Shipping presentation Leif Teksum, head of Large Corporates and - - PowerPoint PPT Presentation

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Shipping presentation Leif Teksum, head of Large Corporates and - - PowerPoint PPT Presentation

Oct 06, 2022 141 likes •308 views

Shipping presentation Leif Teksum, head of Large Corporates and International Oslo, 10 August 2011 Seaborne trade is expected to grow steadily, but we expect 2011 and 2012 to be challenging in the dry bulk and tanker sectors. Expected Worldwide

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Shipping presentation

Leif Teksum, head of Large Corporates and International Oslo, 10 August 2011

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Shipping, Offshore & Logistics

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200 400 600 800 1000 1200 1400 1600 1800 2003 2005 2007 2009 2011 2013 2015

Million dwt

LPG carriers Chemical tankers Product tankers Crude oil tankers Dry bulk carriers Containerships

10 20 30 40 50 60 70 Early 2010 June 2011

Demand for shipping services is expected to grow steadily, but the demand-supply balance for tankers and bulkers is unlikely to improve until 2012/13. The orderbook is lower, but remains high for dry bulk, tankers and containers. The BDI is low, but has stabilized.

Orderbook Expected Worldwide Shipping Demand, according to Lorentzen & Stemoco

Seaborne trade is expected to grow steadily, but we expect 2011 and 2012 to be challenging in the dry bulk and tanker sectors.

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Shipping, Offshore & Logistics

3 Source: Clarkson

Spot 1 yr tc 3 yr tc Cape 7.200 13.000 15.000 Panmx 9.100 12.000 13.000 Handy 10.400 12.000 12.000

  • Spot rates are low, but varies by size and

by region. Some acceptable time charters are still possible.

  • The average contract coverage for the 10

largest clients, representing 62% of the dry bulk portfolio, is 60% in 2011 and 50% in 2012.

Dry bulk: Lower spot rates, as expected. Smaller sizes doing better than the larger capesize vessels.

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Dry bulk shipping demand and supply

0,0 100,0 200,0 300,0 400,0 500,0 600,0 700,0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2006 2007 2008 2009 2010 2011 2012 2013

  • Mill. dwt
  • Mill. tonn

Tonnage demand

Other Soybean Cement Steel products Grain Steam coal Met coal Iron ore Ton-mile demand (right)

  • 100,0

0,0 100,0 200,0 300,0 400,0 500,0 600,0 700,0 2006 2007 2008 2009 2010 2011 2012 2013

  • Mill. dwt

Fleet development

Fleet Actual delivery Scrapping

70 % 75 % 80 % 85 % 90 % 95 % 100 % 105 % 200 250 300 350 400 450 500 550 600 650 700 1q 00 1q 01 1q 02 1q 03 1q 04 1q 05 1q 06 1q 07 1q 08 1q 09 1q 10 1q 11 1q 12 1q 13

Demand Supply Utilization (right)

Tonnage balance Source: Lorentzen & Stemoco

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Crude Tankers: Declining rates

Source: Clarkson

  • Low spot rates, stable charter rates
  • The average contract coverage for the 10

largest clients, representing 2/3 of the portfolio, is 40% in 2011 and 30% in 2012

  • Our tanker clients are typically involved in
  • ther shipping sectors as well.

Spot 1 yr tc 3 yr tc VLCC 7.300 25.000 32.000 Suez 8.000 17.000 24.000 Afra 10.000 16.000 18.000

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  • 2nd hand values dropped in

2009/2009, but have remained relatively stable since.

  • Newbuilding prices have fallen and are

under pressure for further reduction, which may impact 2nd hand values.

Stable second hand tanker values, but falling dry bulk values.

Source: Clarkson

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Containers: Acceptable rates, but lower than 2010. Lower volume growth.

The Q1 results were generally better than last year, Maersk and MOL reporting profits, while China Shipping, NOL, K- Line, ZIM and RCL reported losses. Maersk expects the global demand to grow by 6-8% in 2011, but supply of new tonnage is expected to match or grow even

  • more. Maersk expects a

satisfactory 2011 result, but below 2010.

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Shipping is more than tankers and bulkers

  • Offshore markets are booming
  • Container segment much improved
  • Stable and profitable logistics activities
  • LNG markets are attractive
  • Car carrier market has strengthened
  • Cruise is doing ok
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Shipping, Offshore & Logistics

9 SOL Overview

  • Our core clients are typically leading

integrated shipping companies

  • We prioritize clients where we have a

good and close dialogue and who use a broad range of DnB NOR products

  • We have a global approach
  • We will maintain a good credit quality

We are long term and relationship driven

Client Collateral Cash flow

Covenants

Risk mitigation by the 4 Cs

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We aim to have a diversified portfolio with a good credit quality.

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The shipping, offshore and logistics portfolio has been relatively stable for the past 3 years. The shipping portfolio is ca 8% of the bank’s portfolio.

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12 50000 100000 150000 200000 250000 SPOT RATES DnB NOR Base case DnB NOR Risk case 50000 100000 150000 200000 250000 SPOT RATES DnB NOR Base Case DnB NOR risk case

Dry bulk (USD/day)

Spot rates for dry-bulk capesize vessels last 10 years vs. DnB NOR's assumptions

Tankers (USD/day)

Spot rates for VLCC tanker vessels last 10 years vs. DnB NOR's assumptions

Our internal credit analysis is based on low rate estimates

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  • Reducing or stopping dividends
  • Cancelling or postponing newbuildings
  • Raising additional capital
  • Scrapping vessels
  • Cutting costs

We have earlier stated that the shipping companies would take action during difficult times

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14 200 400 600 800 1000 1200 1400 1600 Expectations Expected loss Write-downs MNOK 2009 2010

Shipping has managed to minimize write-downs

  • 0,40 %
  • 0,20 %

0,00 % 0,20 % 0,40 % 0,60 % 0,80 % 1,00 %

  • 200

200 400 600 800 1000 1200 1400 1600 2002 2003 2004 2005 2006 2007 2008 2009 2010

Net write downs % of drawn portfolio

Actual write-downs 2009, 2010 vs. expectations Actual write-downs past 9 years

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DnB NOR has remained active throughout the financial crisis, delivering strong results each year.

500 1 000 1 500 2 000 2 500 3 000 2007 2008 2009 2010 Gross income Operating profit Operating profit after wd The Shipping division’s financial performance, 2007 -2010 NOK mill.

including interest on allocated capital

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2011 is a balancing act

Maintain core client relations Minimize and prevent further loan losses Maintain high earnings

Greek Mythology:

  • Two sea monsters Scylla and Charybdis were
  • n each side of a narrow channel of water
  • Odysseus challenged several times but in the

end paddled away to safety

Scylla and Charybdis