Third Quarter 2015 Results 12 November 2015 2 Market update and - - PowerPoint PPT Presentation

Third Quarter 2015 Results

12 November 2015

2

Agenda

• Highlights
• Financials
• Operational review
• Project Felix
• Market update and prospects
• Q&A

3

Highlights

• Continued improved operational performance, net result of USD 7 mill
• Chemical Tankers EBITDA was USD 46 mill compared with USD 42 mill in 2Q15.

EBITDA includes negative effects from bunker derivatives of USD 17 mill

• Odfjell chemical freight index (ODFIX) result up 1% compared with previous quarter

Highlights

¹ Proportional consolidation method according to actual historical ownership share

• 50

50 100 150 200 250 300 350 06 07 08 09 10 11 12 13 14 15

USD mill

Annualised EBITDA¹

Chemical tankers Tank terminals LPG/Ethylene

80 100 120 140 160 180 200 06 07 08 09 10 11 12 13 14 15 Index 1990=100

ODFIX

Quartely average 2006-2015

4

Highlights

• Cost-cutting and efficiency programme is on

schedule

• Stable and slightly improved results from

Odfjell Terminals

• Harald Fotland appointed new Head of Odfjell

Tankers

Highlights

First Poland vessel Bow Summer during upgrading with new propulsion concept

5

hallo Income statement¹ - Third quarter 2015 Odfjell Group

Financials

¹ Proportional consolidation method

USD mill

3Q15 2Q15 Gross revenue 276 279 Voyage expenses (106) (104) TC expenses (42) (45) Operating expenses (48) (50) General and administrative expenses (23) (27) Operating result before depr. (EBITDA) 57 53 Depreciation (30) (31) Impairment (0) (10) Operating result (EBIT) 26 12 Net finance (18) (5) Taxes (1) (0) Net result 7 7

6

52.6 (3.4) (1.7) 2.8 2.1 4.3 56.7

10 20 30 40 50 60

USD mill.

Financials

EBITDA variance¹ - Odfjell Group

3Q14 vs 3Q15: EBITDA increased by 81% OPEX down 19% G&A down 22% 3Q14 vs 3Q15: EBITDA increased by 81% OPEX down 19% G&A down 22% 2Q15 vs 3Q15: EBITDA increased by 8% OPEX down 4% G&A down 16% 2Q15 vs 3Q15: EBITDA increased by 8% OPEX down 4% G&A down 16%

31.2 (16.4) 18.9 5.2 11.3 6.5 56.7

10 20 30 40 50 60

USD mill.

¹ Proportional consolidation method

7

Quarterly figures¹ - Odfjell Group

50 100 150 200 250 300 350 2013 2014 2015

USD mill

Gross Revenue

10 20 30 40 50 60 2013 2014 2015

USD mill

EBITDA

• Increased EBITDA in five consecutive quarters
• EBITDA has increased by 81% compared with 3Q14
• Increased EBITDA in five consecutive quarters
• EBITDA has increased by 81% compared with 3Q14

Financials

¹ Proportional consolidation method

8

Quarterly figures

• 6
• 15

5 8

• 15

12 23 5 26

• 99

5

• 120
• 100
• 80
• 60
• 40
• 20

20 40 2013 2014 2015

USD mill

Operating Result (EBIT)¹

• EBIT 3Q includes negative effect of

bunkers hedging USD 17.0 mill

• Unrealized value on derivatives negative

USD 3.8 mill in 3Q, compared with gain USD 11.3 mill in 2Q

• Restructruring of financial lease gave USD

4.2 mill in interest income in 3Q

• EBIT 3Q includes negative effect of

bunkers hedging USD 17.0 mill

• Unrealized value on derivatives negative

USD 3.8 mill in 3Q, compared with gain USD 11.3 mill in 2Q

• Restructruring of financial lease gave USD

4.2 mill in interest income in 3Q

• 9
• 7
• 7
• 9
• 9
• 9
• 9 -11
• 10 -12
• 7

7

• 15
• 6

1

• 5
• 10
• 20

9

• 7
• 30
• 25
• 20
• 15
• 10
• 5

5 10 15

USD mill

Net Finance²

Net interest Other financial/currency

2013 2014 2015

Financials

¹ Proportional consolidation method ² Equity method

haallooo

• 13
• 22
• 32
• 2
• 26

7 9

• 9

7

• 102
• 17
• 110
• 90
• 70
• 50
• 30
• 10

10 30 2013 2014 2015

USD mill

Net Result

9

Results per segment¹

3Q15 2Q15

USD mill Chemical tankers Tank terminals LPG/ Ethylene Chemical tankers Tank terminals LPG/ Ethylene

Gross revenue 244 28 4 247 28 5 EBITDA 46 10 1 42 10 1 EBIT 24 2 10 2 1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Gross revenue EBITDA Assets

3Q15

Chemical tankers Tank terminals LPG/Ethylene

Financials

¹ Proportional consolidation method

• 50

50 100 150 200 250 300 350 06 07 08 09 10 11 12 13 14 15

USD mill

Annualised EBITDA¹

Chemical tankers Tank terminals LPG/Ethylene

10

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Income statement¹ – 3Q15 chemical tankers

USD mill

3Q15 2Q15 Gross revenue 244 247 Voyage expenses (104) (102) TC expenses (41) (44) Operating expenses (34) (36) General and administrative expenses 2 (19) (23) Operating result before depr. (EBITDA) 46 42 Depreciation (22) (23) Impairment (0) (10) Operating result (EBIT) 24 10

Financials

• Bunker adjustment clauses impacted the gross revenue negatively USD 9.9 mill

(USD 6.9 mill in 2Q)

• EBITDA includes negative effects from bunker hedging derivatives USD 17.0 mill

(USD 12.1 mill in 2Q)

• Bunker adjustment clauses impacted the gross revenue negatively USD 9.9 mill

(USD 6.9 mill in 2Q)

• EBITDA includes negative effects from bunker hedging derivatives USD 17.0 mill

(USD 12.1 mill in 2Q)

¹ Proportional consolidation method

2 Including corporate functions

11

41.9 (3.0) 0.3 (5.0) 3.0 2.8 1.9 4.1 46.0

10 20 30 40 50

USD mill.

Financials

EBITDA variance – chemical tankers

3Q14 vs 3Q15: EBITDA increased by 74% 3Q14 vs 3Q15: EBITDA increased by 74% 2Q15 vs 3Q15: EBITDA increased by 10% 2Q15 vs 3Q15: EBITDA increased by 10%

26.4 (13.1) (5.6) (17.2) 35.5 4.1 9.5 6.4 46.0

• 10

10 20 30 40 50

USD mill.

12

Vessel operating expenses – chemical tankers

2,000 4,000 6,000 8,000 10,000 12,000 06 07 08 09 10 11 12 13 14 YTD15

Development USD / day per year

Total Crew Financials

2,000 4,000 6,000 8,000 10,000 12,000 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

Quarterly USD / day

Total Crew

• Project Felix initiatives give significant positive results
• Operating expenses (USD / day) reduced by 18% YTD compared to FY2014
• Expect stabilizing opex at competitive levels
• Project Felix initiatives give significant positive results
• Operating expenses (USD / day) reduced by 18% YTD compared to FY2014
• Expect stabilizing opex at competitive levels

13

Bunker development

66.4 52.3 39.9 38.9 36.8 (3.2) 2.7 10.0 6.9 9.9 (0.2) 16.6 14.7 12.1 17.0 63.0 71.6 64.5 57.9 63.7

(20) (10)

• 10

20 30 40 50 60 70 80 3Q14 4Q14 1Q15 2Q15 3Q15

USD mill

Net Bunker Cost

Bunker purchase Bunker clauses Bunker hedging Net bunker cost

100 200 300 400 500 600 700 800 10 11 12 13 14 15

USD/mt

Platts 3.5% FOB Rotterdam

hallooooo

• Net bunker cost in 3Q USD 445 per tonne before

hedging vs. USD 436 in 2Q

• 50% of the remaining 2015 exposure is hedged at

average USD 527 per tonne

• Bunker clauses in CoAs cover about 50% of the

exposure

• 7% of 2016 exposure is hedged at average USD

255 per tonne

• Net bunker cost in 3Q USD 445 per tonne before

hedging vs. USD 436 in 2Q

• 50% of the remaining 2015 exposure is hedged at

average USD 527 per tonne

• Bunker clauses in CoAs cover about 50% of the

exposure

• 7% of 2016 exposure is hedged at average USD

255 per tonne

Financials

14

Income statement¹ – 3Q15 tank terminals

USD mill

3Q15 2Q15 Gross revenue 28 28 Operating expenses (13) (14) General and administrative expenses (5) (5) Operating result before depr. (EBITDA) 10 10 Depreciation (8) (8) Operating result (EBIT) 2 2

Financials

¹ Proportional consolidation method

• The tank terminal result is stable but at unsatisfactory levels
• The occupancy rate at 94%
• The tank terminal result is stable but at unsatisfactory levels
• The occupancy rate at 94%

15

Tank terminals EBITDA – by geographical segment

‐4 15 11 6

• 5

5 10 15 20 Europe North America Asia Middle East

USD mill

YTD 2015

EBITDA Tank Terminals by geographical segment 3Q15 2Q15 Europe (0) (1) North America 5 5 Asia 3 4 Middle East 2 2 Total EBITDA 10 10

• Stable results in all areas
• Slightly positive EBITDA at OTR in September
• Additional available capacity contributed to a

slight increase in the EBITDA at our terminals in North America

• Stable results in all areas
• Slightly positive EBITDA at OTR in September
• Additional available capacity contributed to a

slight increase in the EBITDA at our terminals in North America

Financials

16

Balance sheet¹ – 30.09.2015

USD mill - Assets Ships and newbuilding contracts 1 299 Other non-current assets/receivables 61 Investment in associates and JV’s 377 Total non-current assets 1 737 Cash and available-for-sale investments 177 Other current assets 125. Total current assets 302 Total assets 2 040 Equity and liabilities Total equity 647 Non-current liabilities and derivatives 49 Non-current interest bearing debt 1 042 Total non-current liabilities 1 091 Current portion of interest bearing debt 181 Other current liabilities and derivatives 121 Total current liabilities 302 Total equity and liabilities 2 040

• Cash balance of USD 177 mill - excluding JV’s cash (USD 108 mill end June)
• Net investment in tank terminals JV’s USD 314 mill
• Unrealised negative value on hedging derivatives USD 23.0 mill end September, compared

to negative USD 28.6 mill end June

• Equity ratio 31.7% (32.5% end June)
• Cash balance of USD 177 mill - excluding JV’s cash (USD 108 mill end June)
• Net investment in tank terminals JV’s USD 314 mill
• Unrealised negative value on hedging derivatives USD 23.0 mill end September, compared

to negative USD 28.6 mill end June

• Equity ratio 31.7% (32.5% end June)

Financials

¹ Equity method

17

Debt development – 30.09.2015

• All scheduled vessel refinancing for 2015 completed
• In total the 2015 refinancing has secured USD 72 mill in new liquidity
• The NOK 600 mill bond maturing in December 2015 will be redeemed by

drawing on cash balance

• Further initiatives will improve cash positions with USD 40 – 50 mill in 4Q

200 400 600 800 1,000 1,200 1,400 3Q15 2015 2016 2017 2018 2019

USD mill

Debt Portfolio

Ending balance Repayment

Financials

50 100 150 200 250 300 350 2015 2016 2017 2018 2019

USD mill

Debt Repayments

Secured loans Balloon Leasing NOK bond 12/15 NOK bond 12/17 NOK Bond 12/18

18

Capital expenditure programme

In USD mill – per 30.09.2015

Remaining 2015 2016 2017 2018 2019 Chemical Tankers, Odfjell share Docking 4 14 14 14 14 Other investments (vessel retrofitting) 3 7 5 Odfjell Gas, 100%1) Sinopacific, 4 x 17,000 cbm 18 131 Sinopacific, 4 x 22,000 cbm 5 30 144 Tank Terminals, 100% Planned capex 40 58 34 10 8

Financials

1) Odfjell SE (50% owner) is committed to inject up to USD 50 mill in equity in 2015 - 2017. Due to delays at the yard the

capital injections will most likely be pushed to later

19

Terminal projects and expansions

Operational review

• In Houston, the new 17,142 cbm tank pit (Bay 10) has now been completed
• Our new terminal in Tianjin is ready for operation, but the explosion in the Tianjin old

harbour in July will most likely further delay the process of obtaining the necessary

• perational permits
• Expansions in Rotterdam are on track

20

Tank terminal capacity and commercial occupancy

200 400 600 800 1,000 1,200 1,400 1,600 1,800

Cubic Metres`000

Mineral oil storage Chemical storage Ongoing expansions

Current capacity 5,448,932 cbm Ongoing expansions 450,400 cbm Available capacity in Rotterdam at 60%

• f gross capacity

Current capacity 5,448,932 cbm Ongoing expansions 450,400 cbm Available capacity in Rotterdam at 60%

• f gross capacity

* Odfjell’s ownership share in the respective tank terminals is shown in percentage

Operational review

89% 97% 96% 94% 89% 84% 86% 86% 91% 91% 92% 94%

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

The occupancy rate was at 94% in 3Q15. The occupancy rate was at 94% in 3Q15.

21

Odfjell Terminals (Rotterdam) – current status

• EBITDA negative USD 0.8 mill in

3Q15 (Odfjell share), compared to negative USD 1.6 mill last quarter

• Per end of 3Q15 the commercially

available occupancy was at 95.5%, last quarter it was at 93%

‐80,000 ‐60,000 ‐40,000 ‐20,000 20,000 40,000 60,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Annualised EBITDA OTR (100%)

EUR 1,000

• Total commercial capacity end September 939,000 cbm, compared to 860,000

cbm end June

• With the current market activity we expect to add further capacity by year end
• The terminal delivered a slightly positive EBITDA in September, with all four

distillation columns fully operational since the end of 2Q

• The largest distillation column will go offline in 4Q15 to increase the capacity of

the unit. This will negatively affect the OTR results in 4Q15

Operational review

22

Odfjell Gas Carriers

 Third quarter affected by idle time for the pool vessels  Activity in all the main markets slowed down more than expected  Improvements are expected for the fourth quarter, in line with the results for 1st half of the year  The construction of 4 x 17,000 cbm and 4 x 22,000 cbm is significantly delayed, and we are in discussions with the yard

USD mill

3Q15 2Q15 Gross revenue 4 5 EBITDA 1 1 EBIT 1

Operational review

23

hhhh hhhh Fleet development - last 12 months

Fleet additions DWT Built Tanks Transaction May 2015 Horin Trader 19 856 2015 Stainless Medium-term TC April 2015 Marex Noa 12 478 2015 Stainless Long-term TC March 2015 Gion Trader 19 883 2015 Stainless Medium-term TC January 2015 Bow Triumph 49 600 2015 Coated Owned October 2014 Bow Trident 46 600 2014 Coated Owned

Short-term: Up to one year Medium-term: 1-3 years

Fleet disposals, owned DWT Built Tanks Transaction November 2015 Bow Victor 33 000 1986 Stainless Recycling August 2015 Bow Bracaria 5 846 1997 Stainless Sale July 2015 Bow Brasilia 5 800 1997 Stainless Sale July 2015 Bow Balearia 5 846 1998 Stainless Sale Bow Victor is sold for recycling at RL Kalthia Shipbreaking Pvt. Ltd yard in India. The vessel has Green Passport and the yard is certified for ISO 9001, ISO 14991, OSHAS 18001, ISO 30000 and are also certified as Hong Kong Convention compliant. The yard is certified by the vetting agency Class NK. Bow Victor is sold for recycling at RL Kalthia Shipbreaking Pvt. Ltd yard in India. The vessel has Green Passport and the yard is certified for ISO 9001, ISO 14991, OSHAS 18001, ISO 30000 and are also certified as Hong Kong Convention compliant. The yard is certified by the vetting agency Class NK.

Operational review

24 Total profit improvement potential (% of total, “run rate”, Sept. 2015) Project Felix, status update

10 20 30 40 50 60 70 80 90 100

74%

Dec ’16 O S A D N

72%

J

64%

% of total

38%

M J

67% 53%

A

38%

J

47%

F Dec ’14

62%

M Target Actual

• End September, run-rate was at 72% which is on target
• Retrofitting of the first Kvaerner class vessel with new

propeller was successfully executed in September with a 20% reduction in fuel consumption

• Retrofitting of the first Poland class vessel takes place in

November 2015

• All our Kvaerner and Poland class vessels will be

retrofitted within end 2017

• Cost reduction initiatives are on schedule. Target is still

to improve net result with USD 100 mill on a yearly basis when the project is fully implemented

• Focus for the following quarters will be on profitability

improvement initiatives

• Process started to evaluate further potential efficiency

improvements beyond project Felix Project Felix

Project Felix: Reducing cost and improving efficiency

72% of improvements are implemented

9% 26% 31% 43% 47% 49% 59% 65% 71% 73% 74% 76% 85% 100%

• A parallell project for the Poland class of 8 vessels
• First sea trial for the first vessel in the Poland class expected early 2016
• 23 vessel with A+ energy rating in the Odfjell fleet when the project is concluded

20% fuel saving with new propulsion concept

• Sea trial of Bow Clipper after upgrading concludes

with decreased fuel consumption of 20%

• Model test indicated 15% reduction
• Same upgrading on 10 Kvaerner class vessels

within 2017

Project Felix

Odfjell will manage one of the most eco-friendly and energy efficient fleet within the chemical tanker market

26

50 75 100 125 150 175 200 05 06 07 08 09 10 11 12 13 14 15

Odf ix Quartely av erage 2005-2015

Odfix Index 1Q 2010 = 100

Chemical tanker spot earnings index Source: Clarkson Platou Securities

Market update – chemical tankers

• Market in third quarter in line with second quarter
• CPP market remained firm, but softened towards the end of the quarter
• Port congestion continues to be a challenge
• No material disruption to the operation of our vessels during the period

Market update and prospects

27

Chemical tanker market

Chemical tanker year-on-year net fleet growth

3 6 9 12 15 18 06 07 08 09 10 11 12 13 14 15 16 17

Odfjell Core Fleet Inge Steensland Clarksons Swedbank

Y-o-y growth (%) Forecasts

• Differences between sources due to different fleet definitions

– Odfjell: IMO 2 tonnage  13,000 dwt, predominantly trading in chemicals. Assuming current orderbook and

• utphasing at 30 years (Europe built) or 25 years (Asia built).
• Stricter definition and thus, more limited fleet basis  larger relative orderbook

Market update and prospects

Annual compound growth rate 2015-17: Odfjell core fleet: 8.3% Average other sources, full fleet: 4.8%

28

Chemical tanker market

Chemical tanker supply/demand development

100 105 110 115 120 125 130 2014 2015 2016 2017

I ndexed (2014 = 100)

Supply

Average forecast annual compound: 5.7% Odfjell Core fleet

Average forecast

Clarkson Inge Steensland Swed- bank

2014 2015 2016 2017

Clarkson World GDP *1.5

Average forecast

Demand

Average forecast annual compound: 5.2% Inge Steensland Market update and prospects

29

Prospects

• Global growth remains modest
• Continued fall in bunker prices reduce our voyage expenses, however bunker

hedging contracts are still offsetting this positive effect

• We expect 4Q to be weaker than 3Q for the Chemical Tankers segment
• We expect Odfjell Terminals 4Q results to be in line with 3Q

Market update and prospects

30

Executive Management - priorities during 2nd half 2015

• Key focus is to build strength

– We continue to improve on our profitability – Our cash and balance sheet is improving

• Familiarization with the global Odfjell organization and other key stakeholders

– CEO familiarization on track

• Keep momentum in project Felix – also beyond initial targets

– We are still confident we will meet or exceed Felix target. Working on new and additional initiatives

• Bond refinance

– Odfjell 2015 bond will be redeemed at maturity in December

• Ongoing review of operational and financial strategies in all segments

– New head of Odfjell Tankers in place

Market update and prospects

31

Company representatives

Terje Iversen – CFO, Odfjell SE Email: Terje.Iversen@odfjell.com Phone: +47 932 40 359 IR – contact: Tom A. Haugen – VP Finance, Odfjell SE Email: Tom.Haugen@odfjell.com Phone: +47 905 96 944 Kristian V. Mørch – CEO, Odfjell SE Email: Kristian.Morch@odfjell.com Phone: +47 55 27 00 00

Thank you

For more information please visit our webpage at www.odfjell.com