Bro Q2 Presentation 2008
-
Upload
brostromweb08 -
Category
Education
-
view
471 -
download
2
Transcript of Bro Q2 Presentation 2008
Broström Q2 Presentation 2008Lennart Simonsson, CEOAnders Dreijer, Deputy MD
27 August 2008
Q2 Report 2008
Sida 2
Agenda
• Welcome!
• Q2 2008 in words
• Q2 2008 in figures
• Fleet development
• Market trends
• Summary and Outlook 2008
27 August 2008
Q2 Report 2008
Sida 3
Q1 in words
• Volatile and weak freight market during most of the second quarter 2008
– European traffic experienced a weak start to the second quarter, which ended with an improvement primarily for large tonnage.
– Atlantic traffic basically followed the same market pattern as European traffic.
– For large tonnage in Asian traffic, the freight market was relatively weak during essentially the entire second quarter.
– Small tonnage in Asian traffic had continued stable development.
27 August 2008
Q2 Report 2008
Sida 4
Q1 in words
• Change in transport capacity during the second quarter
– The BRO ERIK (37,000 dwt) was delivered to Broström's partner in May 2008.
– The CPO FRANCE and the CPO SWEDEN (both 37,000 dwt) were delivered to Broström's partner Claus-Peter Offen. The vessels are now trading in Broström’s European sector.
– The EXCELLO (19,500 dwt) was delivered to Broström's partner Donsötank and is now operating in Broström’s European sector.
27 August 2008
Q2 Report 2008
Sida 5
Income Statement
April-June Jan-June2008 2007 SEK m 2008 2007
912 915 Net sales 1 784 1 841214 400 EBITDA 369 701117 302 EBIT 176 520
73 247 Profit after financial items 75 41966 107 - of which dissolution of neg goodwill and capital gains 66 10971 236 Net profit 77 386
1.12 3.60 Earnings per share, SEK 1.21 5.86
ROCE 4.9% 15.5%Cash flow/share 3.24 8.75
Dividends paid 191 258Repurchases of treasury shares 12 85
Free cash, end of period 703 993
*) from operatings activities before dividends
27 August 2008
Q2 Report 2008
Sida 6
Broström – a global logistics company
66 vessels in European trade
23 vessels in Asia
9 vessels in the Atlantic
98 vessels
+ 7 vessels to be added within next 12 months
27 August 2008
Q2 Report 2008
Sida 7
Fleet Growth
Acquired and newly delivered vessels in 2008
Name Built Dwt Owner-
Ship * Partner
BRO ANNA 2008 17,000 100%
BRO AGNES 2008 17,000 100%
CPO FRANCE 2008 37,000 C/M Offen
CPO SWEDEN 2008 37,000 C/M Offen
GAN-SABRE 2008 51,000 C/M Dünya
EXCELLO 2008 19,500 C/M Donsötank
C/M = Commercial Management
27 August 2008
Q2 Report 2008
Sida 8
Fleet Growth
Newbuildings on order on 30 June 2008
Name Delivery Dwt Ownership Partner
BRO ALMA 2008 17,000 100%
GAN-SKY 2009 17,000 C/M Dünya
CPO GERMANY 2008 37,000 C/M Offen
CPO NORWAY 2008 37,000 C/M Offen
CPO RUSSIA 2008 37,000 C/M Offen
CPO ITALY 2008 37,000 C/M Offen
CPO FINLAND 2008 37,000 C/M Offen
CPO ENGLAND 2008 37,000 C/M Offen
NB 386 2009 7,500 50% Thun
NB 387 2009 7,500 50% Thun
27 August 2008
Q2 Report 2008
Sida 9
Broström’s Market Segments
SMALL 13 vessels 4 vessels = 17 vessels5,000 - 10,000 dwt incl 2 NB incl 2 NB
INTERMEDIATE 43 vessels 5 vessels = 48 vessels10,000-30,000 dwt incl 1 NB incl 1 NB
HANDY/MR 9 vessels 17 vessels 14 vessels = 40 vessels30,000-60,000 dwt incl 4 NB incl 4 NB
ATLANTIC EUROPE ASIA PACIFIC
= 9 vessels = 73 vessels = 23 vesselsincl 7 NB
A total of 105 vessels incl 7 newbuildings
27 August 2008
Q2 Report 2008
Sida 10
Market Trends
27 August 2008
Q2 Report 2008
Sida 11
Oil Price
27 August 2008
Q2 Report 2008
Sida 12
US Gasoline Stocks
27 August 2008
Q2 Report 2008
Sida 13
Spot Market Earnings
27 August 2008
Q2 Report 2008
Sida 14
US market impact from high oil prices
• Miles driven in the US has declined with year-on-year negative growth in 2007/2008
• A contraction in miles driven has historically not been seen even during recessions (1990/1991 and 2001/2002)
27 August 2008
Q2 Report 2008
Sida 15
US market impact from high oil prices
• Less gasoline purchased as prices increase in the US market
27 August 2008
Q2 Report 2008
Sida 16
Developments in Global consumption of oil
Source: IEA August 2008
27 August 2008
Q2 Report 2008
Sida 17
Surplus value of the Broström fleet
• Market valuation of
– Existing vessels
– Newbuilding contracts
• Average based on two external brokers
• As per 30 June 2008 the market value exceeded book value by approximately SEK 2.3 billion
27 August 2008
Q2 Report 2008
Sida 18
Outlook 2008
27 August 2008
Q2 Report 2008
Sida 19
Outlook 2008
• The market improvement – primarily for large tonnage – that took place at the end of the second quarter continued into the third quarter of 2008.
• Broström's strategic position for 2008 and onward has been strengthened through acquisitions and investments made in recent years.
• The trend in transport for the years immediately ahead in Broström's market segment is currently difficult to judge.
• A large volume of new tonnage will be added to the market.
• The high price of oil has brought about a greater urgency to reduce dependency on oil and growth forecasts for oil consumption have been adjusted downward.
• Broström believes that major fluctuations will take place from period to period in both transport volume and freight rates.
27 August 2008
Q2 Report 2008
Sida 20
The Broström Brand
27 August 2008
Q2 Report 2008
Sida 21
The Broström Brand
• Broström’s increasing focus on large, global customers asks for a global brand that is built on trust and credibility
• Branding is a crucial success factor in our industry
• The Broström brand embraces everything the customer experiences and expects from doing business with us
27 August 2008
Q2 Report 2008
Sida 22
The Broström Brand
• The Broström Brand – our most valuable tool in our continued business development
• There is a strong connection between a strong Brand and a good
financial performance
• Having clear strategies and working for common goals are fundamentals when building a Brand
27 August 2008
Q2 Report 2008
Sida 23
• Our ”first” Brand Project was initiated in 1998 and a new Brand platform was introduced the same year
• The power in an organisation that works for common goals is enormous
• An organisation with no clear direction can be a disaster
The Broström Brand
27 August 2008
Q2 Report 2008
Sida 24
Who we are What we say
What we do
…as easy as raising a child!
27 August 2008
Q2 Report 2008
Sida 25
Mission
Vision
Individualvalues
Core values
Brand promise
Strategy
Goals
Actions
Plans
All vital brand ingredients revised – and linked to our existing key strategies – to provide “One Clear Direction”!
27 August 2008
Q2 Report 2008
Sida 26
The Mission – our business concept. What we are here for.
The Vision – our ultimate objective – where we are going and
how we want to be perceived in the future.
The Strategies – principle directives for how we should get
there. The compass.
The Core Values – the basis for our corporate culture; ”how we do things in our company”. The ”heart and soul” of our brand
The Goals – measurable objectives i.e. “step stones” on the
way to realize our ultimate objective, the vision.
Broström´s definitions
27 August 2008
Q2 Report 2008
Sida 27
Our mission
“Broström offers competitive
logistics solutions to the oil and
chemical industry, focusing on
industrial tanker shipping and
marine services.”
27 August 2008
Q2 Report 2008
Sida 28
Our vision
”To be recognized as the most
attractive logistics service
provider based on performance,
reliability and respect.”
27 August 2008
Q2 Report 2008
Sida 29
Key strategies
• Broström will lead the development of logistics solutions primarily for the oil and chemical industry by meeting its customers’ service needs.
• Broström will grow by increasing contract volumes, developing new markets, and acquiring companies.
• Broström will lead the market in terms of quality, safety and environmental care.
• Broström’s production will be cost-effective and improved continuously.
• Broström will develop improved logistics solutions for its customers through its strategic alliance with Vopak.
27 August 2008
Q2 Report 2008
Sida 30
Our core values
27 August 2008
Q2 Report 2008
Sida 31
Reliability
• Highest possible safety standards
• Keeping promises
• Responding quickly
• Co-operating with transparency
27 August 2008
Q2 Report 2008
Sida 32
Respect
• Open-minded attitude
• Treating people as experts in their own field
• Recognise integrity of individuals
• Concern for the environment
27 August 2008
Q2 Report 2008
Sida 33
Excellence in performance
• To be regarded as experts in our field… delivering solutions to our customers and partners, that enables them to stay ahead.
27 August 2008
Q2 Report 2008
Sida 34
Financial objectives
• Growth
– Average annual growth in net sales
– 10% per year over a three years period
– Average annual growth in commercial activities (measured as net sales including partners)
– 20% per year over a three years period
• Roce
– Minimum of the average of past three years’ interest for 10 year US Government Bond plus a risk premium of 5%
– For 2007 the objective is 9.4%
• Equity/assets ratio (II)
– Above 30%
27 August 2008
Q2 Report 2008
Sida 35
Our Brand Promise
Going for Excellence. Together.
27 August 2008
Q2 Report 2008
Sida 36
27 August 2008
Q2 Report 2008
Sida 37
Business Strategy
27 August 2008
Q2 Report 2008
Sida 38
World Economic Outlook
27 August 2008
Q2 Report 2008
Sida 39
World Oil Demand2008 estimate; 100% = 87.2 mbd
N America29%
Europe18%
FSU5%
China9%
Other Asia11%
M East8%
Other 20%
27 August 2008
Q2 Report 2008
Sida 40
World oil demand
• World oil demand has increased each year the last 20 years with the only exception of 1993
27 August 2008
Q2 Report 2008
Sida 41
Global Oil Product Demand
• IEA cut its 2008 forecast from 2.0% to 1.4% due to the poor condition in American economy and high prices. It was the largest cut in forecast since 2001
1,2%
1,3%
1,4%
1,1%
1,2%
1,2%
1,3%
1,3%
1,4%
1,4%
1,5%
2006 2007 2008E
Wo
rld
Oil
De
ma
nd
Gro
wth
27 August 2008
Q2 Report 2008
Sida 42
Rapid Pace of Dieselization Continues in Europe
Source: Cambridge Energy Research Associates
50303-3
European products oil imports
3.63.84.04.24.44.64.85.05.25.45.65.86.06.2
1988
1989
1990
1991
199219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
06
mbd
• Mismatch between refinery output and oil product demand creates need for evening out regional supply imbalances
27 August 2008
Q2 Report 2008
Sida 43
Europeisk obalans i försörjning av oljeprodukter
• Europa har överskott på bensin samt underskott på diesel och flygbränsle
• Det mesta av överskottsbensinen exporteras till USA
• Eldningsolja och diesel importeras främst från Ryssland
• Underskottet på flygbränsle täcks främst genom import från Mellanöstern
Flygbränsle
Diesel
Bensin
Överskott
Underskott
Källa: Neste Oil
27 August 2008
Q2 Report 2008
Sida 44
World oil consumption and refinery capacity
mbd
Source: IEA/Intertanko
30
40
50
60
70
80
90
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Oil consumption
Refinery capacity
Sources: BP review until 2004+1.8% increase oil consumption 2005-2009Increase refinery capacity, Petroleum Economist
Oil product supply is tight!
27 August 2008
Q2 Report 2008
Sida 45
World refinery development
mbd
Source: BP Review/various
0
4
8
12
16
20
24
65 68 71 74 77 80 83 86 89 92 95 98 01 04 07 10
N America
S/C America
Europe
FSU
M. East
Africa
Asia Pacific
Source: BP Amoco.June 2005/Various
Bulk of added refinery capacity is located to Asia and the Middle East
More of refined products will be supplied by regions further away from consumers and be transported over longer distances to get to the end-user
27 August 2008
Q2 Report 2008
Sida 46
Vessel Values
• Contributors to maintained strong vessel values
– Steel prices
– Strong dry bulk tonnage demand
– High ship yard capacity utilisation
27 August 2008
Q2 Report 2008
Sida 47
Ship Values
Newbuilding Prices & Shipvalues
0
10
20
30
40
50
60
Jan-
02M
ar-0
2M
ay-0
2Ju
l-02
Sep-
02N
ov-0
2Ja
n-03
Mar
-03
May
-03
Jul-03
Sep-
03N
ov-0
3Ja
n-04
Mar
-04
May
-04
Jul-04
Sep-
04N
ov-0
4Ja
n-05
Mar
-05
May
-05
Jul-05
Sep-
05N
ov-0
5Ja
n-06
Mar
-06
May
-06
Jul-06
Sep-
06N
ov-0
6Ja
n-07
Mar
-07
May
-07
Jul-07
Mill
ion
US$
47,000 dwt - NB contract47,000 dwt - NB resale 45,000 dwt - 5yr 45,000 dwt - 10yr 45,000 dwt - 20yr
27 August 2008
Q2 Report 2008
Sida 48
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
2004 2005 2006 2007 2008 est 2009 est 2010 est 2011 est 2012 est
An
nu
al f
leet
ch
ang
e
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
Wo
rld
fle
et (
mill
ion
dw
t)
Annual fleet change (%) Total million dwtSource: Clarkson May 2008
World Tanker Fleet Development (<60 kdwt)
27 August 2008
Q2 Report 2008
Sida 49
Ice Trading Conditions
23 March 2008 Normal mid March
An exceptional mild winter in the Baltic
27 August 2008
Q2 Report 2008
Sida 50
Small & Intermediate (number of vessels)
0
10
20
30
40
50
60
70
No
of
ves
sels
, in
cl N
B
Small (5-10 kdwt) Intermediate (10-30 kdwt)
27 August 2008
Q2 Report 2008
Sida 51
Medium Range (MR) & Handy (number of vessels)
0
10
20
30
40
50
60
70
80
90
100
No
of
vess
els
MR&Handy (30-60 kdwt) existing MR&Handy (30-60 kdwt) on order
27 August 2008
Q2 Report 2008
Sida 52
Consolidation Through Tanker Pools
Shipowner/Pool memberMarida Pool 10-30 kdwt
Swift Tankers 10-30 kdwt
Handytankers 30-60 kdwt
Norient Product Pool 30-60 kdwt
High Pool Tankers
30-60 kdwt
Glenda International Management 30-60 kdwt
Clean Products International 30-60 kdwt
D'Amico (Italy) X X XDS Norden (Denmark) XGlencore XHarren & Partner XInterorient Navigation (Cyprus) XMaersk/AP Möller X X XMitsubishi Corp (Japan) XMotia (Italy) XNissho Shipping (Japan) XOSG XSeaarland (Netherlands) XTeekay XUltragas/SONAP (Chile) X
TOTAL NO OF VESSELS 16 19 85+1 45+39 8+4 11 6
27 August 2008
Q2 Report 2008
Sida 53
Broström’s track record in market consolidation
• Broström has contributed to considerable market consolidation through company acquisitions and partnerships:
– United Tankers/Erik Thun (1990)
– Rederi AB Donsötank (1992)
– Van Ommeren Tankers (1998)
– Rigel Schiffahrts (2000)
– Dünya Shipping (2005)
– Nordtank Shipping (2005)
– Furetank Rederi (2005)
– Claus-Petter Offen (2007)
• An expansion into Small and Intermediate (5-20 kdwt) tonnage in Asia has been part of Broström’s strategic planning and resulted May 2007 in the acquisition of The Petroships Group, re-named to Broström Tankers Singapore
• At year-end 2007 Broström operated a fleet of 22 vessels in Asia, compared with 9 vessels at year-end 2006
• Opportunities for further consolidation are being continuously evaluated