Dry Cargo Chartering - NORDEN · PDF fileDRY CARGO CHARTERING Capital Markets Day Mikkel...

DRY CARGO CHARTERING

Capital Markets Day

Mikkel FruergaardVice PresidentCopenhagen, Denmark

Our business is global tramp shippingNORDEN – Dry Cargo Chartering | 1

Copenhagen, Denmark1 June 2012

AGENDA

Organisation

Business model

Strategy

COA focus

Counterparty quality

Optimisation of vessel utilisation

Major trades in 2012


ORGANISATION

Staff breakdown after functionOne of the world’s largest operators of Panamax and Handymax vessels Management & Handymax vessels

Total number of employees 122

12%

12%

9% 3% Management & Support FuntionsChartering

Operations

Overseas offices in:

US

41%23%

Control

Port Captains

Projects

Location of offices and port captains

Brazil

India

Singapore Singapore

China

Port captains ensure ptimely handling of cargoes in ports across the globe

Headquarters

Overseas offices


Port Captains

ASSET LIGHT BUSINESS MODEL

Coverage and customer focusFlexible fleet

Sale and purchase

Capacity

C t t f

Employment

Customer relations

*Active (on order)

Sale and purchase Technical competencies in-house

Owned 29 (5)

LT chartered w. POP 40 (13)Option-based flexibility

Contracts of affreightment

TC out

Custo e e at o sLogistical efficiencies

2-10 year firm periods( )

Other h t d

p y3-7 year firm periods

Flexibility and scaleA bit

FFA market

Spot market

Quick and easy coverLT chartered 23 (1)

chartered (90)

ArbitrageSingle-trip charters

Spot market

BrandPeople Systems


* Active fleet per 30 June 2011Active fleet per 31 March 2012

EXECUTING ON STRATEGY

Long term growth in challenging times

Dry Cargo Tankers Joint Overall targets

Growth in cargoes carried of 15%

p.a.

Growth in owned fleet to 25+ units

Tight cost control on shore and at

sea

Higher shareholder return than peers

Growth in contractually secured cargo

volumes of 15% p.a.

Daily earnings above market

ratesIncreased eco/fuel efficiency focus on

all vessels

Global leader in tramp shipping

Joint ventures and strategic alliances

High standards for quality, safety,

etc.

Flexible financial resources to

pursue opportunities

Added value creation as operator

Increasing EBIT in strategy period


CARGO FOCUS

2011:

61 million tons of transported volumes – 40% up from 2010

87 million tons of contractually secured cargo – 16% up from 2010

Continued focus on profitable growth in cargo volumes

Contractually secured cargo volumes, 2013+Transported volumes 2012

MT MT

50

60

70

80MT

80

100

120MT

10

20

30

40

50

20

40

60

0

10

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Week

R li d l YTD

01 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Week

Accumulated COAs YTD


Realized cargo volume YTDTarget cargo volume (+15%)

Accumulated COAs YTD

Accumulated target (+15%)

IS 15% CARGO GROWTH REALISTIC?

NORDEN has a customer base of approx. 300 clients

Key selection criteria when bidding for COAs:

Financial strength

Proven track record – living up to our values

Size quality and diversity of the fleetSize, quality and diversity of the fleet

CSR focus

NORDENs cargo programmeO s a go p og a

161820Mill. tons

68

101214

024

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Aggregates Bauxite Biomass/wood products Cement products Coal Grain Other Salt Slags


* Per 15 May 2012

Aggregates Bauxite Biomass/wood products Cement products Coal Grain Other Salt Slags

COUNTERPARTY QUALITY

Top 20 counterparties by exposure end-2011 Top 20 counterparties accounted for 78% of the forward cargo bookings 8% 4% Mining companies bookings

Credit risk process:49%

13%

8% Mining companies

Energy Companies

Shipping Companies

Counterparties which have potential exposure of more than USD 5 million must have a credit rating

26%

Industrial Enterprises

Coal distributor

Top 20 counterparties by ownership type

rating

The rating is based on both financial and non-financial parameters

7%3%

Publicly listed

Private

The overall rating translates into a USD exposure limit and a fixture duration limit

90%

State


90%

JOINT VENTURES

Focus on joint ventures with core customers

JVs tighten the bond and give valuable insights into various commodity markets

Provides client with an alternative to vertical integration

L t f l Last refusal on cargo requirements


OPERATOR MODEL

Chartering

How do we optimise earnings in the operator model?

Chartering

Client and brokering networks

Build up a portfolio of COAs

Optimise vessel utilisation

Long/short strategy in different vessel segmentssegments

Vessel positioning

Build up optionality in the fleet

USD 22 million in 2011

Operational

Optimise speed consumption of each voyagevoyage

Port captains optimise loading and discharge


THE IMPORTANCE OF INCORPORATING OPTIONALITY INTO THE BOOK

Optionality provides a ”bottom line” safety against market movements

Value of the optional period can be locked in with FFA

Larger degree of flexibility of period contracts in low markets

NORDENs ship days under different market scenarios* (no. of days)

17 000

15.000

16.000

17.000

12.000

13.000

14.000

10.000

11.000

Q3 2012 Q4 2012 Q1 2013


USD 5000 per day USD 10,000 per day USD 15,000 per day USD 20,000 per day* Per 15 May 2012

SVALBARD ISLAND COA EXAMPLE

Definition: Contract of affreightment (COA) is an agreement to t t

Contract duration:

5 seasons from around 1 July through around 31 O t b h h t h ti t

Cargo:Coal

transport one or more cargoes at a predetermined price per ton

October each year – charterer has an option to extend the contract for another 5 seasons

Coal

Quantity:75,000 mt per shipment – 1,750,000 mt per season

Loading ports:Svea and Longyearbyen

Discharging ports:g g pRotterdam, Immingham, Sines, Brunsbuttel and Esbjerg

Freight rates:Freight rates are based on USD per ton and vary based on loading/discharging ports

Optionalities


Environmental issues

ASAHI TC COA EXAMPLE

Vessel type:

Panamax – max. 15 years oldDefinition: Time charter is a hiring of a vessel for a specific period of

Delivery:

Indonesia or Australia

vessel for a specific period of time at a predetermined rate per day

Redelivery:Japan

Contract duration:

4 voyages per annum over 3 years

Commodity:Commodity:

Coal

Freight rates:Freight rates:

Agreed hire on a standard vessel


COAs – BACKHAUL FOCUS

Record high bunker prices increase the importance of minimizing the ballast ratio

Having secured backhaul COAs, even at low rates, can mean significant savings when the alternative is to ballast

Bachaul COA value example:Bachaul COA value example:

Japan – US Gulf

Duration 32 daysDuration 32 days

Ballast cost approx. USD 25,000 per day

Minimum cost of ballasting: USD 800,000

A d 80% f ll • Around 80% of all cargoes discharged

• All newbuildings delivered


OPTIMISING VESSEL UTILISATION

Discharging in China on 10 g gJune



Discharging in China on 10 g gJune

Cargo fixed for loading in Indonesia on 20 JuneIndonesia on 20 June



Option 1:Ballast from China to Indonesia for 8 days at t t l t f a total cost of approx.

USD 220,000



Option 2:• Find a open cargo

closer to the vessel th t b i that becomes open in China

• Fix a open vessel closer to the loading port in Indonesia


NORDENs MAJOR HANDYSIZE TRADES IN 2012

Wood pellets Wood pellets from USEC to Europe

Fertilizers Fertilizers from Baltic to ECSA

Grain from ECSA to WCSA, WCCA, NCSA, Europe and MED.


NORDENs MAJOR HANDYMAX TRADES IN 2012

Salt from Chile to USEC

Clinker from Coal from Indonesia Med. to WCA

Slag from Japan to USG

to India, Thailand and Philippines

Clinker from

Coal from USA to WCSA

Clinker from Korea to WCA


NORDENs MAJOR PANAMAX TRADES IN 2012

Coal from Svalbard to Europep

Coal from Russia to Europe

Coal from Indonesia to China, Taiwan,

Coal from Australia to Japan

Coal from Indonesia to ItalyBauxite from

Guinea to Ireland

, ,Japan and Philip.

Grain from ECSA to Far East


RECAP

Cargo focus

Only at attractive levelsTanker

Operator activities

Using entire ”toolbox” to generate additional valuegenerate additional value

Long term vision

Use low market for future positioning


Thank you for your attentionANY QUESTIONS?


Dry Cargo Chartering - NORDEN · PDF fileDRY CARGO CHARTERING Capital Markets Day Mikkel...

Documents

Transcript of Dry Cargo Chartering - NORDEN · PDF fileDRY CARGO CHARTERING Capital Markets Day Mikkel...