NOL Q2 2013 results presentation
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Transcript of NOL Q2 2013 results presentation
1H & 2Q 2013 Performance Review7 August 2013
Forward Looking StatementsThe following presentation includes forward-looking statements, which involve known and unknown risks and uncertainties, that could cause actual results or performance to differ. Forward looking information is based on current views and assumptions of management, including, but not limited to, prevailing economic and market conditions. Such statements are not, and should not be interpreted as a forecast or projection of future performance.
1 1H & 2Q 2013 R lt Hi hli ht B N Y t Ch1. 1H & 2Q 2013 Results Highlights By Ng Yat ChungGroup President & CEO
1H2013 Results OverviewEfficiencies drive improved resultsEfficiencies drive improved results• Global slowdown lowers Group revenue• Operational & cost efficiencies improve operating results
Liner – Macro headwinds, improved cost base
Operational & cost efficiencies improve operating results• Building sale gain results in US$41m net profit
e ac o ead ds, p o ed cost base
• Soft global economy dampens volume• Industry oversupply severely weakens freight rates
Logistics – Growing across major markets
y pp y y g• Leaner operations cuts Core EBIT loss by 39%
g g j
• US & emerging markets drive revenue growth• Cost discipline improves profitability
Page 4 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Market conditions deteriorated in 1H & 2Q
1,500
2012
2Q13 vs 2Q121,225
-28%index drops
950
2013
950 Jan Feb Mar Apr May Jun
Shanghai Containerized Freight Index (SCFI)
Page 5 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Source: SCFI
Rates plunged in major trade lanes
1,741 1,800
US$/TEU
1,215 1,250
US$/TEUAsia-Europe Freight Rate Asia-US West Coast Freight Rate
1,030
781
1,200 1,000
781
600 750
-2Q 12 2Q 13
500 2Q 12 2Q 13
Page 6 | 7 August 2013 | 1H & 2Q 2013 Performance Review
2Q 12 2Q 13
Source: SCFI
NOL’s cost & yield focus swings 1H Core EBIT +US$97mEBIT +US$97m
1H13 Revenue US$(276) Y Y
4,595 4,616 4,711 4,801 4,435
(28)5
100 5,000
US$m US$mUS$(276)m YoY
(28)
(120) (100)
0
2 500
(349)
(217)
(300)
(200)
2,500
1H13 Core EBIT +US$97m YoY
(349)
(400)
(300)
-1H11 2H11 1H12 2H12 1H13
Page 7 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Revenue (LHS) Core EBIT (RHS)
Efficiency drive nets US$240m* cost savings
1H13 cost savings highlights
• Bunker & Network:• Network optimisation• Trim optimisationTerminals,
Land Trim optimisation
• Vessel slow-steaming
• Terminal operations Bunker & Network-related
APLL
Land Operations, Equipment
25%
poptimisation
• Empty repositioning
60%
Others10%
APLL5%
• APL Logistics
Page 8 | 7 August 2013 | 1H & 2Q 2013 Performance Review
*Excludes bunker price drop of 10% YoY
2 1H & 2Q 2013 Fi i l P f2. 1H & 2Q 2013 Financial Performance By Cedric FooGroup Deputy President & CFO
Group Financial HighlightsP iti C EBITDA
US$m
Revenue
Positive Core EBITDACore EBITDA
91
37 35 60
120 US$m
2 333
4,711 4,435 5,000 US$m
(60)
(120)
(60)
-2,333 2,064
-
2,500
(120)2Q12 2Q13 1H12 1H132Q12 2Q13 1H12 1H13
% ▲ Better/ (Worse) % ▲ Better/ (Worse)
(12) (6)
% ▲ Better/ (Worse) % ▲ Better/ (Worse)
(59) n.m.
(US$m) 2Q12 2Q13 1H12 1H13Liner 79 24 (87) 3Logistics 12 13 27 32
Page 10 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Total 91 37 (60) 35
Group Financial Highlights1H13 Core EBIT improves 45% YoY Net results lifted1H13 Core EBIT improves 45% YoY, Net results lifted by NOL building sale
16100
US$m
81 150 US$m
EBIT2Core EBIT1
41100 US$m
Net Profit / (Loss)
16
(35)
(120)(100)
-
(96)(26)
(150)
-
(118)(35)
41
(200)
(100)
‐
(217)(300)
(200)
2Q12 2Q13 1H12 1H13
(328)(450)
(300)
2Q12 2Q13 1H12 1H13 (371)(400)
(300)
2Q12 2Q13 1H12 1H13
% ▲Better/
(Worse)
% ▲Better/
(Worse)
73 n.m.
% ▲Better/
(Worse)
% ▲Better/
(Worse)
n.m. 45
% ▲Better/
(Worse)
% ▲Better/
(Worse)
71 n.m.
Page 11 | 7 August 2013 | 1H & 2Q 2013 Performance Review
1) Core EBIT excludes non-recurring items.2) EBIT includes non-recurring items. Includes NOL building sale gain of US$200m.
Financial Highlights by Business Segment
125 US$m
6,000 US$m
Revenue by Business Segments Core EBIT by Business Segments
7
9 22 (45)10 26
(25)
50 755 781
(239)
(146)
(175)
(100)361 354
3,000
(239)(250)
2Q12 2Q13 1H12 1H131,994 4,004 1,728 3,695
-
2Q12 2Q13 1H12 1H13
2Q12 2Q13 1H12 1H13
2Q12 2Q13 1H12 1H13Revenue 2,355 2,082 4,759 4,476Elimination (22) (18) (48) (41)Total 16 (3 ) (21 ) (120)
Page 12 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Total Revenue 2,333 2,064 4,711 4,435 Total 16 (35) (217) (120)
Group Balance Sheet Highlights
US$m 28 Jun’ 13 28 Dec’ 12
Total Assets 8,966 8,219(Restated)1
Total Liabilities 6,745 6,026Total Equity 2,221 2,193
Total Debt 4 636 3 976Total Debt 4,636 3,976
Total Cash 1,223 897
Net Debt 3,413 3,079
Gearing (Gross) 2.09x 1.81x
Gearing (Net) 1.54x 1.40x
NAV per share (US$) 0 84 0 83NAV per share (US$) 0.84 0.83
(S$) 1.06 1.01
Page 13 | 7 August 2013 | 1H & 2Q 2013 Performance Review
1 2012’s results is restated for comparative purposes due to retrospective application of Amendments to FRS 19: Employee Benefit (Revised), which is effective from financial year 2013.
Group Cash Flow Highlights
US$m 1H13 1H12
Cash & Cash Equivalents – Beginning @ Q1 897 228
Cash Inflow / (Outflow)( )
Operating Activities (20) (302)
Investing/Capex Activities (369) (414)
Financing Activities 715 726
Cash & Cash Equivalents – Closing @ Q2 1,223 238
Page 14 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Group Capital Expenditure
US$m 1H13 1H12
1. Vessels 638 393
2. Equipment / Facilities 43 63
3. Drydock 31 16
4. IT 49 13
5 Others 3 45. Others 3 4
Total 764 489
Page 15 | 7 August 2013 | 1H & 2Q 2013 Performance Review
3 Li B K th Gl3. Liner By Kenneth GlennPresident, APL
Liner 1H13 Results HighlightsChallenging macroeconomic & industry conditions• Revenue -8% or US$309m YoY, mainly from -11% Rev/FEU in 2Q13
Positive Core EBITDA +US$90m swing to US$3m
Improved efficiency & cost base
• Positive Core EBITDA, +US$90m swing to US$3m• Core EBIT loss narrowed 39% YoY to US$146m
p y• 19 of 34 new ships* replaced 13 older/smaller ships sold/scrapped
& 25 charter ships returnedB k ti d d b 16% Y Y (228k MT) hil fl t• Bunker consumption reduced by 16% YoY (228k MT) while fleet capacity expanded by 5% YoY
• Cost of sales/FEU reduced by 8% YoY
Maintain yield focus
• Yield focus, while balancing trade & cargo mix
Page 17 | 7 August 2013 | 1H & 2Q 2013 Performance Review
• Headhaul utilisation >90% to maximise assets* From 1 Jan 2012 to 28 June 2013
Industry working through oversupply
2020
Global Fleet Capacity % Annual Capacity Growth % Global Throughput Growth
YoY % change
TEUMillions
Global financial crisis
US quantitative easing
Demand-supply gap
16
13.8 13.2
12 5
14.1
1516
financial crisis easing
5.5
9.1 7.9
6.0 6.6 7.1
10.9
12.5
5 7
8.3
5
10
12
5.7 4.7 4.3
5.4
0
8
( )
‐54
Page 18 | 7 August 2013 | 1H & 2Q 2013 Performance Review
(8.4) ‐10-end 2006 end 2007 end 2008 end 2009 end 2010 end 2011 end 2012 end 2013F end 2014F
Source: Alphaliner, July 2013
Liner Results SummaryRevenue Core EBIT
7
4.0 100 US$m
4,004 3,695
5,000 US$m
Core EBIT Core EBIT margin (%)
(45)
(146) (4.0)
-
(100)1,994 1,728
2,500
0.4
(2.6)(6.0)
(4.0)
(239)(8.0)(300)
2Q12 2Q13 1H12 1H13-
2Q12 2Q13 1H12 1H13
% ▲Better/ (Worse) % ▲Better/ (Worse) Core EBIT % ▲Better/ (Worse)
Core EBIT % ▲Better/ (Worse)
1H13 Revenue decreased 8% or US$309m YoY, while 1H13 Core EBIT improved 39% or US$93m YoY due to continued yield focus & a lower cost base.
(13) (8)Better/ (Worse) Better/ (Worse)
n.m. 39
US$93m YoY due to continued yield focus & a lower cost base. Soft macro conditions, weak off peak season and industry oversupply dampened Average Revenue per FEU to US$2,347.Cost of sales per FEU was 8% lower YoY due to operational cost efficiencies and
Page 19 | 7 August 2013 | 1H & 2Q 2013 Performance Review
lower bunker prices. Bunker prices averaged US$621/MT or 10% lower YoY.
Volume and Average Revenue/FEU Trend
2 6152,650 1,500
Volume('000 FEUs) US$/FEU
2,598
2 539 2 539
2,615 2,601
1,200
Rev/FEU reduced 11%
764 692 699
824 791
720 707 802 772
705
2,539 2,539
2,450
600
900
2,342
2,420 2,419
2,376
2 315
300
600
2,315
2,250 -1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Total Volume (LHS) Average Revenue/FEU (RHS)
Page 20 | 7 August 2013 | 1H & 2Q 2013 Performance Review
( ) g ( )
Operational UpdateSoft global econom contin ed to affect ol me and freight ratesVolume (‘000 FEUs) 1H13 1H12 % ▲ 2Q13 2Q12 % ▲Transpacific 419 418 - 195 202 (3)
Soft global economy continued to affect volume and freight rates
Intra-Asia 660 668 (1) 320 319 -
Asia-Europe 210 242 (13) 101 110 (8)
Latin America 100 103 (3) 48 49 (2)
Transatlantic 88 80 10 41 40 3
Total 1,477 1,511 (2) 705 720 (2)
Average Revenue/FEU (US$) 1H13 1H12 % ▲ 2Q13 2Q12 % ▲Transpacific 3,465 3,741 (7) 3,458 3,651 (5)Intra-Asia 1,439 1,579 (9) 1,454 1,732 (16)Asia-Europe 2,284 2,422 (6) 2,144 2,750 (22)Latin America 3,522 3,497 1 3,448 3,596 (4)Transatlantic 2,650 2,894 (8) 2,675 2,815 (5)
Page 21 | 7 August 2013 | 1H & 2Q 2013 Performance ReviewNote: Based on point of sailing and inclusive of headhaul and backhaul trade.
Total 2,347 2,513 (7) 2,315 2,615 (11)
Fleet renewal program on track, over 50% of vessels delivered
8,100 TEU 9,000 TEU 14,000 TEUTEUs
Total vessels
140,000
160,000
180,00014
80,000
100,000
120,00010
6 x 14,000 TEU
4 x 14 000 TEU
4 x delivered1
2
2
20 000
40,000
60,000
80,000
6 x 9,000 TEU
6 x 9,000 TEU
4 x 14,000 TEU
3 x delivered1
N t
0
20,000
2013 2014
2 x 8,100 TEU 2 x delivered1
As at end-1H13
Page 22 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Note: 1) The 19 delivered vessels as at end-1H13 includes 10 x 10,000 TEU vessels delivered in 20122) 5 out of the 10 x 14,000 TEU vessels for delivery between 2013 and 2014 will be chartered out to MOL
Liner business conditionsIndustry
• Rate increases in Transpacific and Asia-Europe going into peak season
• Intra-Asia trade relatively robust despite cascading of vessels
C t ti d t i t i t• Customers cautious due to macro-economic uncertainty
• Bunker prices steady around US$600/MT
APL• Maintain yield focus, efficiencies & cost discipline
Page 23 | 7 August 2013 | 1H & 2Q 2013 Performance Review
4 L i ti4. Logistics By Jim McAdamPresident, APL Logistics
Logistics 1H13 Results Highlights
Growth across major markets• Revenue of US$781m +4% YoY
Revenue growth led by emerging markets
Revenue of US$781m, +4% YoY• Core EBIT of US$26m, +18% YoY
Revenue growth led by emerging markets• Emerging markets revenue +23% YoY, led by Asia/Middle East• International Services +15% YoY on improved Asian vendor
logistics• Contract Logistics -2% YoY, mainly due to unscheduled auto plant
shut-down in North America
Strict cost discipline improves profitability• Core EBIT margin improves from 2.9% to 3.4%
Page 25 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Core EBIT margin improves from 2.9% to 3.4%
Logistics Results HighlightsRevenue Core EBIT
755 781 750
1,000 US$m
3 4
Revenue Core EBITCore EBIT Core EBIT margin (%)
361 354 500
750
2.5 2.9 2.93.4
-
250
2Q12 2Q13 1H12 1H13
C EBIT % ▲ C EBIT % ▲
• Logistics achieved revenue of US$781 million in 1H13 growing 4% year-on-year (YoY)
% ▲ Better/ (Worse) % ▲ Better/ (Worse)
(2) 4
Core EBIT % ▲Better/ (Worse)
Core EBIT % ▲Better/ (Worse)
11 18
• Logistics achieved revenue of US$781 million in 1H13, growing 4% year on year (YoY), led by emerging markets in Asia/Middle East.
Contract Logistics achieved revenue of US$498 million, a 2% YoY decreaseInternational Services achieved revenue of US$283 million, a 15% increase YoY
Page 26 | 7 August 2013 | 1H & 2Q 2013 Performance Review
• Core EBIT of US$26 million for 1H13, an 18% increase YoY.
APL Logistics Revenue Trend by Region
28% (Asia/Middle East) 23% (Asia/Middle East)
Growth led by Asia/Middle East, up +23% YoY
28% (Asia/Middle East)
$215
23% (Asia/Middle East)
$175
63% (Americas)
$493$73
68% (Americas)
$511
$69$781 $755
9% (Europe) 9% (Europe)
1H13 Revenue Breakdown –by Region (US$m)
1H12 Revenue Breakdown – by Region (US$m)
Page 27 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Performance Breakdown
International Logistics Core EBIT surges +40% YoY
1H13 1H12% ▲
Better/ 2Q13 2Q12% ▲
Better/1H13 1H12 Better/ (Worse)
2Q13 2Q12 Better/ (Worse)
Revenue (US$m) 781 755 4 354 361 (2)Revenue (US$m) 781 755 4 354 361 (2)
• Contract Logistics 498 508 (2) 224 239 (6)
• International Services 283 247 15 130 122 7
Core EBIT (US$m) 26 22 18 10 9 11
• Contract Logistics 12 12 - 4 7 (43)
• International Services 14 10 40 6 2 200
Core EBIT Margin (%) 3.4 2.9 17 2.9 2.5 16
• Contract Logistics 2.4 2.4 - 1.8 2.9 (38)
Page 28 | 7 August 2013 | 1H & 2Q 2013 Performance Review
• International Services 5.1 4.0 27 4.9 1.6 206
Revenue and Core EBIT Margin Trend
15 0%35Weekly Revenue (US$m) (LHS) Core EBIT Margin (%) (RHS)
Weekly Revenue(US$m)
Core EBITMargin (%)
15.0%
30
35
5 7% 6.0%
10.0%25
5.7%
3.8%4.8% 5.1%
3.3%2.5%
5.2%
3.7%2.9%
5.0%
15
20
0.0%101Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Page 29 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Logistics business conditions
Industry• Inclement weather in developed markets slows down retail and consumer
sectors in 2Q13• Domestic consumption in emerging markets remains strong despite
modest demand growth in developed markets
APL Logistics
• Greater adoption of multi-channel retailing provides new supply chain management opportunities in emerging markets
APL Logistics• International Logistics volumes and operating margins improve YoY
(+15% and +40% respectively), driven by consumer & retail sectors in i k temerging markets
• Within Contract Logistics: Land Transportation and Warehousing/ Distribution grew +19% and +13% YoY respectively, driven by Asia and Latin America partly offsetting automotive sector weakness
Page 30 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Latin America, partly offsetting automotive sector weakness• Continue to improve efficiencies and cost discipline
5 G O tl k5. Group Outlook
Group Outlook
General market conditions and freight rates continued to deteriorate in thesecond quarter of 2013, with few signs of a quick recovery. Along with poormarket demand, the container shipping industry remains burdened with over-
it d k f i ht t NOL’ t b ill ti t icapacity and weak freight rates. NOL’s cost base will continue to improvethrough operating efficiencies, aided by lower vessel slot costs with the deliveryof its larger and more fuel-efficient ships. Barring unforeseen circumstances, theGroup remains on track to deliver a better performance than in 2012.p p
Page 32 | 7 August 2013 | 1H & 2Q 2013 Performance Review
A diAppendix
Group Financial Highlights
US$m 1H13 1H12% ▲
Better/ 2Q13 2Q12% ▲Better/US$m 1H13 1H12 Better/
(Worse)2Q13 2Q12 Better/
(Worse)
Revenue 4,435 4,711 (6) 2,064 2,333 (12)
Core EBITDA 35 (60) n.m. 37 91 (59)( ) ( )
Core EBIT (before non-recurring items)
(120) (217) 45 (35) 16 n.m.
Non-recurring items 201 (111) n.m. 9 (112) n.m.
EBIT 81 (328) n.m. (26) (96) 73
Net profit/(loss) to owners of the company
41 (371) n.m. (35) (118) 71
Page 34 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Financial Highlights by Business Segment
Revenue (US$m) 1H13 1H12% ▲
Better/ (Worse)
2Q13 2Q12% ▲
Better/ (Worse)
Liner 3 695 4 004 (8) 1 728 1 994 (13)Liner 3,695 4,004 (8) 1,728 1,994 (13)
Logistics 781 755 4 354 361 (2)
Elimination (41) (48) 15 (18) (22) 18
Total Revenue 4,435 4,711 (6) 2,064 2,333 (12)
C EBIT (US$ ) 1H12 1H11% ▲
/ 2Q13 2Q12% ▲
/Core EBIT (US$m) 1H12 1H11 Better/ (Worse)
2Q13 2Q12 Better/ (Worse)
Liner (146) (239) 39 (45) 7 n.m.
Logistics 26 22 18 10 9 11Logistics 26 22 18 10 9 11
Total Core EBIT (120) (217) 45 (35) 16 n.m.
Page 35 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Liner Results Summary
US$m 1H13 1H12% ▲Better/
(Worse)2Q13 2Q12
% ▲Better/
(Worse)
Revenue 3 695 4 004 (8) 1 728 1 994 (13)Revenue 3,695 4,004 (8) 1,728 1,994 (13)
Core EBITDA 3 (87) n.m. 24 79 (70)
Core EBIT (146) (239) 39 (45) 7 n.m.
EBIT 26 (349) n.m. (37) (105) 65
Core EBIT margin (%) (4.0) (6.0) 33 (2.6) 0.4 n.m.
Page 36 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Logistics Results Highlights
US$m 1H13 1H12% ▲
Better/ (Worse)
2Q13 2Q12% ▲Better/
(Worse)
Revenue 781 755 4 354 361 (2)
Core EBITDA 32 27 19 13 12 8
Core EBIT 26 22 18 10 9 11Core EBIT 26 22 18 10 9 11
EBIT 55 21 162 11 9 22
Core EBIT margin (%) 3.4 2.9 17 2.9 2.5 16
Page 37 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Fleet Capacity Change
APL Fleet APL FleetAPL FleetStart FY2013
129 vessels
APL FleetEnd 2Q13
129 vessels
Charters expiring
2H13 to 2014Net capacity
587,000 TEUsOwned:41%
Chartered: 59%
665,000 TEUsOwned: 48%
Chartered: 52%
2H13 to 2014
23 vessels*135,000 TEUs
change
+78,000 TEU
Average size4,550 TEU
Average size5,160 TEU
1 Jan 2013 28 June 2013Current Future1 Jan 2013 28 June 2013
Page 38 | 7 August 2013 | 1H & 2Q 2013 Performance Review
* Linehaul vessel charters only
Note: APL fleet capacity as at end-Q12 was 630,000 TEU
Group Fuel and Currency Exposures
Bunker
• The Group continues to recover part of its fuel price increases from customers through bunker adjustment factors.j
• The Group also maintains a policy of hedging its bunker exposures.
Foreign exchange
• Major foreign currency exposures are in Euro, Singapore Dollar, Canadian Dollar, Japanese Yen and Chinese Renminbi.
• The Group maintains a policy of hedging its foreign exchange exposures.
Page 39 | 7 August 2013 | 1H & 2Q 2013 Performance Review
Neptune Orient Lines Ltd456 Alexandra Road, NOL BuildingEnd of Presentation
Thank You
NOL BuildingSingapore 119962Tel: (65) 6278 9000Fax: (65) 6278 4900Company registration number : 196800632Dnumber : 196800632DWebsite: www.nol.com.sg