Our Ref.: S/2020/JMT July 31, 2020€¦ · REPORTED FINANCIAL HIGHLIGHTS Q1FY21 Q1FY20 (Amount in...
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www.greatship.com
Our Ref.: S/2020/JMT July 31, 2020
BSE Limited National Stock Exchange of India Limited 1st Floor, Phiroze Jeejeebhoy Towers, Exchange Plaza, 5th Floor, Plot No. C/1, Dalal Street, Bandra Kurla Complex, Bandra (East), MUMBAI – 400 001 Mumbai – 400 051
Dear Sir,
Further to our letter dated July 30, 2020, we enclose herewith Quarterly Presentation
for Q1FY21.
You are requested to take note of the above.
Thanking You, Yours faithfully, For The Great Eastern Shipping Co. Ltd.
Jayesh M. Trivedi President (Secl. & Legal) & Company Secretary Email Id : [email protected]
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QUARTERLY RESULTS
UPDATES – Q1FY21
31 July 2020
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Except for historical information, the statements
made in this presentation constitute forward
looking statements. These include statements
regarding the intent, belief or current expectations
of GE Shipping and its management regarding the
Company’s operations, strategic directions,
prospects and future results which in turn involve
certain risks and uncertainties. Certain factors may
cause actual results to differ materially from those
contained in the forward looking statements;
including changes in freight rates; global
economic and business conditions; effects of
competition and technological developments;
changes in laws and regulations; difficulties in
achieving cost savings; currency, fuel price and
interest rate fluctuations etc. The Company
assumes no responsibility with regard to publicly
amending, modifying or revising the statements
based on any subsequent developments,
information or events that may occur.
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FINANCIAL
RESULTSQ1 FY 2020-21
4
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REPORTED FINANCIAL
HIGHLIGHTS
Q1FY21 Q1FY20 (Amount in Rs. Crs) Q1FY21 Q1FY20
Income Statement
1,025 569 Revenue (including other income) 1,197 773
637 165 EBITDA (including other income) 717 261
465 (50) Net Profit 468 (54)
Balance Sheet
10,284 10,283 Total Assets 14,050 14,252
5,500 5,008 Equity 7,229 6,755
3,560 4,078 Total Debt (Gross) 5,194 5,917
730 1,599 Long Term Debt (Net of Cash) 1,201 2,235
Cash Flow
637 218 From operating activities 691 305
17 64 From investing activities 31 26
(125) (86) From financing activities (190) (166)
530 197 Net cash inflow/(outflow) 531 165
GE Shipping Q1FY21 consolidated Net Profit at Rs. 468 Crores
5
Standalone ConsolidatedKey Figures
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1) The impact of the exchange rate on foreign currency loans and current assets and liabilities, including cash and bank balances, has been removed
2) NCD & Currency Swap:
• Funds raised through NCDs have been swapped into USD using INR-FCY swaps, thus creating synthetic fixed rate USD loans.
• The MTM change of these swaps impacts the reported numbers.
• Normalized numbers are worked out after making necessary adjustments to reported numbers to reflect the effective cost of the synthetic USD loans.
NORMALIZED FINANCIAL
NOTES
6
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NORMALIZED FINANCIAL
HIGHLIGHTS
Q1FY21 Q1FY20 (Amount in Rs. Crs) Q1FY21 Q1FY20
Income Statement
957 631 Revenue (including other income) 1,128 833
593 232 EBITDA (including other income) 672 327
422 17 Net Profit 423 12
Balance Sheet
10,284 10,283 Total Assets 14,050 14,252
5,500 5,008 Equity 7,229 6,755
4,169 4,722 Total Debt (Gross) 5,803 6,561
1,339 2,243 Long Term Debt (Net of Cash) 1,810 2,879
Cash Flow
637 218 From operating activities 691 305
17 64 From investing activities 31 26
(125) (86) From financing activities (190) (166)
530 197 Net cash inflow/(outflow) 531 165
Standalone ConsolidatedKey Figures
7
GE Shipping Q1FY21 consolidated Normalized Net Profit at Rs. 423 Crores
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Standalone ConsolidatedKey Figures
8
*Annualized figures
NORMALIZED FINANCIAL
HIGHLIGHTS
Q1FY21 Q1FY20 Q1FY21 Q1FY20
Key financial figures
31.93% 1.36% *Return on Equity (ROE) (%) 24.12% 0.69%
19.58% 2.60% *Return on Capital Employed (ROCE) (%) 15.03% 3.26%
0.76 0.94 Gross Debt/Equity (x) 0.80 0.97
0.24 0.45 Net Debt/Equity (x) 0.25 0.43
28.70 1.14 Earnings per share, EPS (INR/Share) 28.77 0.78
36.59 9.38 Cash Profit per share (INR/Share) 41.08 13.56
- - Dividend per share (INR/Share) - -
456 383 Net Asset Value per share (INR/Share) 494-536 452-477
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PERFORMANCE REVIEW
Revenue Days Q1 FY21 Q1 FY20
Owned Tonnage 4,018 4,142
Inchartered Tonnage - 35
Total Revenue Days 4,018 4,177
Total Owned Tonnage (mn.dwt) 3.70 3.85
Revenue Days Q1 FY21 Q1 FY20
Offshore Logistics 1,626 1,470
Drilling Services 306 314
Total 1,932 1,784
Break up of Revenue days (Shipping)
Break up of Revenue days (Offshore)
Average TCYs earned over last few quarters in various (Shipping) categories
Average (TCY $ per day) Q1 FY21 Q4 FY20 Q-o-Q Change Q1 FY20 Y-o-Y Change
Crude Carriers 40,109 32,338 24% 14,824 171%
Product Carriers 27,112 18,274 48% 14,581 86%
LPG Carriers 28,908 25,932 11% 16,774 72%
Dry Bulk 7,218 8,321 -13% 10,998 -34%9
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REVENUE VISIBILITY & COVERAGE
CategoryExtent of coverage of fleet’s
operating days Revenue Visibility
Crude Carriers 27%
Rs 513 CrProduct Carriers 16%
LPG Carriers 79%
Dry Bulk 23%
CategoryExtent of coverage of fleet’s
operating daysRevenue Visibility
Jackup Rigs 94%
Rs 472 CrAHTSV 72%
MPSVV 68%
PSV/ROVSV 92%
Category-wise coverage of operating days (Shipping) --- FY21
Category-wise coverage of operating days (Offshore) --- FY21
10
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FLEET PROFILE
SHIPPING
Fleet DWT Number of Ships Average Age (Yrs.)
Crude Carriers 1,461,591 11 14.33
Product Carriers 987,207 17 12.77
Gas Carriers 224,113 5 18.89
Dry Bulk Carriers 1,026,462 13 7.78
Total 3,699,373 46 12.37
OFFSHORE
Fleet Number of Units Average Age (Yrs.)
Jack Up Rigs 4 8.81
Platform Supply Vessels 4 10.96
Anchor handling Tug Cum Supply Vessels 8 10.82
Multipurpose Platform Supply & Support Vessels 2 10.28
ROV Support Vessels 5 8.98
11
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41
78 71
60
74
553
0
100
200
300
400
500
600
0
20
40
60
80
100
Jun-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25
GESCO - Standalone (USD mn)
Repayments Loan O/s (RHS)
GESCO STANDALONE
DEBT REPAYMENT SCHEDULE (NEXT
5 YEARS)
12
GESCO: We have effective all-in USD cost of debt of less than 4%. 85% of debt portfolio is fixed.
USD
Mill
ion
USD
Millio
n
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IMPACT OFCOVID-19
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IMPACT OF COVID-19
ON SHIPPING
15
Operational Disruptions due to COVID-19
• Drydocking
• Crew Changes
• S&P transactions
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SUPPLY SIDE - SHIPPING
16
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8.2%0%
10%
20%
30%
40%
50%
Crude tankers Orderbook (% of Total fleet)
Average Historical Orderbook
6.4%
0%
20%
40%
60%
80%
Product tankers Orderbook (% of Total fleet)
Average Historical Orderbook
Historical Average: 24%
7.2%
0%
20%
40%
60%
80%
100%
Dry Bulk Orderbook (% of Total fleet)
Average Historical Orderbook
Historical Average: 28%
11.0%
0%
10%
20%
30%
40%
50%
LPG Carriers Orderbook (% of Total fleet)
Average Historical Orderbook
Historical Average: 20%
LOWEST ORDERBOOK
IN 20 YEARS
Historical Average: 21%
17Source – Industry Reports
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SCRAPPING
Scrapping was low for Crude and Product tanker sector in H1CY2020
Vessel
Category
Fleet
(mn Dwt)Scrapping (% of beginning world fleet)
15 Jul 20 H1CY20 2019 2018 2017 2016 2015 2014
Crude 423 0.17% 0.61% 4.62% 2.35% 0.35% 0.23% 1.60%
Product 162 0.23% 0.43% 1.64% 1.42% 0.62% 0.61% 1.19%
Dry Bulk 900 0.87% 0.92% 0.54% 1.77% 3.67% 4.03% 2.25%
Source – Industry Reports
18
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0%
5%
10%
15%
20%
25%
Crude Tankers Product Tankers Dry Bulk
Assets above 15 years as % of total fleet
Age: 16-20 Years (% of Total Fleet) Age: >20 years (% of Total Fleet)
SCRAPPING POTENTIAL
ASSET CLASS WISE
19Source – Industry Reports
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OIL CONTANGO & FLOATING STORAGE
20
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BRENT OIL PRICE &
OIL CONTANGO
During March-April’20, Oil Contango was above the floating storage cost economics therefore increased in floating storage demand. While currently, Oil Contango narrowed, hence floating storage also lowered.
21
58.8965.2
20
40In March, OPEC+ failed to reach an agreement on production cuts
Source – Industry Reports
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OIL CONTANGO Vs.
FLOATING STORAGE OF OIL
22
Peaked on 8-May-20
9.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Jan
-18
Mar
-18
May
-18
Jul-
18
Sep
-18
No
v-1
8
Jan
-19
Mar
-19
May
-19
Jul-
19
Sep
-19
No
v-1
9
Jan
-20
Mar
-20
May
-20
Jul-
20
Crude Tankers 10k+ dwt (storage as % of fleet)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Jan
-18
Mar
-18
May
-18
Jul-
18
Sep
-18
No
v-1
8
Jan
-19
Mar
-19
May
-19
Jul-
19
Sep
-19
No
v-1
9
Jan
-20
Mar
-20
May
-20
Jul-
20
Product Tankers 10k+ dwt (storage as % of fleet)
Note: These excludes dedicated storage
Peaked on8-May-20
8.8%
Source – Industry Reports
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DEMAND SIDE - SHIPPING
23
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TANKERMARKET
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CRUDE OIL
DEMAND & SUPPLY IMPACT
25Sources: Industry Reports
kbpd: Thousand Barrels Per Day
(1,025)
(4,146) (4,251)
(11,875)(13,412)
(12,520)
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Crude Oil Demand Y/Y Change (kbpd)
(23) (369)
927 1,215
(8,838)(10,696)
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Crude Oil Supply Y/Y Change (kbpd)
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DECLINE IN CORE PRODUCTS
DEMAND DURING JAN-JUN 2020
26
Sources: Industry Reports
-1%
-7%
-15%
-32%
-19%
-13%-3% -6%
-5%
-17%-12%
-5%-5%-7%
-29%
-63% -65%
-57%
3%
-5%-6%
-12%
-5% -4%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Product-wise fall in demand y/y (%)
Gasoline Gasoil Jet Naphtha
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DRY BULKMARKET
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DRY BULK
MARKETS
Coal 28%
Iron Ore24%Grains
9%
Minor Bulks39%
Commodity wise Break up of Global DB demand (%)
China 44%
India 8%Europe
10%
JKT 20%
SEA 8%Others 10%
Major Importers of - Iron Ore/Coal/Grains (%)
Australia 38%
Indonesia 14%
Russia 6%
S.Africa/Other Africa 5%
Brazil 14%
Argentina/S.America, …
Canada+US, 9%
EuropeUK/Med 4%
Colombia 2% Others 5%
Major Exporters - Iron ore/Coal/Grains (MMT,%)
28
Sources: Industry Reports
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-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2016 2017 2018 2019 H1 CY19 H1 CY20
World Steel China Steel % Growth World % Growth China
CHINA & WORLD
STEEL PRODUCTION
China Steel Production
increased marginally by
3% in H1CY2020 Y-O-Y.
Whereas, World Steel
Production growth was
negative 4%.
Source – Industry Reports
Ste
el P
rod
ucti
on
(in
Mil
lio
n t
on
nes
)
29
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30
24
30
26
35 35 36 3634
37
34 33 33
29
22
19
30 29
34
28
31
33
2725
27
22 21
24
22
30
1
6
11
16
21
26
31
36
41
Total BR IO exports
Total BR Exports (Mt)
BRAZIL IRON ORE
EXPORTS
30
Source – Industry Reports
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Greatship (India)
Limited(a 100% subsidiary)
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OFFSHORE BUSINESS
FLEET PROFILE
Fleet Utilization
Current Owned Fleet Type Fleet CountExtent of coverage of fleet's operating days
(FY21)
Jack Up Rigs (350ft) 4 94%
Anchor Handling Tug cum Supply Vessels
(AHTSV)8 72%
Multipurpose Platform Supply and Support
Vessels (MPSSV)2 68%
Platform Supply Vessels (PSV) / ROV Support
Vessels (ROVSV)9 92%
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As on 30th June 2020
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OFFSHORE
E&P SPENDING
Source – Industry Reports
The E&P spending after declining marginally in 2018 was flattish in 2019. Spending in 2020 is expected to
see a sharp fall of about 20-30%.
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KEY POINTS ON E&P MARKETS
Q2CY2020
Source – Industry Reports
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• The steep fall in oil price and Covid-19 impact on the world economy has stalled the recovery.
• Some regions have witnessed early terminations & renegotiations. As a result charter rates have again come
under pressure.
Day Rates
• Rigs: Competitive fleet has remained unchanged over last 1 year and has shrunk by 6-7% over the last 5
years due to scrapping and cold stacking.
• OSV’s: Competitive fleet has reduced marginally over last 1 year and by about 8-9% over the last 5 years.
• Very few new orders for vessels as well as rigs in last 4-5 years.
Fleet Growth
• Rigs: 60-70% (Term) (Decreased by about 3.5% from June19 levels and by about 5% in the last quarter)
• Vessels: 40-50% (Term) (Utilization remained almost flattish from June 19 till Mar 20 but decreased by about
6% during last quarter)
Global Fleet Utilization
• OSVs: 80%-90%(CY2019)
• Rigs: 50% - 60%(CY2019)Slippage
34Source – Industry Reports
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GLOBAL FLEET SUPPLY
OFFSHOREFleet Profile
Number Jackup Rigs PSVs + AHTSVs
Current Fleet 526 3591
Orderbook 47 178
O/B to current fleet 8.9% 5%
Scrapping over last 5 years (as %age of fleet) 3.64% 1.9%
No. of Vessels/Rigs more than 20/30 years old
(as %age of fleet)39% 19%
Source – Industry Reports
Fleet composition is expected to correct over next few years with older vessels and rigs expected to get scrapped.
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23 23 32
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97 218
0
50
100
150
200
250
0
20
40
60
80
100
120
Jun-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25
GIL (USD mn)
Repayments Loan O/s (RHS)
GIL STANDALONE
DEBT REPAYMENT SCHEDULE (NEXT
5 YEARS)
36
USD
Mill
ion
USD
Millio
n
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• Most challenging years for the offshore sector since the late 80s.
• Utilization levels across asset classes dropped to historic lows, charter rates came down to levels that barely generated any +ve EBIDTA.
• Large part of the industry went through financial restructuring/reorganization/forced consolidation.
• How did we fare?
Mar 15 : USD 118 M
Mar 20: USD 138 M
Mar 15: USD 555 M
Mar 20: USD 225 M
Net Bank Debt to Equity:
Mar 15: 0.75
Mar 20: 0.22
Gross bank debt
Cash on the balance sheet:
LAST 5 YEARS: SNAPSHOT
OFFSHORE
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KEY VALUATIONS CONSIDERATIONS
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0%
10%
20%
30%
40%
50%
60%
-
50
100
150
200
250
300
350
400
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Q1FY2021
Net Debt/Equity & Market Value of Fleet
Net Debt (LHS) Net Debt to Market Value of Fleet Net Debt to Equity
NET DEBT/EQUITY & MARKET VALUE
OF FLEET - STANDALONE
Fleet Expansion
Phase
Net Debt Reduction
Phase
39
USD Mn
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0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0
100
200
300
400
500
600
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Q1FY21
Consolidated NAV Share Price/Consol. NAV (RHS)
SHARE PRICE TO
CONSOLIDATED NET ASSET VALUE
40
INR
/Sh
are
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-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Q1FY21
Market Cap Consolidated Cash & Cash Equivalent
MARKET CAPITALIZATION VS
CONSOLIDATED CASH & CASH
EQUIVALENTINR Crores
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Market Positives (Shipping):• Historically low orderbook• Potential Scrapping• Demand/Supply – Finely balanced
Market Negatives (Shipping):• Commodity demand uncertainities
Market Negatives (Offshore):• E&P spends reduced significantly
Company Positives:• Deleveraged balance sheet• Proven ability to manage shipping cycles• Capital Available for future buying opportunities
SUMMARY –
SHIPPING & OFFSHORE
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visit us at www.greatship.com
THANK YOU
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