Q2 Presentation - Wallenius Wilhelmsen Logistics ASA · PDF fileOrganizational restructuring...
Transcript of Q2 Presentation - Wallenius Wilhelmsen Logistics ASA · PDF fileOrganizational restructuring...
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Q2 PresentationAugust 9th 2017
Craig Jasienski, President & CEO
Rebekka Glasser Herlofsen, CFO
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Agenda
2
Financial Performance
Market and Business Outlook
Business Update
Summary and Q&A
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BUSINESS UPDATE
by Craig Jasienski
3
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Business update Q2 at a glance…
4
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Still pressure on ocean rates
Positive development for landbased continues
Realization of synergies well on the way
Volume, cargo and trade mix show positive development
Organizational restructuring completed
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Organizational restructuring completed
5
- Organizational restructuring completed with a ~20% reduction in office staff
- USD 20 million in personnel related restructuring costs accounted for in the second quarter, well below savings achieved
- Landbased separation in place, tasks from owners absorbed and organizations from WW ASA and WWL AS merged
- Foundation for increased cooperation between WWL Ocean and EUKOR established
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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Realization of synergies well on the way…
6
Business Update Financial Performance Market and Business Outlook Summary and Q&A
- Approximately half of the targeted annualized synergies have been confirmed, through actions related to the organizational restructuring and procurement
- USD 5 million already realized in Q2 (annualized effect of USD 20 million)
- The remainder of confirmed synergies gradually taking effect over the next 3-9 months
- Realization of remaining synergies on fleet optimization, ship management and IT carry a longer lead time
- USD 100 million synergy target within 2019 remains
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Volume and cargo mix show positive development
7
Comments
• Ocean transported volumes up 12% q-o-q,
largely driven by seasonality:
• Increased exports out of Asia, mainly to Europe and
North America
• Increased exports from Europe to Asia
• Increased exports from Europe to Oceania
• Improved cargo mix with a high & heavy share
of 24.8%, up from 23.2% q-o-q
• Ocean transported volumes up 6% y-o-y
primarily driven by higher volumes
transported in foundation trades, in particular
export from Asia to Europe
Volume and cargo mix developmentMillion CBM and %
Business Update Financial Performance Market and Business Outlook Summary and Q&A
0
5
10
15
20
25
30
35
6
22
20
16
8
0
12
10
2
4
18
14
Q1’17
15.9
23%
+6%
Million CBM
17.8
19.4
18.018.2
Q2’15
18.3
24% 24%
Q4’14
23%
20%
Q2’14
25%
Q1’15 Q3’15Q3’14
18.7
25%
22%
20.5
Q4’15
19.6
15.2
%
24%
Q1’16
21%
24%
16.816.1
Q2’16
24%
Q3’16
+12%
Q4’16
25%
Q2’17
15.5
HH share of volumesVolume
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WWL trade routes
EUKOR trade routes
ARC trade routes
8
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Good seasonal development in all foundation trades
Atlantic Shuttle
3.0
Q2 ’16
2.9
Q1 ’17
3.3
+5%-10%
Q2 ’17
EU/NA – Oceania1)
+18%
Q2 ’17Q2 ’16
1.82.0
+12%
Q1 ’17
1.7
EU - ASIA
+14%
3.2
Q1 ’17 Q2 ’17
2.8
Q2 ’16
3.1
+1%
Asia - EU
+22%+22%
2.7
Q1 ’17
2.7
Q2 ’16 Q2 ’17
3.3
Asia - NA
Q2 ’16
3.4
+5%
Q2 ’17
3.4
Q1 ’17
3.3
+2%
Asia - SAWC
1.0 1.1
Q2 ’17Q1 ’17
+16%
Q2 ’16
0.9
+9%
Note: Prorated volumes on operational trade basis in CBM
1) Including Cape sailings (South Africa)
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9
Business Update Financial Performance Market and Business Outlook Summary and Q&A
But there is still significant pressure on rates
80
85
90
95
100
105
Q2’17Q1’17Q2’15 Q4’16Q3’16Q4’15 Q2’16Q1’16Q1’15 Q3’15Q2’14 Q3’14 Q4’14
CommentsNet freight / CBM development1
Indexed to 100 per Q2 2014
• Net freight / CBM development not only
impacted by rates, but also trade, customer
and cargo mix
• There is still significant pressure on rates in
several tenders due to tough competition
and customer procurement focus
Note: Unprorated volumes excluding US flag operations
1) Net freight = Revenues adjusted for BAF elements such as BAF and SRC
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Total fleet is 127 vessels, with one delivery in the second quarter
10
Fleet developmentCEU in 1000, # of vessels
Comments
• WWL ASA operates approximately 20% of the global
car carrier fleet
• In Q2, two chartered-in vessels were redelivered to
external owners and a Post-Panamax newbuilding,
“Morning Prosperity”, was delivered in June for
EUKOR
• Regular chartering in and out of short term positions
continued throughout the quarter to balance
capacity
• Four Post-Panamax vessels under construction and
expected to enter service between 2017 and 2019,
with remaining installments of USD 170 million
• The group has the flexibility to redeliver three
vessels by end of 2017 and has 18 vessels on short
term charters
125 127128127130
134133137139140143
147146
0
20
40
60
80
100
120
140
160
180
0
1,000
800
600
400
200
Q3’15
917897
Q2’15
900
Q4’14
886924
Q2’14 Q3’14
CEU ‘000
934
# of vessels
Q3’ 16
865
929
Q2’17
869873
Q4’16Q2’ 16
889
Q1’ 16
865
Q1’15 Q1’17
873
Q4’15
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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• Continued strong performance for technical services supported by stable volumes and high content value adding services for VSA
• Build-up of auto inventories in the US continued in Q2 2017
• Terminals experienced improved performance in line with overall increase in ocean volumes with the terminals in Baltimore, Port Hueneme, Pyeongtaek and Zeebrugge as the main positive contributors
• On the business development side several smaller positive developments took place
• Network expanded with three new yard management contracts (two in Mexico for VSA and one in Europe)
• Expansion of Oxnard VPC to facilitate growth with new and existing customers
• 25% of Vehicle Services South Africa (VSS) sold to local new partner to ensure compliance and improve competitive position
• Interesting pipeline of investment and M&A opportunities for landbased
The positive development for landbased continues…
11
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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12
Financial Performance
by Rebekka Glasser Herlofsen
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Consolidated results – second quarter
13
• Extraordinary items in the second quarter include
• Merger accounting loss of USD 62 million
• Org. restructuring cost of USD 20 million
• Total income adjusted for the merger accounting loss
was USD 974 million, up 9% q-o-q and 6% y-o-y
• EBITDA adjusted for the extraordinary items was
USD 188 million, up 32% q-o-q
• ROCE in the second quarter was 6.0%3
• Underlying improvement in financial performance is
driven by higher transported volumes, reduced SG&A
costs and the US flag operations, as well as improved
results from the landbased business.
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Comments
1) Adjusted for extraordinary items2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time3) ROCE calculated as annualized EBIT adjusted for extraordinary items minus restructuring costs divided by average CE in the quarter
Consolidated results - Total income and EBITDA1, 2
USD million
Total income EBITDA
912
62
890913869
919
Q2 ’17
974
+9%+6%
Q1’17Q3’16 Q4’16Q2’16
82
31
143143
162
Q1’17
188
Q2’17
179
Q3’16Q2’16 Q4’16
+16% +32%
Extraordinary items
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Ocean segment – second quarter
14
Total income and EBITDA ocean segment1, 2
USD million Comments
Business Update Financial Performance Market and Business Outlook Summary and Q&A
• Ocean income was USD 798 million, up 11%
since previous quarter
• EBITDA adjusted for extraordinary items
improved 32% q-o-q
• Increase in transported volumes, reduced
SG&A cost, lower net bunker costs and
revenues from the US flag operations all
contributed to the improved result
• Continued pressure on rates
Total income EBITDA
798
719744
707759
+11%
Q2’16
+5%
Q2 ’17Q1’17Q3’16 Q4’16
1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time
1731
123125
142
162166
Q4’16Q3’16
+14%
Q2’16 Q2’17Q1’17
+32%
Extraordinary items
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Landbased segment – second quarter
15
Total income and EBITDA landbased segment1, 2
USD million Comments
Business Update Financial Performance Market and Business Outlook Summary and Q&A
• Landbased income was USD 192 million, up 3%
since previous quarter
• EBITDA adjusted for organizational restructuring
cost was USD 27 million, up 21% since previous
quarter
• Continued strong performance for technical
services supported by stable volumes and an
increase in value-adding services for VSA
• Terminals show improved performance in line with
ocean volumes, with the terminals in Baltimore,
Port Hueneme, Pyeoengtaek and Zeebrugge as the
main positive contributors
192186184
177176
Q2’16 Q4’16
+3%
Q3’16
+9%
Q2 ’17Q1’17
26
2221
20
23
Q1’17Q4’16 Q2 ’17
27
1
+18%
Q3’16
+21%
Q2’16
Extraordinary items
Total income EBITDA
1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time
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Consolidated results – First Half Year 2017
16
• Extraordinary items in the first half include
• Merger accounting loss of USD 62 million
• Org. restructuring cost of USD 20 million
• Total income adjusted for the merger accounting loss
was USD 1 864 million, up 4% from the same period
last year
• EBITDA adjusted for the extraordinary items was
USD 331 million, an underlying improvement of 10%
compared with same period previous year
• Underlying improvement in financial performance is
driven by higher transported volumes, reduced SG&A
costs, the US flag operations, as well as improved
results from the landbased business
Business Update Financial Performance Market and Business Outlook Summary and Q&A
CommentsConsolidated results - Total income and EBITDA1, 2
USD million
Total income EBITDA
1 802
1 794
1H 2016 1H 2017
62
+4%
1 864
249
82
301331
1H 2016
+10%
1H 2017
Extraordinary items
1) Adjusted for extraordinary items; 2) Comparable numbers for H1 2016 and Q1 2017 are pro forma numbers as if the transaction had taken place back in time
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ASSETS EQUITY & LIABILITIES
Balance sheet review
17
Unaudited Balance Sheet 30.06.2017USD billion Comments
• Net interest bearing debt of USD ~3.2 billion,
of which cash and cash equivalents of USD 755
million
• Equity ratio at 34.7%
• USD ~310 million in provisions remain to cover
extraordinary costs in jurisdictions with
ongoing anti-trust investigations
• Fair value of assets and liabilities at merger
date (except 100% owned WW ASA entities)
• USD 288 million goodwill element after
allocation of merger consideration to fixed and
intangible assets
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Non current assets
1.3
7.7
Current assets
6.4
1.3
Equity
Non current liabilities 3.8
Current liabilities
2.7
7.7
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Cash flow and liquidity development
18
Business Update Financial Performance Market and Business Outlook Summary and Q&A
755
150
1862106
607
-90-48
Liqudity Q2 2017
-49
Interest and financial
derivatives
Other CAPEX Net financing1Proceeds from sale of financial
investments
Merger lossEBITDALiquidity Q1 2017
Cash flow and liquidity developmentUSD million
1) Includes: Proceeds from issue of debt of USD 131 million, Repayment of debt USD 206 million and loan to related party USD 15 million2) Loss on previously held equity interests in JVs joint ventures as a consequence of the merger transaction
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19
Market and Business Outlook
by Craig Jasienski
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Auto sales dropped 1.7% q-o-q driven by drop in China
20
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Global auto sales per main sales region1
CAGR 2016-2021, Change Q2’17 vs Q1’17
Comments to global auto sales
Source: IHS Markit1) Size of circle indicates auto sales Q2 2017
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35%
CAGR ’16-21
Q2’17 vs Q1’17
West Europe
Greater China
Central Europe
East Europe incl. Russia
ASEAN
Oceania
Japan/Korea
NAFTA
South America
India & Pakistan
Middle East & Africa
APAC AMEUR ME AF• Increased sales of 11.1% q-o-q in the US driven by seasonality,
with y-o-y sales down 1.4%. Despite softer sales, the absolute sales figures are still strong, with inventory building up.
• Flat development for Western Europe both q-o-q and y-o-y. Sales have rebounded after historic low figures and sales rate is now almost on par with sales before financial crisis.
• The Chinese market is down 8.4% q-o-q driven by the implementation of less favorable (tax) incentives. Small improvement of 0.6% y-o-y
• The Russian market shows signs of a fragile recovery continuing during the second quarter
• In Brazil the market looks to have turned a corner in the second quarter as sales have started to pick up
Long term forecast shows ~2% annual growth rate for sales
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Auto exports increased with 1.6% q-o-q
21
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Global auto export per main production region1,2
CAGR 2016-2021, Change Q2’17 vs Q1’17
Comments to global light vehicle export
• NAFTA exports (driven by Mexico) continue to increase, with 4.2% y-o-y and 0.6% q-o-q
• European exports still strong, mostly driven by strong demand in the US and new models. Exports to China also still solid.
• Exports out of Japan developed with a seasonal lift 3.6% q-o-q while flat y-o-y. NAFTA is still the largest receiving region for light vehicles produced in Japan.
• Exports out of South Korea continue to decline and were down 7.1% y-o-y, but increased 6.9% q-o-q driven by seasonality. The main driver of the decline is less volume to US as production capacity in Mexico is ramped up.
Long term forecast shows ~2% annual growth rate for exports-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
-14% -12% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12%
South Korea
Japan
CAGR ’16-21
Q2’17 vs Q1’17
North America
South Asia
Middle East/Africa
Greater China
South America
Europe
AMAPAC ME AFEUR
Source: IHS Markit1) Size of circle indicates auto production Q2 20172) Chinese figures are adjusted
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Moderately improving outlook for Construction and Agriculture
22
Business Update Financial Performance Market and Business Outlook Summary and Q&A
1) Source: IHS Construction and IMF (International Monetary Fund) | World Construction Spending (% growth y/y in real terms ($2010))2) Source: CEMA (European Agriculture Machinery)) | Business Barometer (Index = sum of 1) evaluation of the current business situation & 2) turnover expectation, 100/-100)
Construction growth picking up World construction spending (% y/y), 12-20E1
Mixed outlook for Agriculture equipment
European business climate (Index 100/-100), 10-172
• World construction growth is picking up, and infrastructure projects look
increasingly important in mid-term spending prospects
• Equipment sales in the China-driven Asian market is the current growth
engine
• Low crop and dairy prices put pressure on the agricultural equipment segment,
but sentiment is improving in some key regions
• Mixed outlook for equipment market, with South America outperforming the
other regions in the short term
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
’19E’14 ’17E’15 ’18E ’20E’13 ’16’12
% y/y
Total
Emerging and developing economies
Advanced economies
-100
-80
-60
-40
-20
0
20
40
60
80
100
Business climate
1Q171Q161Q151Q141Q131Q121Q10 1Q11
Index Present Future
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The recovery for the mining segment is still slow
23
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Continued uptick in global equipment deliveriesGlobal surface mining equipment shipments (Index ‘07 = 100), 07-171
1) Source: Parker Bay | Surface Mining Equipment Index (Indexed value of surface mining equipment shipments in real terms ($2010), 2007 = 100) 2) Source: IHS Global Trade Atlas | Non-rolling mining equipment deliveries in regions as reported by customs for individual cargo values > USD 20.000.
(12 month rolling average (L12M) units) (Data edge: 04.2017)
0
25
50
75
100
125
150
175
200
1Q14 1Q15 1Q16 1Q171Q10 1Q12 1Q131Q111Q091Q07 1Q08
• Average mining equipment age is at a level not observed since the 1990’s, and the older fleet is driving higher demand for parts and eventually replacements
• OEMs are reporting significantly growing sales with Asia looking the strongest, but much of the growth is related to aftermarket or smaller machines for coal mining activity
• The increase in mining shipments are mainly driven by intraregional shipments of smaller machines in Europe (Russia) and South Asia
• Larger equipment for more traditional regions (Australia, Canada, Peru) also expected to slowly recover, but no significant improvement expected before 2019/2020
Several regions have seen imports bottom outCustoms trade flows of non-rolling mining machines (L12M avg units), 12-172
0
100
200
300
400
500
600
Avg. monthly units
1Q15 1Q161Q13 1Q141Q12 1Q17
Oceania
North America
Latin America
Europe
Asia
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Source: SeaWeb, Lloyds List Intelligence Unit
Moderate net fleet growth forecasted going forward
24
Business Update Financial Performance Market and Business Outlook Summary and Q&A
3% of fleet are recycling candidates…Fleet by year of build, 1000 CEU
..contributing to moderate net fleet growthForecasted net fleet growth, % p.a.
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
Net fleet growth, %
400
350
300
100
200
50
150
0
250
61
333
20
00
142
72
215
146
321319
84
176
134124
268
20
05
20
20
4561
130
279
227
15
185
388
155
20
15
20
10
1
52
1
118
443026
19
90
19
85
18
161
65
38
19
95
61
112522
12
ACTIVE
OPTION UNCONFIRMED
ORDER
~40 FIRM VESSELS 7-8% OF FLEET CEU
36 VESSELS >25 YRS OLD
3% OF FLEET CEU
• Five vessels were delivered and seven vessels were sold for recycling during the quarter
• The current global order book counts ~40 vessels representing 7-8% of global fleet capacity
• No new orders or negotiations to postpone deliveries were reported, but four newbuildings were converted to tankers during the second quarter
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Summary and outlook
25
Business Update Financial Performance Market and Business Outlook Summary and Q&A
SUMMARY
Volume, cargo and trade mix showed positive development in the second quarter
Organizational restructuring completed and realization of synergies well under way; USD 100 million target is maintained
Adjusted EBITDA for the second quarter ended at USD 188 million – up 32% q-o-q
Strong results for landbased combined with interesting M&A/ investment pipeline
OUTLOOK
Recovery in the high & heavy segment remains slow and no significant improvement for large mining shipments is expected before 2019
The Ocean business is still faced with tough competition and pressure on rates
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26
Q&A
by Craig Jasienski and Rebekka Glasser Herlofsen
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27
Thank you!