Results Q3 - 2012 22 November 2012
Agenda    Highlights    Financials    Operations    Macro Update    Q&A
Highlights   GOGL results Q3 2012                   Operating revenues      EBITDA     Net profit                         ...
FinancialsBirgitte Vartdal, CFO Golden Ocean Management AS
Profit & LossKey figures:(in thousands of $)                                  2012      2012                              ...
Balance Sheet(in thousands of $)                                        2012        2011                                  ...
OperationsBirgitte Vartdal, CFO Golden Ocean Management AS
Vessels: Deliveries, charters and newbuildings   July 2012: Sanko went into formal rehabilitation proceedings in Japan    ...
Corporate transactions and covenants  Asset values continued to drop during the quarter      $15.5 million in extraordinar...
Overview of newbuilding program                               Jinhaiwan             PipavavCapesize                       ...
Open positions on sailing vesselsCapesize exposure - Sailing vessels Core Fleet                                           ...
Cash cost breakeven            Cash cost breakeven for sailing vessels                             (2013 estimates)       ...
Vessel operating expensesBased on 13 Panamax/Kamsarmax and 6 Capesize vessels
Macro UpdateHerman Billung, CEO Golden Ocean Management AS
Still robust underlying growth in seaborne dry trade…     Mill tons / month     100      90      80      70      60       ...
Dry bulk market strengtheningFreight rates moving up in Q3 2012 Series            Date       Previous   Current   Change  ...
Freight market development                           Baltic Dry Index, seasonal pattern Still some seasonality visible. Co...
Premium quality ore is becoming an increasingly attractive product  World production and Fe grades                        ...
New Iron Ore Project developments until 2015                                                                              ...
Steam coal imports growing robustlySteam coal steaming ahead                                Fallout from Fukushima China’s...
Bulk carriers: existing fleet and order book by year of delivery                                                          ...
What lies ahead? Part I                                Deliveries and Order book by main Builder nation  “Theoretical” ord...
What lies ahead? Part II                                Historic deliveries and Orderbook for Chinese Green field yards  1...
Dry bulk market recovering from demand-supply imbalance Tonnage overhang reduced, demand catching up with supply          ...
Dry Bulk Market fundamentals expected to improve in 2014-15       Mill dwt                                                ...
… and then slowly improve up to 91% in ‘15                           Dry bulk fleet utilization Utilization %             ...
Q&A
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Golden Ocean Q3 2012 results presentation

  1. 1. Results Q3 - 2012 22 November 2012
  2. 2. Agenda Highlights Financials Operations Macro Update Q&A
  3. 3. Highlights GOGL results Q3 2012 Operating revenues EBITDA Net profit 70,0 EBITDA before impairment: 64,0 $24.1 million 60,0 53,4 56,5 50,0 Loss: -$17.1 million 40,0 Loss per share: $0.04 30,0 27,3 25,7 24,1 20,0 13,0 10,0 6,4 0,0 Cancelled two newbuilding -10,0 Q1 2012 Q2 2012 Q3 2013 contracts in November 2012 -20,0 -17,1 -30,0
  4. 4. FinancialsBirgitte Vartdal, CFO Golden Ocean Management AS
  5. 5. Profit & LossKey figures:(in thousands of $) 2012 2012 Jul-Sep Apr-JunOperating revenue 56 473 64 036 Revenues down on lowerVessel voyage expenses -9 516 -11 440 trading activity, lowerProvision for bad debt -2 575 -3 624 earnings on Feng and lowerVessel operating expenses -10 591 -10 133Charter hire expenses -6 658 -8 213 spot ratesAdministrative expenses -3 580 -3 011 Voyage expenses and charterDepreciation and amortisation -8 622 -8 377 hire expenses down on lowerImpairment -25 200 -2 900Other gain/ (losses net) 583 -1 915 trading activityOperating profit -9 685 14 423 Total provision $6.2 million onInterest income 437 339 FengInterest expense -5 239 -5 515Interest swap -1 713 -1 694 Impairment related to sailingOther financial items -916 -1 153 vesselsTaxation 0 0Profit for the period -17 116 6 400 Lower interest rate andProfit attributable to: JPY/USD exchange rateOwners of the parent -17 145 6 316 impact finance costsNon-controlling interest 29 84Profit for the period -17 116 6 400
  6. 6. Balance Sheet(in thousands of $) 2012 2011 Sep 30 Dec 31ASSETS Vessels and equipment, net 618 222 637 441 • Impairment sailing vessels Vessels held under finance leases, net 142 587 147 991 Vessels under construction 207 935 216 965 • Two installments paid Other assets 10 502 10 681 Total non-current assets 979 246 1 013 079 Cash and cash equivalents 101 222 138 284 •Cash down on paid installments, Trade and other receivables 17 085 22 789 paid down debt, repurchase Other current assets 7 165 37 920 shares and CB Total current assets 125 472 198 993Total assets 1 104 718 1 212 071EQUITY AND LIABILITIESEquity attributable to equity holders of the parent Share capital 45 350 45 699 Additional paid in capital 102 686 104 801 Other reserves 12 481 14 110 Retained earnings 367 537 364 779 Non-controlling interest 541 496Total Equity 528 594 529 885 • Long term debt down from Long term debt 364 942 455 385 extraordinary downpayments Obligations under finance leases 119 780 124 859 Other long term liabilities 2 281 - 2 508 - Deferred incomeTotal non-current liabilities 487 004 582 752Current Liabilities • Ordinary downpayments Long-term debt - current portion 51 874 62 962 • Bought back CB in September Obligations under finance leases – current portion 6 725 6 426 • MVC payments in October Other current liabilities 30 521 30 046Total current liabilities 89 120 99 434Total liabilities and shareholders’ equity 1 104 718 1 212 071Equity ratio ~ 48 %
  7. 7. OperationsBirgitte Vartdal, CFO Golden Ocean Management AS
  8. 8. Vessels: Deliveries, charters and newbuildings July 2012: Sanko went into formal rehabilitation proceedings in Japan Reduced payments on Golden Feng (original charter rate $46,000 net/day) until July, no hire after July Vessel taken back in August 2012 Vessel currently trading spot July 2012: Reduced contract price for three vessels at Jinhaiwan Golden Nantong, Golden Excellence and Golden Explorer extended to fourth quarter Aggregate new price for the vessels is $86.65 million November 2012: Cancelled two newbuilding contracts at Jinhaiwan Golden Excellence and Golden Explorer passed cancelling date again November 2012: Golden Bull started on the five year charter at $16,788 /day
  9. 9. Corporate transactions and covenants Asset values continued to drop during the quarter $15.5 million in extraordinary downpayments in July 2012 $14.3 million in extraordinart downpayments in October 2012 Share repurchase Purchased 6 238 204 shares to date Convertible bond repurchase Purchased $5.9 million of CB back in September at 99 cents Increase the interest rate hedge Bought $100 million of interest rate swaps for 7 years
  10. 10. Overview of newbuilding program Jinhaiwan PipavavCapesize 1 0Kamsarmax 2 0Iceclass panamax 4 1Installments paid 168.6 21.4(MUSD)Loan drawn 43.2 14.4(MUSD)As per 30.09.2012. Cancelled contracts also include installments and loans.
  11. 11. Open positions on sailing vesselsCapesize exposure - Sailing vessels Core Fleet 2012 2013 2014Total vessel days 277 2 108 2 108Open vessel days 10 697 1 633Open position (%) 3% 33 % 77 %Average net rate on fixed days 24 493 30 872 23 510No of vessels 6 6 6Panamax exposure - Sailing vessels Core Fleet 2012 2013 2014Total vessel days 794 6 038 5 925Open vessel days 59 1 397 3 352Open position (%) 7% 23 % 57 %Average net rate on fixed days 16 115 17 453 19 523No of vessels 17 17 17
  12. 12. Cash cost breakeven Cash cost breakeven for sailing vessels (2013 estimates) Capesize 16,200 $/day Panamax/Kamsarmax 12,100 $/dayAssumptions Cash B/E includes OPEX, quarterly loan repayment, interest and admin costs B/E rates is calculated for owned sailing vessels
  13. 13. Vessel operating expensesBased on 13 Panamax/Kamsarmax and 6 Capesize vessels
  14. 14. Macro UpdateHerman Billung, CEO Golden Ocean Management AS
  15. 15. Still robust underlying growth in seaborne dry trade… Mill tons / month 100 90 80 70 60 Yr/Yr change % 9 mos 2012/2011 50 + 6.9 % 40 30 20 10 0 08.1 09.1 10.1 . 11.1 . 12.1 Iron ore Coal Grain/soybean Steel products Source: Platou Economic Research
  16. 16. Dry bulk market strengtheningFreight rates moving up in Q3 2012 Series Date Previous Current Change Percent % Cape TCAvg 2012-11-20 16734 16809 75 0.45 % Panamax TCAvg 2012-11-20 7210 7453 243 3.26 % SM TCAvg 2012-11-20 7187 7269 82 1.13 % Handy TCAvg 2012-11-20 6018 6056 38 0.63 % Source: Pareto Shipping
  17. 17. Freight market development Baltic Dry Index, seasonal pattern Still some seasonality visible. Coal and Grain seasons. Monsoon season. Source: Fearnleys
  18. 18. Premium quality ore is becoming an increasingly attractive product World production and Fe grades • The Fe grade of the average global iron ore product is declining over Mt 51% 3,500 time 50% 3,000 • This trend is in particular apparent 49% in China, where the average grade is 2,500 48% well below the global average 2,000 47% 1,500 • China’s import need is not only 46% about need for volumes, but also 1,000 45% about need for higher grade material 44% 500 to offset its domestic low grade iron 43% 0 ore 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 World production (rhs) World Fe Grade (lhs) • With a falling average grade over time, the relative value of a high grade product is expected to increase over time Source: Pareto Shipping
  19. 19. New Iron Ore Project developments until 2015 New discovered deposits Qinghai Baffinland 18 mt 50 – 75 mt ArcelorMittal 8mt Total 26 mt Rio Tinto (jv Orissa 40 mt W.Africa 60 mt Vale 103 mt Angelo Minas 27 mt Total 130 mt Kumba Rio Tinto 53 mt Xstrata BHP Billiton 46 mt IMC Fortescue 59 mt Others 159 mt 50 – 70 mt Total 317 mt In total 625 – 650 mill tons Source: Platou Economic Research
  20. 20. Steam coal imports growing robustlySteam coal steaming ahead Fallout from Fukushima China’s imports will be about 194 mill. tons ‘ in ’12 Downward revision from 205 mill. tons in last update Sourcing from Indonesia and Australia Source: Pareto Shipping
  21. 21. Bulk carriers: existing fleet and order book by year of delivery ON Deliveried Rest ON ORDER IN %DWT EXIST.FLEET* ORDER 2012 2012 2013 2014 2015+ OF EXIST.FLEETBULK CARRIERSHandy 10-14,999 2.9 0.1 0.0 0.0 0.1 0.0 0.0 3.2 15-19,999 5.2 0.1 0.3 0.0 0.0 0.0 0.0 1.4 20-29,999 31.8 1.3 1.1 0.4 0.6 0.2 0.0 4.1 30-39,999 46.1 10.0 7.1 1.0 5.7 2.1 1.3 21.8 Total Handy 86.0 11.5 8.5 1.5 6.4 2.3 1.3 13.4Handymax / Supramax 40-52,999 54.5 4.3 1.6 1.0 2.7 0.5 0.1 7.8 53-64,999 (blt > 1999) 82.3 16.2 15.7 4.5 8.6 2.8 0.3 19.7 Total Handymax/Supramax 136.8 20.5 17.3 5.5 11.2 3.3 0.4 15.0 Total Handy/Handymax 222.8 32.0 25.8 7.0 17.6 5.6 1.7 14.3Panamax / Kamsarmax 65-84,999** 137.9 33.5 17.4 13.1 13.9 5.7 0.8 24.3Post Panamax 85-119,999 43.2 7.4 9.3 2.2 3.7 1.1 0.4 17.1Capesize 120,000 + 265.5 40.1 35.0 14.1 20.8 5.1 0.2 15.1TOTAL 669.5 113.1 87.6 36.3 56.1 17.5 3.2 16.9No of vessels 9 382 1 393 1042 398 704 229 62 * Scrapped vessels removed from the fleet when sold for scrap. ** Incl 60,000 - 64,999 built year 2000 and before Source: Platou Economic Research
  22. 22. What lies ahead? Part I Deliveries and Order book by main Builder nation “Theoretical” orderbook for about 130 million DWT in 2012.... 78% of the 2011 orderbook was delivered – slippage to remain an issue. Chinese Greenfield yards supposed to deliver 57 mdwt in 2012, up from 29 mdwt in 2011. China overall is supposed to increase its newbuilding deliveries by 60%..... Soft earnings and difficult funding conditions also to reduce actual deliveries. Source: Fearnleys
  23. 23. What lies ahead? Part II Historic deliveries and Orderbook for Chinese Green field yards 118 “greenfield” yards in China Monthly average output about 3.6 mdwt. Combined order book about 68 mdwt 71 yards have delivered less than 2 ships latest 12 months (49: zero) Only 77 of them have ships on order 32 yards have five or less vessels on order 88% of the order book is scheduled for delivery by end 2013 2012 2013 2014 2015 # of vessels 357 395 92 12 DWT 26,4 32,7 7,6 1,3 Source: Fearnleys
  24. 24. Dry bulk market recovering from demand-supply imbalance Tonnage overhang reduced, demand catching up with supply We estimate dwt supply growth to y/y growth increase by 13% in 2012, versus a 18% 14.9% 15.4% ton-mile demand growth of 10% 16% 13.3% 14% Market balance turns positive in 12% 13.4% 2013 with net supply growth at 6%, 10% 7.7% 11.3% below tonnage demand growth of 8% 7.0% 10.0% 6.8% 7% 6% 5.2% 6.3% 4.1% 4% 5.3% 2% 3.8% 2.3% 2.6% 0% 2008 2009 2010 2011 2012e 2013e 2014e 2015e Dwt demand growth Dwt supply growth Source: Pareto Shipping
  25. 25. Dry Bulk Market fundamentals expected to improve in 2014-15 Mill dwt Percent 800 130 700 120 600 110 500 100 400 90 300 80 200 100 70 0 60 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Supply Demand Utilization rate Source: Platou Economic Research
  26. 26. … and then slowly improve up to 91% in ‘15 Dry bulk fleet utilization Utilization % • We forecast utilization to improve in 98 95.7 2013 and onwards, yet stay below 96 the historical average of 92% and 10- 94 92.7 year avg of 93% 91.6 92 90.5 89.2 • Rates should stay below pre- 90 88.5 financial crisis levels, but slowly 88 86.3 86.8 increase from the lows in 2012 86 84 82 80 2008 2009 2010 2011 2012e 2013e 2014e 2015e Utilization 2001-2011 avg Source: Pareto Shipping
  27. 27. Q&A
  28. 28. Thank you for your attention !

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