Mercator Lines (Singapore) Ltd.        Q2 FY 2013 ResultsQuarter Ended September 30th 2012            Stock Code : EE6
DISCLAIMERThis document contains forward-looking statements which are statements that are not historical facts,including s...
PRESENTATION OUTLINEMercator Lines (Singapore) Ltd.   Financial OverviewMarket Review & Outlook  Company Overview         ...
Mercator Lines (Singapore) Ltd.     Financial Overview
FINANCIAL HIGHLIGHTS FOR 6 MONTHS(H1 FY 2013)                 REVENUE                                                     ...
FINANCIAL HIGHLIGHTS FOR THE QUARTER(Q2 FY 2013)                REVENUE                                                   ...
BALANCE SHEET HIGHLIGHTS     (In USD millions)       30 September 2012   30 September 2011   Cash & Bank Balances         ...
HISTORICAL FINANCIAL PERFORMANCE         Particulars               FY 09           FY 10            FY 11           FY 201...
FLEET UTILISATION                                                                                            Q2 FY 2013   ...
PER DAY TCE EARNINGS Vs. MARKET   45000   40000   35000   30000   25000                                                   ...
FAVOURABLE LONG TERM DEBTREPAYMENTS                                                                 32.9                  ...
Mercator Lines (Singapore) Ltd.Market review and outlook
AVERAGE FREIGHT RATES COMPARISON                      40Per day USD rate inthousands                  33.7                ...
DRY BULK SHIPS - INVESTMENT ANALYSIS                            Current 1 yr T/C                        Required T/C      ...
DRY BULK ORDERBOOK AND DELIVERY SCHEDULE    Type of vessel       Order book       % of fleet        Delivery expected   De...
DRY BULK DEMOLITION ACTIVITY                    30                                                                        ...
WORLD ECONOMY  % change                     10                                                                        9.3 ...
INDUSTRIA L PRODUCTION & DRY BULK GROWTH                                               Industrial production growth rate e...
MARKET OUTLOOK                          POSITIVE                   NEGATIVE      The overall outlook for the dry bulk ship...
Mercator Lines (Singapore) Ltd.     Company overview
COMPANY HIGHLIGHTS                       Young modern fleet with average age much below the industry average.        Flee...
OUR STRATEGY                                                                                                Deploy substan...
AWARDS & RECOGNITION       Mercator Lines    (Singapore) Limited                                                          ...
RELATIONSHIPS                               OUR KEY RELATIONSHIPS           One of the largest iron ore companies in the w...
FLEET PROFILE S. No       Owned Vessels                        Type                Capacity    Year Built               Sh...
FLEET DIVERSIFICATION                                   DIVERSIFICATION BY TYPE   PANAMAXES                POST           ...
RISK MANAGEMENT        FREIGHT VOLATILITY                        BUNKER FUEL COSTS - Long term contracts                  ...
MOVING FORWARD• The Company expects the next 12-18 months to remain challenging for drybulk  shipping industry.• The Compa...
GLOSSARY                                                          •Under a COA, the ship owner provides capacity to transp...
Investor Relations Contact:                                    Ms. Cindy Vaithilingam                                     ...
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Mercator Lines (Singapore) Q2 FY2013 results presentation

  1. 1. Mercator Lines (Singapore) Ltd. Q2 FY 2013 ResultsQuarter Ended September 30th 2012 Stock Code : EE6
  2. 2. DISCLAIMERThis document contains forward-looking statements which are statements that are not historical facts,including statements about our beliefs and expectations. Forward-looking statements generally can beidentified by the use of forward-looking terminology, such as “may,” “will,” “could,” “expect,”“anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project” and similar terms and phrases.These statements include, among others, statements regarding our business strategy, future financialposition and results, and plans and objectives of our management for future operations. Forward-looking statements are, by their nature subject to substantial risks and uncertainties, and investorsshould not unduly rely on such statements. Forward-looking statements reflect our current views withrespect to future events and are not a guarantee of future performance. These statements are based onour management’s beliefs and assumptions, which in turn are based on currently available information.Although we believe the assumptions upon which these forward looking statements are based arereasonable, any of these assumptions could prove to be inaccurate, and the forward-lookingstatements based on these assumptions could be incorrect. Actual results may differ materially frominformation contained in the forward-looking statements as a result of a number of factors, many ofwhich are beyond our control . Because of these factors, we caution you not to place undue reliance onany of our forward-looking statements. Forward-looking statements we make represent our judgmenton the dates such statements are made. New risks and uncertainties arise from time to time, and it isimpossible for us to predict these events or how they may affect us. Save as required by all applicablelaws of applicable jurisdictions, including the SFA, and/or rules of the SGX-ST, we assume no obligationto update any information contained in this document or to publicly release the results of any revisionsto any forward-looking statements to reflect events or circumstances that occur, or that we becomeaware of, after the date of this document. 2
  3. 3. PRESENTATION OUTLINEMercator Lines (Singapore) Ltd. Financial OverviewMarket Review & Outlook Company Overview 3
  4. 4. Mercator Lines (Singapore) Ltd. Financial Overview
  5. 5. FINANCIAL HIGHLIGHTS FOR 6 MONTHS(H1 FY 2013) REVENUE INCOME  Revenue at USD 66.2 mn. as  Net Profit at USD 0.1 mn. as compared to USD 73.2 mn. for compared to USD 5.6 mn. for the corresponding period the corresponding period previous year previous year EBITDA OPERATING DAYS  EBITDA at USD 22.8 mn. as  Operating days at 2918 days as compared to USD 28.3 mn. for compared to 3120 days for the the corresponding period corresponding period previous previous year year• Decrease in Revenue and Income mainly due to weaker spot markets as compared to previous year• Decrease in operating days due to idle days and higher scheduled drydock days as compared to previous year Note : FY /Financial Year refers to the period from April 1st of current year to March 31st of following year 5 * Market rate refers to average of Time charter routes for Panamax vessels
  6. 6. FINANCIAL HIGHLIGHTS FOR THE QUARTER(Q2 FY 2013) REVENUE INCOME  Revenue at USD 35.5 mn. as  Net loss at USD 0.3 mn. as compared to USD 35.1 mn. for compared to net profit of USD the corresponding period 1.7 mn. for the corresponding previous year period previous year EBITDA OPERATING DAYS  EBITDA at USD 11.2 mn. as  Operating days at 1476 days as compared to USD 13.0 mn. for compared to 1558 days for the the corresponding period corresponding period previous previous year year Note : FY /Financial Year refers to the period from April 1st of current year to March 31st of following year * Market rate refers to average of Time charter routes for Panamax vessels 6
  7. 7. BALANCE SHEET HIGHLIGHTS (In USD millions) 30 September 2012 30 September 2011 Cash & Bank Balances 6.4 17.1 Trade Receivables 35.6 15.0 Vessel, Property & 597.0 626.8 Equipment Debt 236.2 264.2 Trade Payables 18.3 15.7 Shareholders Equity 391.7 391.5 Debt Equity Ratio 0.60 0.67 * As on Market Price per share SGD 0.115* SGD 0.139 November 07, 2012 EPS (for 6 months ended) SGD 0.0002 SGD 0.006 7
  8. 8. HISTORICAL FINANCIAL PERFORMANCE Particulars FY 09 FY 10 FY 11 FY 2012 H1 FY 2013 Revenue (USD mn.) 186.1 144.5 155.4 147.7 66.2 Net Profit (USD mn.) 75.8 40.7 31.1 7.8 0.1 Approx. TCE Earnings per 41,886 27,605 26,049 20,600 16,665 day (in USD) Average Baltic Panamax TC 36,954 24,251 21,276 12,290 8,087 rate (USD per day) Operating days 4,084 4,703 5,543 6,259 2,918 Total Fixed Assets (USD mn.) 485.4 570.8 644.5 610.5 597.0 Revenue and earnings have been impacted due to continued weak markets However, the Company has continued to perform much better than the industry average rate Significant increase attained in fixed assets and operating days over the past years 8
  9. 9. FLEET UTILISATION Q2 FY 2013 H1 FY 2013 HIGH CAPACITY UTILIZATION Owned vessels Number of vessels 14 14 Operating days 1219 2374 Fleet utilization % 96.8% 97.8% Chartered-in vessels* Number of vessels 3 3 Operating days 258 545 Fleet utilization % 98.3% 99.2% Total fleet Number of vessels 17 17 Operating days 1476 2918 Fleet utilization % 97.0% 98.0% TCE Revenue (US$’000s) 23,670 48,628 Approx. TCE Rate (US$ per day) 16,035 16,665“TCE Revenue” is defined as revenue less voyage expenses before taking into account revenues attributable to vessels chartered- in on a voyage charter.* Company charters in vessels on short term basis to maximize earnings out of its contract. 9
  10. 10. PER DAY TCE EARNINGS Vs. MARKET 45000 40000 35000 30000 25000 Our TCE per day 20000 rate 15000 Average Baltic 10000 Panamax TC rate 5000 0 FY 2009 FY 2010 FY 2011 FY 2012 H1 FY 2013 We have consistently outperformed the market in terms of Time Charter Equivalent (TCE) Earnings per day 10
  11. 11. FAVOURABLE LONG TERM DEBTREPAYMENTS 32.9 25.5 24.5 21.8 13.1 US$113.5 Next 6 FY 2014 FY 2015 FY 2016 FY 2017 months FY 2013 Our debt repayment commitments are structured to ensure cash flow flexibilityNote: 1. Schedule as on 30th Sep 2012. 2. Amounts in US$ Millions 3. Repayment schedule is towards principal payments only. 4. Excludes working capital revolver loan facility 11
  12. 12. Mercator Lines (Singapore) Ltd.Market review and outlook
  13. 13. AVERAGE FREIGHT RATES COMPARISON 40Per day USD rate inthousands 33.7 35 30 26.6 25 23.1 YTD CY 2010 20 16.9 YTD CY 2011 14.5 14.5 YTD CY 2012 15 13.4 9.8 10 8.7 8.4 7.9 6.9 5 Source: RS Platou 0 Capesize Panamax Supramax Handysize The freight have fallen down considerably over the past 3 years Note : CY /Calendar Year refers to the period from Jan 1st to Dec 31st 13
  14. 14. DRY BULK SHIPS - INVESTMENT ANALYSIS Current 1 yr T/C Required T/C Actual in % of req. USD/Day USD/Day T/C ratePROMPT RESALECapesize 170,000 13,750 19,000 72%Panamax 75,000 7,800 14,000 56%Supramax 53,000 8,500 13,000 65%5 YEARS SECOND-HANDCapesize 170,000 13,750 17,000 81%Panamax 75,000 7,800 12,000 65%Supramax 53,000 8,500 12,000 71%Source: Fearnleys Assumptions: 25 years lifetime. Interest: 10 % on total investment, and normal operating/docking expenses. Based on end of Oct 12 values and demoliton prices. Operating days: 355 Note : CY /Calendar Year refers to the period from Jan 1st to Dec 31st 14
  15. 15. DRY BULK ORDERBOOK AND DELIVERY SCHEDULE Type of vessel Order book % of fleet Delivery expected Delivery expected Delivery expected ( million DWT) in CY 2012 in CY 2013 in CY 2014 and (million DWT) (million DWT) beyond (million DWT) Capesize 58.0 21.2% 22.4 24.6 11.0 Panamax 55.8 32.6% 21.4 24.4 10.1 Handymax 26.1 19.1% 11.5 11.3 3.3 Handysize 14.6 17.0% 5.6 6.5 2.5 Total Fleet 154.5 23.1% 60.9 66.8 26.8Source: Clarksons Majority of the delivery expected in CY 2012 and CY 2013. The orderbook remains substantially high which will keep the freight rates low in the coming years. 15
  16. 16. DRY BULK DEMOLITION ACTIVITY 30 25 25 23.1 20 15 10.6 million dwt 10 6.4 5 0 CY 2009 CY 2010 CY 2011 YTD Sep 2012Source: Clarksons High demolition activity seen in CY 2011 and YTD CY 2012 16
  17. 17. WORLD ECONOMY % change 10 9.3 8.4 8 7.8 7.1 6.7 6 5.8 CY 2011 4 3.8 3.6 CY 2012 (f) 3.3 CY 2013 (f) 2.1 2.0 2.3 2 1.8 1.5 1.3 0.2 0 USA Euro Zone Japan China India World -0.5 -0.7 -2Source: RS Platou,IMF Global Economy expected to grow at a lower rate in CY 2012 17
  18. 18. INDUSTRIA L PRODUCTION & DRY BULK GROWTH Industrial production growth rate estimatesGrowth rate in 15percentage 10 CY 2011 5 CY 2012 (f) CY 2013 (f) 0Source: RS Platou USA Euro Area Japan China Other Asia -5 Dry Bulk Trade Growth correlated with GDP Growth 14 12 10 8 6 Dry Bulk Trade 4 World Output 2 0 -2 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (f) (est) -4 Source: IMF, Clarksons Industrial production growth expected reduce even for China in the coming years which will also impact the dry bulk trade 18
  19. 19. MARKET OUTLOOK POSITIVE NEGATIVE The overall outlook for the dry bulk shipping market seems to be negative mainly due to oversupply of vessels 19
  20. 20. Mercator Lines (Singapore) Ltd. Company overview
  21. 21. COMPANY HIGHLIGHTS  Young modern fleet with average age much below the industry average. Fleet  Largest fleet owner of geared Panamaxes amongst Indian-Owned Shipping Companies.  History of repeat contracts from major customers Customer base  Blue Chip customer base including Tata Power, Arcelor Mittal Group, Cosco Group, Cargill, Bunge Group and Noble Group  The Board and Key Management Personnel have collective industry experience of close to 200 years. Management  Having an experienced in-house technical management company ensures delivery of high quality service to our customers together with minimising operating expenses and maximising operational efficiencies  Providing customized logistics solutions from the load port to the point of Logistics usage to its customers in India. solutions  The Company has won high revenue generating contracts due to this unique advantage 21
  22. 22. OUR STRATEGY Deploy substantial Focus on high portion of fleet growth markets in capacity on long dry bulk trade from China South Korea India term contracts to China and India Iron Ore Iron Ore hedge against Brazil Coal Indonesia freight volatility Coal Australia Iron Ore Iron Ore To provide Leverage strong VLOC routes customized end-to- and continued end logistics relationships withWe specialize in transportation of commodities such as solutions existing customers coal and iron ore to and from countries like India, Indonesia, China, Brazil and Australia. Mercator Singapore Mercator India Ship voyage Trucks/ Rail Port loading with Port unloading Jetty Stock Yard User Site geared vessels with geared vessels Coal Barges Trucks/ Rail Together with Mercator India, we provide logistics solutions from load port to point of usage to customers. 22
  23. 23. AWARDS & RECOGNITION Mercator Lines (Singapore) Limited Best Annual Report in 2009 (Silver) and 2010 (Bronze) Global Entrepreneur Best Investor Relations 2012 Best Investor Relations 2011 amongst Singapore listed of the Year 2010 (Gold) (Silver) companies Emerging India Awards 2010 Singapore Corporate Awards Singapore Corporate Awards Singapore Corporate Awards DEMONSTRATING STRONG CORPORATE GOVERNANCE Ranked 20th by NUS and Business Times TRACKRECORD amongst the public Ranked 16th in overall listed companies in performance amongst Governance and listed shipping Transparency Index companies in the world – (GTI) Marine Money June/July 2012 Winning awards for consecutive four years in a row in the Singapore Corporate Awards emphasizes our drive towards better corporate governance and Investor Relations 23
  24. 24. RELATIONSHIPS OUR KEY RELATIONSHIPS One of the largest iron ore companies in the world The largest steel manufacturing company of the world One of the largest power companies in India. Owned by one of the most reputed business groups in the world. One of the largest commodity trading companies OUR OTHER RELATIONSHIPS 24
  25. 25. FLEET PROFILE S. No Owned Vessels Type Capacity Year Built Shipyard (DWT) Geared Panamax 73,461 2001 Tsuneishi Corp, Japan 1 Sri Prem Aparna 2 Sri Prem Varsha Geared Kamsarmax 82,379 2006 Tsuneishi Corp, Japan 3 Sri Prem Veena Gearless Kamsarmax 82,459 2007 Tsuneishi Corp, Japan 4 Gaurav Prem Gearless Panamax 73,901 2005 Jiangnan, China Panamax 5 Gearless Panamax 74,444 2006 Hudong, China Fleet Average Garv Prem Age: 8 years 6 Sri Prem Vidya Geared Kamsarmax 82,273 2006 Tsuneishi Corp, Japan 7 Garima Prem Gearless Panamax 74,456 2007 Hudong, China 8 Kesari Prem Geared Panamax 69,186 1997 Tsuneishi Corp, Japan 9 Kanak Prem Geared Panamax 69,221 1997 Hashihama, Japan 10 Sri Prem Putli Very Large Ore Carrier (VLOC) 279,022 1993* Yiulian Yard, China 11 Kalpana Prem Geared Panamax 73,652 2000 Imabari Shipyard, Japan 12 Gauri Prem Gearless Panamax 74,405 2007 Hudong, China 13 Aarti prem Gearless Panamax 69,087 1994 Imabari Shipyard, Japan 14 Chitra Prem Gearless Post Panamax 93,270 2010 New Yangzijiang, China Converted from VLCC to VLOC in 2009 in Yiulian S. No Chartered vessels Type Capacity Year Built Country (DWT) Built 1 Chaitali Prem Gearless Post Panamax 93,312 2009 China 2 Chanchal Prem Gearless Post Panamax 93,259 2009 China 3 Maria Laura Prem Gearless Post Panamax 91,945 2010 South Korea 25
  26. 26. FLEET DIVERSIFICATION DIVERSIFICATION BY TYPE PANAMAXES POST PANAMAXES KAMSARMAXES KAMSARMAXES VLOC (GEARLESS) PANAMAXES (GEARED) • Chitra Prem • Sri Prem Aparna • Sri Prem Putli • Gaurav Prem • Sri Prem Veena • Chaitali Prem • Kesari Prem • Garv Prem • Sri Prem Varsha • Chanchal Prem (Geared) • Kanak Prem • Aarti Prem • Maria Laura • Sri Prem Vidya • Kalpana Prem Prem (Geared) DIVERSIFICATION BY DEPLOYMENT DIVERSIFICATION BY CARGO CONTRACT OF 4% AFFREIGHTMENT CONSECUTIVE VOYAGE Geared CONTRACT Iron ore Panamaxes/Geared VLOC Kamsarmaxes 37% Others TIME CHARTER Coal 45% Geared and Gearless Panamaxes/Geared BAREBOAT CHARTER Grain Gearless Panamax Kamsarmax/Post Panamaxes 8% 26
  27. 27. RISK MANAGEMENT FREIGHT VOLATILITY BUNKER FUEL COSTS - Long term contracts - Appropriate Bunker adjustment factor in all long term voyage charter contracts - Forward Freight Agreements (FFAs) -Bunker cost borne by Charterer in Time Charter Contracts Multifaceted risk management strategy attuned to market volatility CURRENCY RISKS ACCIDENT RISKS - Insured all vessels adequately - Income, expenses and reporting in USD - Successful implementation of safety management practices 27
  28. 28. MOVING FORWARD• The Company expects the next 12-18 months to remain challenging for drybulk shipping industry.• The Company is exploring various options to shore up its liquidity to overcome the current downfall in the industry which are as under: Achieving increased Sale of one of its operational efficiency Vessel by closely monitoring operating costs Reduction in liabilities by engaging the owners of long term chartered in vessels Better positioned to overcome the current industry challenges 28
  29. 29. GLOSSARY •Under a COA, the ship owner provides capacity to transport a certain amount of cargo Contract of Affreightment within a specified period from one place to a destination designated by the customer. Typically all of the ship`s operating, voyage**and capital expenses are borne by the ship (COA) owner. Freight rate normally is agreed on a per cargo ton basis. •Under a CV, the ship owner provides capacity to transport a certain amount of cargo on Consecutive Voyage a consecutive voyage basis over the contract period. Similar to a COA, all of the ship`s operating, voyage**and capital expenses are borne by the ship owner and freight rate is Contract (CV) agreed on a per cargo ton basis. •A charter under which a vessel is chartered to a customer for a fixed period of time at a rate that is typically fixed. The charterer pays all voyage costs. The owner of the vessel Time Charter (TC) receives monthly or semi monthly charter payments on a per day basis and is typically responsible for providing the crew and paying all vessel operating expenses(including maintenance, repair and docking) and capital costs of the vessel. Time Charter Equivalent •A standard shipping industry performance measure used primarily to compare period- to-period changes in a shipping company`s performance despite changes in the mix of (TCE) chartered types.**Voyage Expenses - Expenses incurred due to a Vessel`s travelling from a loading port to a discharging port, such as fuel(bunker) costs, portexpenses, agents` fees, canal dues, extra war risk insurance and commissions. 29
  30. 30. Investor Relations Contact: Ms. Cindy Vaithilingam Tel: +65 6220 9320 Email : ir@mllsg.comMercator Lines (Singapore) Ltd. Thank You

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