j. lauritzen a/s investor update interim financial report 2015...

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J. Lauritzen A/S

Investor Update – Interim Financial Report 2015 Q2

August 2015


AGENDA

• Key messages on 2015 Q2

• 2015 H1 financials

• Lauritzen Bulkers

• Lauritzen Kosan

• CAPEX

• Existing financing

• Outlook 2015

• Appendix

2 2015 Q2 Interim Financial Report – Investor Update

Please read the disclaimer placed as the

last slide in this presentation. Thank you.

2015 Q2 as difficult as foreseen - EBITDA as expected, however unsatisfactory low; Vessel values down 17% since 2014YE - Markets appear to have stabilised, albeit at low levels

• Markets

• Record low dry cargo markets during Q1 and into Q2

• Markets for smaller gas carriers in general performing as expected

• Asset values under pressure during 2015 H1, particular in the dry bulk segment (values down 18-34% since 2014YE)

• Business areas

• Activity (ship days, total controlled fleet) in 2015 Q2 on average down 8% on 2015 Q1

• Core fleet totalled 109 vessels at end-2015 Q2 against 113 at end-2015 Q1

• Cease of long-term employment on two owned capesize dry bulk carriers against compensation payment to JL

• Financials

• EBITDA USD (8.4)m in 2015 Q2 compared to USD (9.5)m in 2015 Q1

• 2015 FY EBITDA estimate revised to USD (55)m-(25)m – narrowing the previous guidance

• Net interest bearing debt USD 322m at end-2015 Q2 (USD 282m at end-2015 Q1)

• Cash balance USD 155m at end-2015 Q2 (USD 256m at end 2015 Q1) – JLA 01 repaid on 5 may 2015

• Financing and investments

• Commitment for refinancing of 2017-maturing bank debt secured

• Five (hereof two post-2015 Q2) dry bulk vessels sold, with three taken back on time-charters

3

Key messages

2015 Q2 Interim Financial Report – Investor Update

2015 H1 Net results of USD (144.6)m; impacted by special items

4

Income statement EBITDA per quarter in USDm

• EBITDA as expected at USD (17.9)m; down USD 45.6m

• Lauritzen Bulkers at USD (24.9)m down USD 42.2m

• Lauritzen Kosan at USD 11.2m down USD 2.9m

• Special items USD (86)m against USD 31m

• See separate breakdown on next slide

• Finance net down USD 3.3m to USD (17.4)m

• Net results down USD (173.6)m to USD (144.6)m

- Very weak dry cargo markets in H1 causing negative EBITDA in Bulkers; Spot trading as expected

- EBITDA from Kosan (LPG and petrochemicals) in line with expectations

Comments on 2015 H1 vs. 2014 H1


(10)

0

10

20

30

Q1 Q2 Q3 Q4 Q1 Q2

2014 2015

1st half

USDm 2014 2015

EBITDA

Lauritzen Bulkers 17.3 (24.9)

Lauritzen Kosan 14.1 11.2

Not allocated a.o. (3.8) (4.1)

EBITDA 27.7 (17.9)

Sale of assets 5.6 (0.0)

Depreciation (28.6) (23.4)

Joint ventures 0.1 0.3

Operating income (EBIT)

before special items 4.8 (41.0)

Special items 31.0 (86.0)

Net financial items (20.7) (17.4)

Results before tax 15.1 (144.4)

Tax 0.1 (0.1)

Disc. ops. incl minorities 13.8 (0.1)

Net result 29.0 (144.6)

Special items

2015 Q2 Interim Financial Report – Investor Update 5

- One-off items: Revenue from sale of claims, settlements , compensation for contract termination

- Write-downs, impairment losses and provisions

USDm 2014 H1 2015 H1

One-off revenue from sale of claims and

claim settlements, contract termination 31.0 77.2

Sale of vessels as a consequence of

counterparty defaults - -

Impairment losses on vessels and

vessels under construction - (151.6)

Provisions and use of provisions

for onerous contracts - 6.6

Impairment losses on vessels

owned by joint ventures - (14.9)

Financial items related to contract

termination - (3.3)

Special items, net 31.0 (86.0)

Break-down of special items

USDm 2014 H1 2015 H1

EBITDA 58.7 65.9

Sale of assets 5.6 0.0

Depreciation and impairment losses (28.6) (175.0)

Joint ventures 0.1 (14.6)

Operating income 35.8 (123.8)

Net financial items (20.7) (20.7)

Results before tax 15.1 (144.5)

Condensed income statement with special items in operating profit

• One-off revenue

• Compensation connected to the termination of long term employment of two owed capesize vessels

• Write-down and impairment losses

• Write-down of two owned capesize vessels to sales value

• Challenging bulk markets causing further impairment losses on small dry bulk vessels (owned and part-owned fleet)

Notable items

Balance sheet at 2015 Q2

Balance sheet

6

Key messages

• Fixed assets at USD 694m

down from USD 935m at end-2015 Q1,

hereof USD 91m reclassified as assets held for sale

• Solvency at 41.2%

down from 43.0% at end-2015 Q1

• Key figures very unsatisfactory

• ROIC of (32.5%) reflecting the impairment loss, and

• NIBD/EBITDA at (9.0) reflecting the negative EBITDA

• Cash at USD 155m

down from USD 256m at end-2015 Q1,

hereof USD 71m net repayment of JLA 01 in May 2015

• CAPEX commitment relating to

owned newbuildings USD 96m (down from USD 139m) Further details on slide 12

• Off-balance commitments related to chartered fleet

was USD 709m (gross), down USD 23m Further details on slide 17

- Cash and committed facilities totaled USD 155m

- Net interest bearing debt USD 322m corresponding to 63% of vessel market values


Notes: * Does not include undrawn committed facilities (was USD 99.7m at year-end 2014)

** Continuing operations only

USDm 2014YE 2015 Q1 2015 Q2

Fixed assets 952 935 694

- Vessels in operation 773 763 513

- Investments in joint ventures 89 84 73

Current assets 256 332 357

- Assets held for sale - - 91

- Cash * 184 256 155

Total assets 1,208 1,267 1,050

JL share of equity 573 545 433

Minority share 0 0 0

Non-current liabilities 424 512 421

Current liabilities 211 211 196

Solvency 47.4% 43.0% 41.2%

ROE (25.3%) (19.3%) (57.5%)

NIBD/EBITDA ** 17.5 (7.4) (9.0)

Investments (vessels only) 43 0 5

Divestments (vessels only) 602 0 3

ROIC ** (14.3%) (6.6%) (32.5%)

- 50 100 150 200 250 300 350 400 450

-

-

- 50 100 150 200 250 300 350 400 450 - 50 100 150 200 250 300 350 400 450

LB

LK

Market Value Debt Book Value

30 June 2014 31 Dec. 2014

Fleet LTV 72% on average (up from 65% at end-2014) - Y-o-Y, vessel values down 23%. Since 2014YE, down 17%

- Prudent Loan-to-Value ratio


Fully owned fleet - Values and debt in USDm as per end June 2015

Excluding

vessels held for

sale,

LTV was 68% at

end-2015 Q2

Average age in years

Total owned fleet 8.4 Dry bulk carriers 5.6 Gas carriers 10.8

Activity & fleet

• Controlled fleet (total activity) averaged 99 vessels in 2015 Q2 (100 vessel on average in 2015 Q1)

• Core fleet totalled 72 at end 2015 Q2 (2015 Q1: 75)

• Short-term chartered fleet for the spot trading activities averaged 26 vessels in 2015 Q2 (2015 Q1: 25)

• Coverage in handysize and supramax increased. Redelivery of two capes reflected in changed cover for capesize segment

• After end-2015 Q2:

• Two handysize newbuildings sold and chartered back to LB

• One handysize vessel sold and chartered back to LB

• Two owned capesize vessels sold


- Increased focus on spot trading: Generates value in fluctuating and in depressed markets

- Expected activity in 2015FY (measured by average no. of vessels) 96; slightly down on earlier expectations

Cover for rest of 2015

Handysiz

e

Supra

max

Capesiz

e

To

tal

New

build

ings

Total 58 11 3 72 19

Owned 17 0 2 19 4

Part-owned 7 0 0 7 2

B/B in 0 0 0 0 0

T/C in *) 25 11 1 37 13

Pool, etc. 9 0 0 9 0

Fleet at end 2015 Q2*

Note: * Not including time-charters with a

duration of less than 12 months

Note:

CoAs included in the cover with expected requirement

Activity (avg. no. of vessels)

15%

38%

71%

45%

70%

12%

0% 25% 50% 75%

Handysize

Supramax

Capesize

2015 Q3-Q4

end-2014

0

20

40

60

80

100

120

0

20

40

60

80

100

120

2011 2012 2013 2014 2015 Q1

2015 Q2

Handysize Supramax

Capesize Total

Dry Bulk outlook: Remainder of 2015 to be stable with rates at low levels

• Global dry bulk demand is expected to experience stable,

but at much lower growth rates than previous years

We expect the business environment to remain

challenging throughout 2015

A rebound assuming continued high scrapping pace and

slippage likely within one to two years


- Slowdown in Chinese demand growth and excess oversupply continue to hurt dry bulk markets

- Despite increase in scraping and very limited contracting currently, real improvements not likely during 2015

Markets

Source: Own analysis based on data from Clarkson Research Services

Age profile and order book

• Scrapping activity during 2015 H1 surpassed total

2014-scrapping

(19.7m dwt in 2015 H1 vs. 15.6m dwt for 2014FY)

• Post-2016, delivery volumes will tail off and forecasts

indicate record delivery slippage and cancellations

• Demand for new vessels will be very low in the coming

years

World fleet

Spot market rates

0

500

1,000

1,500

2,000

2,500

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2011-01 2012-01 2013-01 2014-01 2015-01

Average of the 6 T/C Routes for Baltic Supramax Index (LHS)

Average of the 6 T/C Routes for the Baltic Handysize Index (LHS)

Baltic Exchange Dry Index (RHS)

USD/day Index

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

Capesize Supramax Handysize

25 years or more 16-24 years 0-15 years Orderbook %

- Expected activity in 2015: 36 vessels on average

- Fleet employment (cover) typically renewed annually

10

Cover for rest of 2015 Fleet at end 2015 Q2 Activity (avg. no. of vessels)

Sem

i-refrig

era

ted

Eth

yle

ne

Fu

lly-p

ressuris

ed

To

tal

New

build

ings

Total 12 13 12 37 0

Owned 6 6 10 22 0

Part-owned 0 3 0 3 0

B/B in 4 0 0 4 0

T/C in *) 0 0 2 2 0

Pool, etc. 2 4 0 6 0

0

10

20

30

40

50

0

5

10

15

20

25

2011 2012 2013 2014 2015 Q1

2015 Q2

Semi-refrigerated Ethylene

Fully-pressurised Total (RHS)

54%

60%

33%

58%

57%

38%

0% 25% 50% 75%

F/P

S/R

Ethylene

2015 Q3-Q4

end-2014


Note:

CoAs included in the cover with expected requirement

Total >>

Activity & fleet

• Controlled fleet averaged 36 vessels in 2015 Q2 (unchanged from 2015 Q1)

• Total activity expected unchanged approx 36 vessels on average in 2015

• Coverage levels in line with levels at beginning of 2015

Small gas carriers: 2015 appear to bring the expected improvement

• Demand supported by

• Stabilisation of oil and commodity prices

• Less maintenance and outage of refining and petrochemical plants

• Supply side developing as expected

• Modest rate improvements materialising during 2015 (except for fully-pressurised carriers in Asia/East of Suez)

• Lifting of Iran-sanctions not likely to have any near term impact on market for small gas carriers (mainly ETH)


- Demand supported by positive economic growth expectations and stabilisation of energy and petrochemical prices

- Markets for smaller gas carriers developing as expected, in general

Outlook continues points to a recovery

Sources: Own analysis based on data from Fearnleys and Clarkson Research Services

Small gas carriers: Age profile and orderbook Spot rates

0

100

200

300

400

500

600

700

2011-01 2012-01 2013-01 2014-01 2015-01

(F/P) 3.500 cbm - East (F/P) 3.500 cbm - West

(S/R) 6.500 cbm (ETH) 10.000 cbm

1,000 USD/month

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

Age distribution FP Age distribution SR/FR

25 years or more 15-24 years 0-14 years Order book %

CAPEX, financing and deliveries - Post-delivery bank financing for owned newbuildings secured

2015 2016 2017 2018 Total

CAPEX

Remaining payments on newbuildings

Owned USD m 7 42 28 19 96

Part-owned – JL share (dry bulk) * USD m 2 1 2 - 5

Part-owned – JL share (Axis Offshore) ** USD m 5 53 - - 58

Financing (owned newbuildings)

Committed financing *** USD m - 37 20 20 77

Deliveries

Owned newbuildings

Handysize (dry bulk) # - - - - -

Supramax (dry bulk) # - 2 1 1 4

Part-owned newbuildings

Handysize (dry bulk) # - - 2 - 2

Accomodation and Support Vessels (Axis Offshore) # - 2 - - 2

Time-chartered newbuildings

Handysize (dry bulk) # 1 6 5 - 12

Supramax (dry bulk) # - 1 - - 1

Note: Totals may differ due to rounding.

* Amounts shown are the equity commitment expected to be called from JL. J/V will procure financing directly

** Timing and amounts shown are the commitment expected to be called from JL. Timing and actual amount may differ and will e.g. depend also on amount of capital raised directly

by Axis Offshore and any changes in the delivery schedule.

*** Committed amount (maximum). Actual amount may be lower and depend on market value of vessels at delivery.


Financing - Commitment for refinancing of USD 63m 2017-maturing bank debt obtained

- Remaining bank debt refinancing: USD 21m in 2016

Outstanding debt in USDm, at end-of-year Repayment profile in USDm

-37 -20 -20

21 39 28 30 26 23 17 11

76 21

63

38 60

57

82

-50

-25

0

25

50

75

100

125

150

175

200

2015 H2

2016 2017 2018 2019 2020 2021 2022 2023

Disbursements

Repayments

Prepayments

Bullets (bank loans)

Bullet (bonds)

Refinancing commitment secured. Completion of refinancing expected by 2015 Q3

154 142 99 91

64 48 35 30

43 37

31 25

19 13

7 2

142 137

116 119

88 87

28 26

82 82

0

50

100

150

200

250

300

350

400

450

2015 2016 2017 2018 2019 2020 2021 2022 2023

Term loans

Term loans ECA backed

Revolving credits (incl undrawn amounts)

Bonds unsecured

Notes: Data as per end-July 2015

• Prepayments cover repayment of debt related to assets held for sale.

• Disbursements are amounts to be drawn from committed loan facilities in connection with delivery of newbuildings.

Actual disbursements may be lower and will e.g. depend on valuations.

• All numbers shown are forecasts and can change e.g. in case of sale of a vessel, prepayment, change in use of revolving facilities, etc.

• Bond debt at hedged value less JL’s own bond holding.


Revised earnings guidance for 2015 FY - Reflecting effect from termination of certain long-term employment, asset sales, impairment losses, etc.


Guidance as per 13 August 2015

Announcement #1 #2 #3 #4

USDm Annual report

25-Feb-15 Q1

11-May-15 Cease of charter

06-Jul-15 2015H1

13-Aug-15

EBITDA (20)-30 (50)-0 (65)-(15) (55)-(25)

Result from continuing operations (70)-(20) (100)-(50) (135)-(80) (200)-(170)

JL's share of the result (70)-(20) (100)-(50) (135)-(80) (200)-(170)

Market conditions for bulk carriers in Q1 expected to continue during 2015, negatively impacting our full-year earnings

Special items down by approx. USD (15)-(20)m Notice of risk of impairment connected to 2015H1

EBITDA range narrowed Includes total impairment losses of USD (173)m, whereof approx USD (79)m relates to existing handysize vessels and new buildings

Concluding remarks


- Markets appear to have stabilised, albeit at low levels

- Protecting our cash continues to be a key focus

2015FY earnings expected to be unsatisfactory low

• Current (mid-August) upturn in dry bulk rates not to be mistaken for a solid improvement

• Markets for smaller gas carriers see moderate improvements, save for F/P in Asia

Steps taken by JL

• Monetisation of employment contracts

• Asset sales, including exiting from vessel ownership in the capesize segment

• Exchanging of CAPEX commitments into longer T/C-commitments

• Obtained commitment for refinancing of bank debt

JL’s status

• USD 155m liquidity at end-2015 Q2

• Solid 41% equity ratio at end-2015 Q2

• Robust average 68% loan to value

• Refinancing risk reduced even further

• In compliance with all financial covenants

http://sharenet.j-lauritzen.com/pg/Bulk/Working Situations/REB_2.jpg


Appendix

• Charter obligations and committed charter income

• Other business activities

• Contact details

• Disclaimer


Charter obligations

17

Operational lease liabilities (time charter and bare boat contracts) at end 2015 Q2

Bulkers Kosan

Total

(continuing operations only)

USDm

No. of vessels

(full year equiv.) USDm

No. of vessels

(full year equiv.) USDm

No. of vessels

(full year equiv.)

2nd half 2015 72.4 16.2 6.0 3.0 78.4 19.2

1 - 2 Year 120.3 26.4 7.7 4.3 128.0 30.7

2 - 3 Year 106.6 24.1 3.7 2.1 110.2 26.2

3 - 4 Year 97.3 22.4 - - 97.3 22.4

4 - 5 Year 72.8 17.0 - - 72.8 17.0

> 5 Year 222.6 51.1 - - 222.6 51.1

Total 692.1 - 17.3 - 709.4 -


At end 2015 Q2 JL had purchase options on 22 dry bulk carriers

Other business activities

18

Axis Offshore (accommodation and support vessels)


• Joint venture with HitechVision

• JL investment commitment maximum USD 66m

• JL ownership 33.6% (50% voting rights)

Other investments

Hafnia Tankers

• Lauritzen Tankers sold its fleet

of MR tankers to Hafnia Tankers

in 2013 (delivery completed 2014 Q1)

• At end 2015 Q2, JL held 5.3% of

the shares in Hafnia Tankers Ltd.

Dry bulk

• Co-ownership in J/Vs controlling

seven handysize vessels (operated by LB) and

two supramax vessels (not operated by LB)

• Co-ownership in a J/V controlling two orders on handysize

vessel newbuildings

Gas carriers

• Co-ownership in a J/V owning 3 ETH gas carriers

employed by Lauritzen Kosan

Hafnia Tankers is an international pure-play product tanker

company. The shares are quoted on the Olso OTC-list

• “Dan Swift” on T/C to Petrobras until end 2016 Q2

• ”Axis Nova”: Agreed with yard to allow for postponed

delivery to 15 July 2016. Cancellation rights, if any, not to

be exercised prior to 30 June 2016

• ”Axis Vega”: Expected ready for operation in Spring 2016

Axis Offshore Pte. Ltd.

– key figures

2015

Q1

JL share

USDm

EBITDA 6.0

Net profit 0.8 0.3

Total assets 301.6 103.1

Equity 141.9 47.7

Above information taken from Axis Offhore’s published information

http://www.axisoff.com/

http://www.hafniatankers.com/

Contact details

Investor relations

Jacob Winthereik Financial Investor Relationship Manager

E-mail: [email protected]

Phone: +45 3396 8384

Web: http://www.j-l.com


Press & Media

Jens Søndergaard Senior Vice President,

Strategic Planning & Executive Communications

E-mail: [email protected]

Phone: +45 3396 8401

Web: http://www.j-l.com

mailto:[email protected]



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Disclaimer

• This presentation contains forward-looking statements concerning J. Lauritzen A/S (“J. Lauritzen”, “JL” or the “Group”) and its financial condition, results of

operations and business. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking

statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown

risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements.

• Forward-looking statements include, among other things, statements concerning J. Lauritzen’s potential exposure to market risks and statements expressing

management’s expectations, beliefs, estimates, forecasts, projections and assumptions. There are numerous factors that could affect J. Lauritzen A/S’ future

operations and could cause J. Lauritzen A/S’ results to differ materially from those expressed in the forward-looking statements included in this presentation.

• All forward-looking statements contained in this presentation are expressly qualified by the cautionary statements contained or referenced to in this statement.

Undue reliance should not be placed on forward-looking statements.

• Each forward-looking statement speaks only as of the date of this presentation. J. Lauritzen does not undertake any obligation to publicly update or revise

any forward-looking statement as a result of new information or future events other than required by applicable law. In light of these risks, results could differ

materially from those stated, implied or inferred from the forward-looking statements contained in this presentation.

• Some of the statistical and graphical information contained in the presentation is supplied from the Clarkson Research Services Limited (“CRSL”) database

and other sources. CRSL has advised that (i) some information in CRSL’s database is derived from estimates or subjective judgments, (ii) the information in

the databases of other maritime data collection agencies may differ from the information in CRSL’s database, (iii) whilst CRSL has taken reasonable care in

the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation

procedures and may accordingly contain errors, (iv) CRSL, its agents, officers and employees cannot accept liability for any loss suffered in consequence of

reliance on such information or in any other manner, and (v) the provision of such information does not obviate any need to make appropriate further

enquiries. Any use of such data and graphical information appear with reference to Clarkson Research Services Limited

• While the information in the presentation is believed to be accurate, no representation or warranty, express or implied, is or will be made in relation to the

accuracy or completeness of this presentation or any other written or oral information transmitted or made available to any person or its advisors in connection

with any investigation of the Group and no responsibility or liability is or will be accepted by the Group or any of their respective affiliates and representatives.

In particular, no representation or warranty, express or implied, is or will be given as to the achievement or reasonableness of any statements, estimates and

projections with respect to the anticipated future performance of the Group and the market for the Group’s products and services.


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