April 2020 Investor presentation
Global LV sales expected to drop 12%, downgrades across all major markets IHS Markit Sales and Deepsea estimates 2020-2027 COVID-19 status update Auto LV Sales +3.6% -4.2% IHS Markit assume 2020 global LV sales set at LV Sales, million units -12.2% +5.4% +6.3% 100.6 98.6 78.8m for 2020, down 12% with downgrades 96.2 94.3 93.7 91.9 89.7 88.3 across all major regions, and risk of further 83.8 78.8 downgrade 11,0 10,5 9,9 9,5 8,9 9,2 8,3 8,6 8,1 20.1 7,6 19.9 19.6 19.5 20.7 19.4 20.3 19.0 18.6 Supply 17.2 21.1 21.0 20.7 21.0 20.6 20.5 20.6 19.8 18.8 18.0 Temporary plant closures in all major regions e.g. 30.5 31.4 28.5 29.5 27.5 26.1 27.5 25.3 24.3 22.8 Europe, NA, Korea and Japan, while Chinese operations appear to be recovering 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 LV deep-sea volume, million units ? Deepsea trade +3.3% -1.0% -11.9% +5.8% IHS Markit assume deepsea volume to see 16.5 16.3 15.9 15.7 15.2 15.1 decline from 14.9m in 2019 to 13.1m in 2020, 14.9 14.5 1.2 13.9 1.2 1.2 1.2 13.1 equal to a drop of 12%, with risk of further 1.1 1.1 1.1 1.6 1.6 1.1 1.5 1.1 1.4 1.3 1.4 1.0 1.3 1.3 1.3 downgrade 1.3 1.2 1.3 1.3 1.4 1.3 1.1 1.3 1.1 1.3 1.2 3.5 3.6 3.2 3.1 2.9 2.6 2.7 2.7 Demand 2.5 2.5 2.8 3.0 3.4 3.3 3.3 3.3 3.3 3.1 2.8 2.6 Large uncertainty to how fast consumers will 5.1 5.0 4.7 4.8 4.8 4.4 4.4 4.7 4.6 4.1 turn back to dealers, governmental stimulus such as tax brakes might contribute to rebound 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Source: IHS Markit ME/Africa S America Jp/Ko S Asia NA Europe G China 2
Retail sales 1,2 OEM sales estimates 3 COVID-19 status update H&H Sales (YoY) Government policies Sales (YoY) 10% +17% Construction 5% Mixed government responses, but H&H deemed +2% «essential» in several key markets and exempt 0% 01/19 03/19 05/19 07/19 09/19 11/19 01/20 from shutdowns due to the coronavirus outbreak -5% -5% -10% -8% -15% 2018 2019 2020e 2021e Production suspension Temporary plant closures in a number of affected Sales (YoY) Sales (YoY) regions e.g. Europe and Brazil, while Chinese +21% 30% operations appear to be recovering Mining 20% +4% +4% 10% ? Guidance withdrawals 0% 01/19 03/19 05/19 07/19 09/19 11/19 01/20 -10% -7% 2018 2019 2020e 2021e OEMs are withdrawing FY2020 guidance due to the uncertainty around the ultimate magnitude Sales/Reg. (YoY) of COVID-19 on financial and operational results Sales (YoY) 20% Agriculture +12% 10% Demand implications +5% 0% 01/19 03/19 05/19 07/19 09/19 11/19 01/20 -1% Reduced capex spend and postponed investment -10% -4% decisions due to current global economic 2018 2019 2020e 2021e -20% conditions and an uncertain outlook 1) Caterpillar | 3 month rolling retail sales (Units last 3 months y-o-y) 2) Tractor sales and registrations in key markets | US Large Tractors (2WD 100+HP & 4WD), Australia Large tractor (100+HP), Brazil (All), y (70KW+), UK (50+HP) 3) FactSet data and Analytics (30.03.20) | OEM Revenue Consensus Estimate (y-o-y). Construction: Volvo, Caterpillar, CNH, Komatsu, Hitachi, Terex. Mining: Sandvik, Caterpillar, 3 , Epiroc. Agriculture: AGCO, CNH, Deere. Sales in construction/mining/agriculture equipment divisions only
Operations in Covid-19 epicentres are partially disrupted Operational impact Overview of WalWil locations and status as of March 31 st ▪ Adjusting trading patterns and schedules in response to fluctuation in demand in the ocean business ▪ Terminals, though in many places congested, at this time remain open and operating ▪ Countries with strict lockdown rules, such as South Africa and India , forces closure of landbased sites ▪ Some sites in US and Mexico temporarily closed or disrupted due to little or no activity at some plants ▪ European sites remain open , but with some operational disruptions ▪ Other sites in Asia and Oceania are mostly open , but with some disruptions, and some closures 4
Ocean segment drivers and preventive measures Item Key characteristics Measures to adjust costs ▪ Auto contract duration typically 1-3 years, and 3-5 years for H&H Revenue ▪ Rates are fixed for the contract period, but no volume minimum ▪ Contracts representing 20% of revenue up for renewal in 2020 ▪ Approximately 70% of total costs are variable in ocean segment ▪ Adjust speed, adjust sailing schedules and idling of vessels Variable ▪ Variable costs consist of cargo, bunker and voyage expenses ▪ Tighter bunker inventory management cost ▪ Approximately 30% of total costs are fixed in ocean segment ▪ Redelivery of chartered vessels : Average charter hire saved per day for redelivery candidates in range USD 18 000 – 20 000 ▪ Ship operating and charter expenses considered short term fixed, and ▪ Cold lay-up for 10 vessels (OPEX reduction per vessel per day in lay- Fixed cost will move in steps, dependent on number of vessels operated up of USD 3000 – 4000) and defer drydocking ▪ Early recycling of up to four vessels, estimated positive cash impact of about USD 4 – 7 million per vessel ▪ CAPEX primarily related to planned dry-dockings, including ballast ▪ Reduce capex to critical maintenance and dockings water treatment systems installations ▪ Cancellation of 4 scrubber installations , cash impact of USD 20m in CAPEX ▪ Scrubber installation program for 16 vessels total (of which USD 5 million was estimated for 2020) ▪ Two newbuildings expected in Q2 2020 and late 2020 5
Landbased and group drivers and preventive measures Item Key characteristics Measures to adjust costs ▪ Inland distribution and technical services typically depend on factory throughput, and terminals on ocean volumes Revenue ▪ The anti-cyclical storage business may experience higher volumes Variable ▪ Approximately 75% of total costs are variable in landbased segment ▪ Adjusting variable costs in line with customer activity and volumes ▪ Approximately 25% of total costs are fixed in landbased segment and fixed cost ▪ Maintenance CAPEX related to equipment, sites and buildings ▪ Reduce CAPEX to critical maintenance, delay growth CAPEX CAPEX ▪ Growth CAPEX related to expansions of existing sites and new site developments Other measures taken on group-wide level ▪ SG&A: Limit/ban travel and entertainment, pause/cancel projects, postpone/cancel salary increase Group ▪ Dividend: Dividend cancelled fixed cost 6
Limited capital expenditures going forward Comments Overview of main capital expenditures 2020 (USDm) ▪ CAPEX reduced to a minimum, prioritizing safety 160 170 and maintenance critical expenditures C 15 ▪ Landbased CAPEX estimated at ~USD 10m for rest A 40 B of year mainly related to required maintenance D 50 ▪ Ocean CAPEX rest of year primarily related to: - Drydocking and ballast-water treatment B C 40 systems estimated to ~USD 40m - Scrubber installations estimated to about C D 50 USD 40m in 2020, for which we have 40 D committed financing of USD ~15m 55 - Two newbuildings remaining, with final D -115 Q2 15 instalments amounting to ~USD 40m per vessel. Financing of ~USD 50m per vessel will Q3 40 20 D be drawn after delivery. Estimated delivery 10 for the two newbuildings in May 2020 and Q4 20 A around year-end 2020 Landbased Ocean Group Total CAPEX Financing secured CAPEX net of funding 7
Very little refinancing requirements near-term and a solid liquidity position Debt maturity profile (USDm) Liquidity position EoY 2019 (USDm) 2 397 4 043 Installments (bank loans and leases) 775 70 Balloons (bank loans and leases) Bonds 1 190 Credit facilities (drawn) 377 Total 398 1 137 657 218 90 495 349 85 52 494 358 9 47 438 2020 2021 2022 2023-> Total Cash Undrawn Total facilities A strong balance sheet coupled with distant debt maturities gives confidence in a global trough 8
Covenants are measured on business unit level rather than group level Wallenius Wilhelmsen Unit / segment Typical covenants within the segment Limitation on ability to pledge assets Ocean Landbased Minimum liquidity Minimum liquidity Current assets / current liabilities Net debt / EBITDA Loan to value clauses Equity ratio Fixed charge / interest coverage 9
Preparing for post Covid-19 rebound Auto shipments in WW Ocean 1 H&H shipments in WW Ocean 2 hipments Shipments 000 units) Growth y/y (1000 units) Growth y/y +3.1% 50% 40% 00 1,800 +0.4% -38% 40% 1,600 30% -41% 30% 20% 1,400 00 20% 10% 1,200 10% 0% 1,000 00 0% -10% 800 -10% 600 -20% 500 -20% -30% 400 -30% -40% 200 -40% -50% 0 0 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 WW Ocean H&H shipments (CEU) Global growth y/y WW Ocean LV shipments WW Ocean LV growth y/y EUKOR H&H shipments (CEU) WW H&H growth y/y Global growth y/y RoRo shipping saw a significant rebound in the aftermath of the 2008/2009 financial crisis ce: 1) IHS Markit | World (major exporters) LV Deepsea exports (Value > 8 kUSD). 2) IHS Markit | World (major exporters) construction & rolling mining equipment and agriculture equipment exports (Avg. pment value >20 kUSD). WW H&H shipments do not include Commercial vehicles such as Buses & Trucks 10
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