Orient Overseas (International) Limited Annual Results 2018 - PowerPoint PPT Presentation

Orient Overseas (International) Limited Annual Results 2018

Disclaimer • The information provided is for reference only and includes data obtained from sources provided by the relevant information provider(s) and is subject to change without notice. Orient Overseas (International) Limited (“OOIL”) and its affiliates, and the concerned information provider(s), make no representation and accept no responsibility as to the accuracy, completeness, timeliness and fitness for a particular purpose and expressly disclaims any liability whatsoever for any loss whatsoever arising from or in reliance upon the whole or any part of the information. This information is neither a recommendation, an offer to buy, sell or trade in nor solicitation of an offer to buy, sell or trade in any investment. It is not intended to be a statement concerning investment, legal, tax, accounting financial or other professional or expert advice and should not be relied upon as such. • The information may include forward-looking statements about the operations, operatives and financial results of OOIL. Such statements are inherently subject to uncertainties arising from a variety of factors.

OOIL highlights Op. Profit (US$m) Container Transport & Cash Generation* Revenue (US$b) Logistics EBIT Margin (US$m) 6.6 263 (%) 590 550 Financial 3.2 6 238 1.9 11% 10% 7% 2018 2017 2018 2017 2018 2017 2018 2017 Good progress already made in: Synergy Savings - Network optimisation - Joint procurement - Information Technology - Equipment Utilisation Meaningful impact in 2019 Total Debt (US$b) Net Debt to Equity Liquid Assets US$2.2b Balance Sheet 4.6 0.43 4.2 0.41 2018 2017 2018 2017 Liftings 6.7 million TEU 6% Growth Loadable capacity 8.1 million TEU 7% Progress in digital technology, and build out of logistics business. * Operating profit before working capital changes. 3

Group result breakdown Restated US$M 31-Dec-2018 31-Dec-2017 Container Transportation and Logistics – EBIT 210.3 111.4 EBIT margin 3.21% 1.87% Property and Investments - EBIT 48.2 56.2 Wall Street Plaza Hui Xian 13.4 32.3 Interest, Investments and Others 5.4 57.4 67.0 145.9 OOIL GROUP - EBIT 277.3 257.3 Finance Costs (143.2) (97.4) Taxation (58.6) (12.4) Profit/(loss) from discontinued operation 32.7 (9.8) 108.2 137.7 OOIL Group Profit After Taxation 4

Group balance sheet highlights US$M 31-Dec-2018 31-Dec-2017 Non-current Assets 6,807 7,104 Current Assets 2,774 2,965 Assets held for sale 473 - Total Assets 10,054 10,069 Non-current Liabilities 3,806 4,007 Current Liabilities 1,372 1,379 Liabilities directly associated with assets 141 - classified as held for sale Total Liabilities 5,319 5,386 Shareholders’ Funds and Total Equity 4,735 4,683 5

Balance sheet Long term borrowings and short-term borrowings reduced US$234.2 million and US$122.2 million dollars respectively US$45.8 million increased finance costs due to increase in interest rates, increased proportion of fixed rate funding, and full year effect of financing newbuildings in 2017 and early 2018. Maintain access to competitive funding arrangements with diversified network of banks OOIL Net Debt to Equity * 2018 Annual Results Net Debt to Equity 7 6.41 6 5 3.87 4 0.43 0.42 0.41 3 0.32 0.28 0.25 2 1.28 0.91 0.12 0.7 1 0.06 0.41 0.36 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 MSK OOIL* EMC HPL CMA YML HMM 6 Net Debt to Equity (2017) Net Debt to Equity (End 3Q18)

Operating cash flow Strong cash generation through the cycles US$ millions 700 600 500 400 300 200 100 0 2015 2016 2017 2018 7 *Operating profit before working capital changes

Total liquid assets US$M 31-Dec-2018 31-Dec-2017 Cash and Bank Balances 1,646 2,005 Portfolio Investments, Equities and Bonds 601 529 Total 2,247 2,534 8

Net debt position US$M 31-Dec-2018 31-Dec-2017 Liquid Assets 2,247 2,534 Debt 4,198 4,554 Net Debt 1,951 2,020 9

Container transportation (excl. logistics) 2018 / 2017 2018 2017 % ▲ Liftings ('000 TEU) 6,697 6,299 6% Revenue (US$M) 6,003 5,466 10% Revenue Per TEU (US$) 896 868 3% Net Operating Capacity (TEU) 701,463 698,401 0% Load Factor (%) 82.9 83.7 0.8% pt Note: Results presented above include the discontinued operation, Long Beach Container Terminal. 10

Market situation Stronger peak season volumes and Shanghai Container Freight Index rates US$ SCFI spot rates performed better 1,350 through fourth quarter seasonality 1,150 Benefit of larger spot market exposure on TransPacific 1,074 950 Some increase volume may be driven 827 833 by front-loading 724 750 Revenue per TEU (US$) 650 1,200 1,040 936 1,000 890 861 550 773 800 600 350 400 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 200 0 SCFI Average 2014 2015 2016 2017 2018 11

Shanghai Container Freight Index US$ $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- Jan 2017 v 2018 Dec USWC (2018) USEC (2018) Europe (2018) USWC (2017) USEC (2017) Europe (2017) TransPacific vs AsiaEurope divergence is obvious 12

U.S. Consumer Confidence 160 140 120 100 80 60 40 20 0 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 U.S. consumer confidence Rebounded in February, following three months of consecutive declines. Negatively impacted in recent months by financial market volatility and the government shutdown, recovered in February. Consumers expect the economy to continue expanding, however, the pace of expansion is expected to moderate in 2019. 13 Source: The Conference Board

-1.5% -1.0% -0.5% U.S. Wholesale Inventories 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Source: Trading Economics Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 U.S. wholesale inventories May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 Average 1992 - 2018 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 14

Improving market fundamentals GDP Growth 2018 high supply side growth Limited new build ordering in 2018 gives certainty on future supply side risk 2016 2017 2018F 2019F 2020F 2021F 2022F 2023F Major economies continue World 3.3% 3.7% 3.7% 3.7% 3.7% 3.6% 3.6% 3.6% positive GDP growth albeit China 6.7% 6.9% 6.6% 6.2% 6.2% 6.0% 5.8% 5.6% slowing U.S. 1.6% 2.2% 2.9% 2.5% 1.8% 1.7% 1.5% 1.4% Source: IMF Trade negotiations on-going Global Container Trade Demand vs Supply (%) 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2013 2014 2015 2016 2017 2018F 2019F 2020F 15 Demand Fleet Growth* Source: Drewry * Drewry' s estimated effective capacity or net capacity

Industry trade volume FY FY FY Trade 2018 vs 2017 2017 vs 2016 2016 v 2015 Trans Pacific EB 7.7% 6.2% 4.7% 2.0% Asia Europe WB 4.4% 3.0% 5.3% 3.9% N/A Intra Asia Trans Atlantic 4.4% 7.1% (1.4%) WB Sources: Datamyne and CTS 16

Gross new building deliveries million TEU 9.2% < 7,499 TEU ships 1.8 1.73 7,500 -14,500NPX 8.5% > 13,300 TEU ships 1.6 1.47 6.2% 1.4 5.9% 1.30 4.7% 0.81 4.9% 1.19 1.2 1.13 1.09 0.60 4.6% 0.94 1.0 0.59 0.51 0.66 0.50 0.8 2.2% 0.48 0.57 0.6 0.55 0.70 0.05 0.51 0.39 0.4 0.36 0.36 0.37 0.34 0.2 0.32 0.23 0.22 0.23 0.20 0.17 0.15 0.12 0.0 2014 2015 2016 2017 2018 2019F 2020F 2021F 17 Source: Alphaliner (projections based on orderbook as at 1 March 2019)

Capacity vs Rates TEU US$ 490,000 $4,000 480,000 $3,500 470,000 $3,000 460,000 450,000 $2,500 Weekly Capacity 440,000 $2,000 430,000 $1,500 420,000 410,000 $1,000 400,000 $500 390,000 380,000 $- Janaury Janaury February March March April May June June July August August September October November November December January January February March March April May June June July August August September October November November December January January February March Jan 2017 / 2018 / 2019 Mar TransPacific Capacity USWC SCFI USEC SCFI 18 Source: Alphaliner Monthly (March 2019)

Weekly Capacity Capacity vs Rates 350,000 360,000 370,000 380,000 390,000 400,000 410,000 420,000 430,000 TEU Source: Alphaliner Monthly (March 2019) January Jan January February March March April May June June July August August September AsiaEurope Capacity October 2017 / 2018 / 2019 November December December January February February March April April Europe SCFI May June June July August August September October November November December January January Mar February March $- $200 $400 $600 $800 $1,000 $1,200 19 US$