PRESENTATION FOR ITMMA Creating and running an International Group Antwerp, 21st April 2008 1
2 INTERNATIONAL GROUP EURONAV AN
Belgian Public Company engaged in owning, operating and managing bulk transportation of crude oil EURONAV Stock Exchange: EURONEXT Ticker: EURN Bloomberg: EURN BB Reuters: EURN.BR GREEK BELGIAN Internationally held LIVANOS Families SAVERYS Families Free Float 20% 37.5% 42.5% 3
EURONAV FLEET 7% 4% 4% 4% 4% 7% 29% 29% 35% 35% 17% 4% 17% 4% Vplus VLCC Owned Vplus VLCC Owned VLCC TC-in (weighted) N/B VLCC VLCC TC-in (weighted) N/B VLCC Suezmax N/B Suezmax Suezmax N/B Suezmax Aframax Aframax
Owner, Operator, Manager Vessel Type Cargo intake/Vessel Owned TC-In or BB World Fleet V-PLUS 3 mbls 2 0 4 VLCC 2 mbls 12 8 incl. J/V 474 (11+ (2 x 50% in J/V)) (weighted 5,85) New Building 2 mbls 2 (CSR) VLCC Suezmax 1 mbls 15 0 361 (13 ice class) New Building 1 mbls 5.5 (3 in JV) Suezmax (1 ice class & 5 CSR) Aframax 0.6 mbls 0 2 (BB) 742 TOTAL = 39 Vessels and 7.5 Newbuildings 2 VPlus 15 Suezmax 20 VLCC 5.5 N/B Suezmax 5 2 N/B VLCC 2 Aframax
WORLD’S LARGEST TANKERS… 6
Can carry eq. to 5.6 million kegs Longer than the of Beer! Eiffel Tower! From keel to deck it is taller than a 7 storey high building!! 7
8 MARKET VLCC TRADES MARKET VLCC TRADES
9 An International Business YEMENI WATERS
10 An International Business MALAYSIAN RECEIVERS CANADIAN CARGO SAUDI CARGO
An International Business DUTCH SALVORS – FRENCH DUTCH SALVORS – FRENCH FLAG SHIP – CREW FRENCH FLAG SHIP – CREW FRENCH BULGARIAN AND PHILIPPINO BULGARIAN AND PHILIPPINO 11
An International Business NORTH ATLANTIC NORTH ATLANTIC NORWEGIAN CARGO NORWEGIAN CARGO CANADIAN RECEIVER CANADIAN RECEIVER 12
13 An International Business BELGIAN SHIP BELGIAN SHIP
14 An International Business INTERNATIONAL WEATHER INTERNATIONAL WEATHER
15 EURONAV’S DEVELOPMENT MARKET EVOLUTION AND
The tramp bulk markets Historically have involved: – high volatility; – focus on low cost operations as a hedge against volatility; – trading in ships as a major source of revenue i.e. buy cheap, sell expensive producing the value in the business – carriage of cargo, something to do whilst waiting to play the cycle. 16
World VLCC Fleet 100 200 300 400 500 600 700 800 0 1965 World VLCC Fleet Size 1968 One cause was an overbuilt 1971 1974 1977 1980 1983 1986 1989 fleet 1992 1995 1998 2001 2004 2007 50 60 70 80 90 100 110 120 Oil Consumption (mbpd) . 17
HISTORIC RATES $100.000 AG - East $90.000 $80.000 $70.000 US$ / Day $60.000 1977 –1990 avg: $10,479 $50.000 $40.000 $30.000 $20.000 $10.000 $0 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Source: Poten / Clarksons 18
Bulk Markets capital Vs People • In the old environment operations did not add real value. Lost revenue could be offset by reduced costs . Best exemple is lay up • Capital cost – timing in and out of the market was everything • Ship management was outsourced whole sale to third party managers to achieve economy of scale. 19
Post 2000 • Customer consolidation in late 90s:Total Fina Elf – Total Chevron Texaco – Chevtex BP, Amocco, Arco – BP Exxon Mobil – Exxom The focus in these mergers was squeezing the lemon. • Boom in profitability from production of oil and refining. More people, consuming more energy more of which is made up of oil • What could go wrong for an oil company A spill Poor logistics, oil not in the right place at the right time 20
TCE EARNINGS FOR VLCCs
IMO SINGLE HULL BAN Erika Erika • In 1999 the International Maritime Organisation (IMO) decided to ban single hull tankers from 2015. Prestige Prestige • Single hulls carrying heavy crude were banned in Europe in October 2003. • In December 2003 the IMO brought forward the date from 2015 to 2010. 22
Hebei Spirit Single Hull collision = possible Oil Spill
Samco Europe Double Hull collision : No oil spill
Health and Safety Quality and the Environment • From January 2003 onwards the world is clearly short of ships • As the fleet grows, it is clear that the world is short of qualified seafarers • Customers will now pay for ship and quality services, because they are enjoying record profitability and cannot afford business disruption • Customer are mega public companies seeking competitive advantage through corporate social responsibility H & SQE. 25
THE CURRENT TI POOL THE CURRENT TI POOL Wah Kwong Kwong Wah Wah Kwong OSG OSG OSG Euronav Euronav Euronav Petronas Petronas Petronas Oak Oak Oak Oldendorff Shinyo Oldendorff Oldendorff Shinyo Sanko Sanko Sanko Established in 2000 26
THE TI FLEET Rest of World Fleet Single hull: 0 156 Double hull: 42 320 Total fleet: 42 432 % double 100% 76% hulled: Average age of 7.6 years 8.8 years fleet: 27
WHY POOL ? Improved Performance = Improved Earnings • Improved Performance = Improved Earnings • Greater flexibility which means more earning days. Ballast Vs Laden den • Greater flexibility which means more earning days. Ballast Vs La • Improved expertise through dedicated roles improving reliability of of • Improved expertise through dedicated roles improving reliability • service service • A large uniform fleet provides A large uniform fleet provides • • Economies of scale (agent, bunker, admin.) Economies of scale (agent, bunker, admin.) • Global operation • Global operation • Vettings / Approvals programme / Approvals programme • Vettings • • Increased access to information Increased access to information • • Increased access to contracts Increased access to contracts • 28
Euronav’s revenue strategy • The current business strategy is to manage revenue volatility through time charter where earnings are fixed daily rate either with or without a profit share • Pooling spot vessels to insure improved exploitation through optimisation • Professionalism of people ashore and on board is key to quality service necessary for time charter strategy and for optimisation under a spot strategy 29
Current Business Environment • With ship values up, finance costs are up and the proportion of daily cost related to quality services is down • The quality premium that charterers in sensitive geographical locations will pay is up • Where are the sensitive locations ? Atlantic Basin, Med, Black Sea, North Sea and Baltic • Euronav in its pools and time charters is focusing on these areas for trade 30
31 INTERNATIONAL GROUP MANAGING AN
Make up of Euronav Staff • 31/12/06 1,292 seafarers on Board our vessels, 635 officers, 80 cadets, 657 ratings • 6 nationalities make up the vast majority of our crew, Belgian, French, Greek and Bulgarian officers with Salvadorian and Philippino deck hands • Ashore Euronav has four offices: Antwerp, Piraeus, London and Nantes with 87 shore base staff 32
Composition of Office staff Shore staff by function HR,Legal 3 A dmin 4 Finance 20 O perations 5 IT 6 M gmt 8 Technical 14 Purchasing 7 M arine 8 Crewing 12 34
35 Multiple Locations Shore staff by location Nantes Piraeus 9 32 London 8 Antwerp 38
How to ensure uniform professionalism and competence • Professionalism and competence existed due to a history of keeping faith with national flags. • It is sub optimal to run 4 offices but it also provides access to 4 labour markets • Uniformity is necessary, but if imposed top down the culture of the company can be oppressive and unfulfilling with the con commitment risk of loss of staff and therefore value • Too much autonomy and Euronav will behave like a different company in each office and in each department. E.G. Franship when owned by CNN in the early 1990s 36
Develop a corporate culture which transcends nationality and language • Improve communication (English language, terminal server, newsletter, social interraction) • Standardise working procedures; • Rebranding the company • Common business ethic (cooperate, be rational, benchmark); • Cross functional, cross branch, self directed work teams; • Clarity of roles, expectations and authorities; • Emphasis on quality and professionalism; • Open communication and no blame culture. 38
Mission For our society, to deliver worldwide the primary source of Energy needs in ways which are economically, socially, ethically and environmentally viable, now and in the future. For our clients, to run safe and effective operations that contribute to the success of their business objectives by setting higher standards of quality and reliability. For our people, to develop, inspire and lead talented people to achieve their career goals in a healthy, challenging and rewarding environment. For our shareholders, to create significant lasting value by strategically planning financial and investment decisions while operating a first class business. 40
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