18 August 2020 Q2 and first half 2020 Presentation
Covid-19 – Staying true to our purpose and our values OUR PRINCIPLES ○ Take social responsibility for employees and community ○ Be financially prudent for our shareholders ○ Maintain operational stability for our customers ○ Protect long-term operational capabilities to be ready to meet the future 2
Highlights second quarter 2020 ○ Adjusted EBITDA of USD 104 million, volumes and income for the group highly impacted by impact of Covid-19 pandemic ○ Earnings balanced by effective cost control, higher net freight per CBM and low net bunker costs ○ Ocean volume declined 45% y-o-y, but decisive action to adjust fleet capacity and reduce costs contributed to bolster earnings ○ Performance in Landbased fell as a result of lower volumes, strongly impacted by OEM plant closures and production cutbacks ○ USD 539 million in cash, up from USD 451 at end of first quarter, supported by measures put in place to protect and strengthen cash flow ○ Provisions increased by USD 55 million related to updated estimates of customer claims related to the antitrust case 3
Agenda Business update Financial performance Market update Outlook and Q&A
Business update by Craig Jasienski
Business update Financial performance Market update Outlook and Q&A Ocean volumes decline 45% y-o-y Largest decline for Auto Million CBM • Unprorated (loaded) % 18.8 19 45 18.4 -45% -28% volumes down 50% y-o-y, 18 17.3 17.1 17.0 17.0 Volume and cargo 17 16.5 while prorated volumes 40 16.2 16.1 mix development 1,2 15.7 16 benefitted from a relatively 15 35 Million CBM and % 14 strong March and were 13.0 13 30 down 45% y-o-y 12 Prorated volumes 11 25 • Impact from Covid-19 10 9.4 High&heavy share, unprorated 9 driving volume 20 8 development 7 15 6 • High & heavy share 40.3% 5 10 4 • Auto volumes relatively 3 5 2 more affected, down 57% 1 vs H&H down 34% 0 0 Q3’17 Q4’17 Q1’18 Q2 ’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 (unprorated) 1) Total volume based on prorated volume (WW Ocean, EUKOR, ARC and Armacup) 2) H&H share calculated based on unprorated volumes. Nominal volume for auto and H&H calculated as total prorated volume x unprorated auto share and total prorated volume x unprorated H&H share, 6 respectively
Business update Financial performance Market update Outlook and Q&A Lower volumes across all main trades EU-Asia and EU/NA – Oceania hardest hit compared to last year EU - ASIA Asia - EU Atlantic -59% -45% -34% -5% 3.0 -47% -38% 3.2 2.3 2.2 2.1 2.9 2.5 1.2 1.5 Q2’19 Q1’20 Q2’20 Q2’19 Q1’20 Q2’20 Q2’19 Q1’20 Q2’20 Asia - NA EU/NA – Oceania 1) -35% -21% 3.1 -60% -36% 2.6 1.8 2.0 Asia - SAWC 1.1 0.7 -52% -35% Q2’19 Q1’20 Q2’20 1.1 Q2’19 Q1’20 Q2’20 0.8 0.5 WW Ocean trade routes EUKOR trade routes ARC trade routes Q2’19 Q1’20 Q2’20 ARMACUP trade routes Note: Prorated volumes on operational trade basis in CBM 1) Including Cape sailings (South Africa) 7
Business update Financial performance Market update Outlook and Q&A Few contract renewals in second quarter, with minor impact Overview of 2020 contract renewals Rate changes and impact from Q2 2020 contract renewals Per cent. (Circle indicates size of contract in millions) Rate change Contract renewals Q2 2020 Per cent. Contract renewals Q1 2020 30 20 Renewed 47% 10 0 -10 To be renewed 52% -20 Not renewed 1% -30 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 2020 Rate impact (USD millions) 8
Business update Financial performance Market update Outlook and Q&A Managing cash Measures underway with up to USD 210 million impact on cash in 2020 Ocean segment Landbased segment Group • • • Cancellation/deferral of scrubber Deferral of all non-essential Cancel and pause non-essential installations CAPEX projects • • • Early recycling of vessels Temporary lay-off of production Non-salary related SG&A savings workers program • Cold lay-up of vessels • Voluntary temporary salary • Delay vessel drydocking reductions & furloughs • Ship management savings • Deferral of loan instalments *Number includes a combination of recurring and non-recurring effects 9
Business update Financial performance Market update Outlook and Q&A Managing capacity Adjusting our fleet to meet demand Fleet development – vessels in operation RECYCLING # of vessels ○ 1 vessel recycled in Q2 ○ 1 vessels to be recycled in Q3 127 127 126 ○ 2 vessels to be recycled in Q4 123 123 121 120 0 1 1 117 0 0 COLD LAYUP 48 48 46 48 43 42 41 40 ○ 15 vessels in cold layup in Norway and Malaysia currently ○ Additional 5 vessels under evaluation REDELIVERY 80 79 79 79 79 79 78 78 ○ 2020: 7 vessels redelivered ○ 2021: 3 redelivery candidates ○ 2022: 4 redelivery candidates -1 -1 -3 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 April May June Owned Chartered Short Term T/C In/Out 10
Financial performance by Astrid Martinsen
Business update Financial performance Market update Outlook and Q&A Consolidated results – Q2 2020 Performance impacted by lower volumes, to some extent offset by effective cost control % change % change Q2 2020 Q1 2020 Q2 2019 Q-o-Q Y-o-Y Total income 606 834 -27% 1005 -40% Operating expenses (564) (703) -20% (793) -29% EBITDA 42 130 -68% 211 -80% EBITDA adjusted 104 130 -20% 211 -51% EBIT (45) (132) n/a 88 n/a Financial (30) (153) -80% (83) -63% income/(expenses) Tax income/(expense) 6 (0) n/a (3) n/a Profit for the period (69) (285) n/a 3 n/a EPS (0.15) (0.65) n/a 0.00 n/a 12
Business update Financial performance Market update Outlook and Q&A Ocean segment – Q2 2020 Adjusted EBITDA down 43% due to lower volumes, lower net bunker cost had a large positive impact Adjusted EBITDA 1 Total income USD million USD million • Revenue declined 38% Adjusted y-o-y as a result of Extraordinary items lower volumes though -43% -8% -24% -38% partly offset with higher 800 188 184 773 net freight/CBM 756 171 compared to Q2 2019 652 • EBITDA down by 43% 495 113 due to the lower 104 141 volumes but slightly 42 compensated by a much lower net bunker cost of about USD 35 - 40m 62 (adjusted for volume 30 effects) Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 1) Adjusted for extraordinary items 13
Business update Financial performance Market update Outlook and Q&A Landbased segment – Q2 2020 EBITDA fell by 88% as a result of lower volumes Adjusted EBITDA 1 Total income USD million USD million • Revenue down 47% EBITDA Extraordinary items y-o-y as lower volumes impacted across all -93% -88% -39% -47% segments, significantly 35 235 impacted by plant 221 212 205 29 closures as a result of 29 Covid-19 21 • EBITDA fell 93% y-o-y 126 with particularly 26 Solutions Americas – Auto contributing to the decline 2 3 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 1) Adjusted for extraordinary items 14
Business update Financial performance Market update Outlook and Q&A Consolidated results – first half year 2020 Performance impacted by lower volumes % change 1H 2020 1H 2019 Y-o-Y Total income 1439 2022 -29% Operating expenses (1267) (1592) -20% EBITDA 172 430 -60% EBITDA adjusted 234 430 -46% EBIT (176) 183 n/a Financial income/(expenses) (183) (153 ) 20% Tax income/(expense) 7 (5) n/a Profit for the period (353) 25 n/a EPS (0.80) 0.04 n/a 15
Business update Financial performance Market update Outlook and Q&A Cash flow and liquidity development – Q2 2020 Free cash flow of USD 178 million USD million Undrawn credit facilities -11 -1 -16 1 244 -37 136 267 -83 -7 104 539 451 Liquidity Adjusted Δ Working Other effects Taxes paid Net CAPEX Net other Interest paid Net debt Other Liquidity Q1 2020 EBITDA cap. investing incl. financial uptake financial items Q2 2020 cash flow derivatives Operating cash flow Financing cash flow Investing cash flow 229 -15 -127 16
Business update Financial performance Market update Outlook and Q&A Balance sheet – Q2 2020 Stable net debt and equity ratio Balance Sheet 30.06.2020 Assets Equity & Liabilities USD billion • Equity ratio 34.4% 7.4 7.4 stable from last quarter Equity 2.6 • Provisions increased by USD 55 million Non current assets 6.4 related to updated estimates of customer Non current liabilities 3.8 claims • Net debt stable Current assets 1.0 Current liabilities 1.0 17
Market update by Craig Jasienski 18
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