Shipbuilding Market Overview Cargotec Capital Markets Day, Helsinki, 17 th November 2011. Steve Gordon, Clarkson Research Services Limited (CRSL) The information supplied herewith is believed to be correct but the accuracy thereof is not guaranteed and the Company and its employees cannot accept liability for loss suffered in consequence of reliance on the information provided. Provision of this data does not obviate the need to make further appropriate enquiries and inspections. The information is for the use of the recipient only and is not to be used in any document for the purposes of raising finance without the written permission of Clarkson Research Services.
Agenda 1. Market Position, Seaborne Trade, World Fleet 2. Regional Shipbuilding Capacity 3. Ship Type Investment & Outlook 4. Summary
Market Position: Clarksea Index ClarkSea Index '000 $/day 60 � Three very different The Clarksea Index is an average decades! w eighted index of earnings across 50 the major sectors of tankers, bulkers, containers and gas � Between the end of May 40 2008 and mid-April 2009, the Index fell from almost Average 1980s - $9,461/day 30 $50,000/day to a low of Avergae 1990s - $11,924/day Average 2000s - $21,720/day $7,350/day. 20 � 2009 & 2010 proved better than expected and low 10 interest rates helped. 0 � Sentiment now weaker - 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 as of 11 th November 2011, Source: Clarkson Research, April 2011 $11,142 / day The Clarksea The Clarksea Index (tankers, Index (tankers, bulkers bulkers, containers, , containers, gas) Source: Clarkson Research gas) Source: Clarkson Research
Cycle Position November 2011 LNG Gas & LPG Offshore Offshore better Container 1,700 teu Rates have continued to This chart shows Container 3,500 teu decline since the summer average earnings today for the ship Handy Quarterly type, as a % of Handym ax Upturn but lots the average Panam ax of supply to earnings during Capesize come the last 10 years Clean Products Tankers Afram ax depressed Suezm ax VLCC -100% -50% 0% 50% 100% 150% 200% 250% % deviation from 10 year trend
The World Economy - Sea trade cycles generally follow cycles in world GNP – but not precisely. World Seaborne Trade & GDP 8.0% Trade Grow th Seaborne Trade 2011, m.tonnes 2010 Oil Products 6.0% Gas 9% 1990-2008: trade Crude Oil linear 3% almost doubled 21% 4.0% trendline to 8.2bn tonnes Major 2007 2.0% Bulks – that is over 25% 2008 one tonne for 0.0% every person on World GDP the planet Grow th % -2.0% Other Dry 27% -4.0% 2009 Minor Bulks 13% -6.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Source: Clarkson Research Services Source: Clarkson Research Services. IMF
World Seaborne Trade 2000-2010 Trade Growth Global Seaborne Trade 8.2% Billion Tonnes 10.0 Iron Ore 7.9% Major Bulk Minor Bulk Container Container Trade Crude Oil 9.0 6.5% Oil Products Gas LNG Other 8.0 5.7% Coal 4% 7.0 5.3% Cruise average 4.9% 6.0 Cars 4.3% 5.0 Oil Products 3.9% 4.0 Baux./Alum. 2.9% 3.0 LPG 2.7% 2.0 Grain 2.5% 1.0 Minor Bulk 1.7% 0.0 Crude Oil -1.9% ) 0 2 4 6 8 0 2 4 6 8 Other e 9 9 9 9 9 0 0 0 0 0 -3.7% ( 9 9 9 9 9 0 0 0 0 0 0 1 1 1 1 1 2 2 2 2 2 1 Phos. Rock % Grow th Per 0 2 -5.0% 0.0% 5.0% 10.0% A Source: Clarkson Research, April 2011 Source: Clarkson Research, April 2011
Seaborne Trade Outlook Seaborne Trade Scenarios Billion Tonnes 18 Chinese Imports 16 � We expect trade to grow by World Less China 7% scenario around 5% in 2011 but there 14 4% scenario are lots of risks given economic 3% scenario 12 1% scenario developments / uncertainty and 10 there is a lag on trade data. Period % p.a. 1951-60 6.3% 8 � For planning purposes, 4% 1961-70 9.1% 1971-80 3.5% growth in trade over the next 6 1981-90 2.3% 1991-00 3.9% decade does not seem 4 2001-10 3.7% unreasonable. 2 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Source: Clarkson Research, April 2011
Age Profile –11% of fleet above 25 years 100 Million GT Deliveries 80 Relatively few vessels built in the 1980s so limited 60 replacement requirement 40 20 0 1971 1981 1991 2001 2011
World Fleet 1986 - 2012 World Fleet Development Million Growth Rates : 1200 10% � This year the fleet moved 8% 1000 past the billion GT mark 6% � Fleet growth has moved up 800 to 7-8% in recent years and 4% this is also forecast for 2011 600 and 2012. 2% � This is roughly double long 400 0% term trade growth and more than the 5% trade growth 200 -2% World Fleet Development expected this year. % Growth � 0 -4% Graph in GT 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 (f) Source: Clarkson Research, April 2011
Agenda 1. Market Position, Seaborne Trade, World Fleet 2. Regional Shipbuilding Capacity 3. Ship Type Investment & Outlook 4. Summary
World Shipbuilding & Scenario Market Peak – Surplus 100 2010 or 2011? Capacity Million GT Deliveries 80 The last shipbuilding peak was in 1975 when output reached 36 60 million GT – 35 year cycle 40 20 0 1971 1981 1991 2001 2011 2021
Shipbuilding Output by Country & CGT 60 Million CGT Deliveries Europe Japan S. Korea China 40 Others 20 0 1996 1998 2000 2002 2004 2006 2008 2010
Shipbuilding – Waves of Competition 100 Other 90 China USA 80 % total ships launched 70 Korea 60 50 40 Scandinavia 30 Japan 20 Europe 10 Britain 0 1902 1907 1912 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 Source: Maritime Economics (2009)
China takes the lead….. Global Shipbuilding Share (2011 YTD Delivery in Dwt) Global Shipbuilding Share - Delivery Europe Others 70% 2% % DWT Deliveries 4% China Europe Japan Japan South Korea 20% 60% Others 50% 40% China 30% 41% 20% 10% 0% 2011 YTD 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 S. Korea 33% Source: Clarkson Research Services
South Korean success in high value orders Global Shipbuilding Share (2011 YTD contracting in CGT) Global Shipbuilding Share - Contracting Europe Others 60% Japan 6% % CGT Deliveries 7% China Europe 5% Japan South Korea Others 50% 40% 30% China 32% 20% 10% 0% 2011 YTD 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 S. Korea 50% Source: Clarkson Research Services
World Shipbuilding by Country 2010 Million CGT Output 2010 0 5 10 15 20 25 China 19.0 223 yards S. Korea 16.0 30 yards Japan 9.7 78 yards Germany 0.8 What is CGT? Italy 0.7 CGT is the Gross Tonnage (GT) 0.6 Philippines of the ship weighted to reflect its 0.5 Norway work content per GT. For 0.5 Turkey example the weight for a 0.4 containership might be 1.0 and Spain the weight for a big tanker 0.25) Netherlands 0.3 3.6 Others Source: Clarkson Research
World Shipbuilding by Country 2011 YTD Million CGT Output in 2011 0 5 10 15 20 25 14.7 China 232 yards 13.1 S. Korea 31 yards 7.0 Japan 68 yards What is CGT? 0.4 Germany CGT is the Gross Tonnage (GT) 0.4 Italy of the ship weighted to reflect its Norway 0.2 work content per GT. For 0.2 Turkey example the weight for a 0.2 Spain containership might be 1.0 and the weight for a big tanker 0.25) 0.2 Netherlands 2.4 Others Source: Clarkson Research
World Shipbuilding Capacity 2010 - CGT World Shipbuilding Production by Country COUNTRY Tankers Bulkers Containers Gas her Total Output M CGT M CGT M CGT M CGT M CGT M CGT China 3.9 10.3 1.7 0.1 3.0 19.0 S. Korea 4.6 3.0 4.8 2.2 1.4 16.0 Japan 2.3 4.7 0.8 0.6 1.3 9.7 Germany 0.0 0.0 0.2 0.0 0.6 0.8 Italy 0.0 0.0 0.0 0.0 0.7 0.7 Philippines 0.1 0.3 0.2 0.0 0.0 0.6 Norway 0.0 0.0 0.0 0.0 0.5 0.5 Turkey 0.3 0.0 0.0 0.0 0.1 0.5 Spain 0.0 0.0 0.0 0.0 0.3 0.4 Netherlands 0.0 0.0 0.0 0.0 0.3 0.3 All Others 0.4 0.5 0.4 0.0 2.2 3.6 Total 11.6 18.8 8.1 3.0 10.5 52.0 Indicates market leader for each ship type
World Shipbuilding Capacity 2011 YTD - CGT World Shipbuilding Production by Country COUNTRY Tanker Bulk Carrier Containership Gas Others Total China P.R. 2.6 9.3 0.7 0.1 2.1 14.7 South Korea 3.3 3.6 4.2 0.7 1.4 13.1 Japan 1.6 4.2 0.4 0.2 0.6 7.0 Philippines 0.0 0.6 0.0 0.0 0.0 0.6 Italy 0.0 0.0 0.0 0.0 0.4 0.4 Germany 0.0 0.0 0.0 0.0 0.3 0.4 Taiwan 0.0 0.1 0.2 0.0 0.0 0.3 Vietnam 0.0 0.2 0.0 0.0 0.1 0.3 Norway 0.0 0.0 0.0 0.0 0.2 0.2 Turkey 0.1 0.0 0.1 0.0 0.0 0.2 All Others 0.2 0.2 0.1 0.0 1.1 1.6 Total 7.8 18.1 5.6 1.0 6.3 38.8 Indicates market leader for each ship type
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