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Shipping, Offshore & Oil Services Presentation Stockholm February 13, 2012 Hans C. Kjelsrud, Head of Shipping, Offshore and Oil Services Disclaimer This presentation contains forward-looking statements that reflect managements current


  1. Shipping, Offshore & Oil Services Presentation Stockholm February 13, 2012 Hans C. Kjelsrud, Head of Shipping, Offshore and Oil Services

  2. Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Nordea believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors. Important factors that may cause such a difference for Nordea include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) change in interest rate and foreign exchange rate levels. This presentation does not imply that Nordea has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided. 2 •

  3. Key messages • Nordea is a globally leading shipping and offshore bank with strong long term relationships with major shipping and offshore companies • Operating profit after loan losses of EURm 233 in 2011 – third highest ever • Near term outlook is weak for crude tankers, dry cargo and containerships but robust for offshore, oil services, cruise and LNG • Orderbooks for major shipping segments are gradually reducing and we are getting closer to a balanced market • Our strategy and commitment to the industry remains intact 3 •

  4. • About our division • Financial results • Shipping markets • Offshore markets • Cruise and ferry markets • Risk management

  5. Our business • A globally leading industry bank with a strong international brand name and robust historical returns • Inherently cyclical and volatile markets, but our loan portfolio is well diversified across segments, geography and clients • Long standing relationships with the worlds leading shipping, offshore and cruise companies • Consistently ranked as a global leader in loan syndications • Presence in all Nordic and key international markets 5 •

  6. Our strategy • Our strategy is global, but our core markets are Europe, North America and selected countries in Asia • Focus on risk management, capital efficiency, and profitability • Broad relationships with large, transparent companies that own and operate modern assets • Market leadership built on strong industry and credit skills • Leverage our relationship platform to grow products sales • Our loans should generally be secured by 1 st priority mortgages on modern assets 6 •

  7. Diversified and balanced portfolio Exposure of EURm 19,700 with drawn loans of EURm 13,600 11 % Crude Tankers Miscellaneous Ferries / Ropax 11% Dry Cargo 2% 10% Cruise 4% Other Oil Services Product Tankers 8% 2% Shipping FPSO / FSO 58 % Integraded Oil 3% Services Chemical Tankers 6% 4% Supply Vessels 6% Car Carriers 7% Gas – LNG Drilling Rigs 4% 10% Gas - LPG 3% RoRo 2% Container Vessel 2% Multi Purpose 1% 1% Other Diversified across: Segments Geography Clients 7 •

  8. Competitive landscape • Ship finance market dominated by European banks • Number of competitors and lending capacity significantly reduced since start of financial crisis • New transactions executed on conservative structures • Attractive pricing environment with new transactions priced in range of 250 – 400 bps • Recently higher activity within the offshore and oil services segment than in shipping • Limited number of capable lead banks for large transactions 8 •

  9. A typical financing • A fleet of modern ships or offshore assets • Tenor of 5-7 years st priority mortgages in the assets financed • 1 • Loan-to-value ratio of 50-75% • Loan repayment profile steeper than asset depreciation • Minimum security covenant of 120 -140% • Covenants in respect of net worth, cash flow, leverage and liquidity 9 •

  10. • About our division • Financial results • Shipping markets • Offshore markets • Cruise and ferry markets • Risk management

  11. Financial results (2006 – 2011) From 2008 to 2011 total income is up 38% while lending volume is down 2% In EURm 2006 2007 2008 2009 2010 2011 Total income 216 236 313 370 393 433 Total expenses (42) (45) (50) (49) (56) (64) Profit before loan losses 174 191 263 321 336 369 Loan losses, net 1 1 (11) (96) (45) (135) Operating profit 175 192 253 225 292 233 Lending volume 9.371 11,253 13,820 12,852 13,608 13,561 RAROCAR 28% in 2011 Exceeding Nordea Group’s target of 21% 11 •

  12. Continued increase in credit spreads Basis points • We expect credit spreads to 200 continue to increase 180 • New loans are typically priced between 250 and 400 160 bps 140 • Continued imbalances in 120 supply and demand for financings 100 80 60 40 20 0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 (*) From 2010 spreads are affected by a new funds transfer pricing model 12 •

  13. • About our division • Financial results • Shipping markets • Offshore markets • Cruise and ferry markets • Risk management

  14. Orderbook shipping (as % of fleet) 90% • Orderbooks peaked in 2008 80% • Limited contracting of new vessels since then 70% • Present orderbooks 60% probably overstated 50% • Limited new orders will be key to restore market 40% balances 30% 20% 10% 0% 1996-01 1996-09 1997-05 1998-01 1998-09 1999-05 2000-01 2000-09 2001-05 2002-01 2002-09 2003-05 2004-01 2004-09 2005-05 2006-01 2006-09 2007-05 2008-01 2008-09 2009-05 2010-01 2010-09 2011-05 2012-01 Tanker Bulker Containerships Source: Nordea/Clarksons 14 •

  15. Dry bulk freight rates and values (2001 – 2012) Freight Value Index USDm • Currently at record low 12 000 140 levels, high volatility 120 • Weak outlook for the 10 000 next 12 months 100 • Outlook hampered by 8 000 double digit annual fleet 80 growth through 2012 6 000 • Demand dependent on 60 Chinese import of iron 4 000 ore as input to steel 40 production 2 000 20 0 - 30% Orderbook Freight Index - BDI Value - Capesize 10Y Value - Capesize. NB Source: Nordea/Clarksons 15 •

  16. Crude tankers freight rates and values (2001 – 2012) Freight Value • Weak earnings and falling Index USDm asset values during 2011 3 500 180 • Charter preference for 160 3 000 modern tonnage 140 • Older vessel uneconomical 2 500 120 due to high bunker consumption 2 000 100 • Strong Chinese growth 80 1 500 partially offset by 60 dampened OECD oil 1 000 demand 40 500 20 0 0 20% Orderbook Freight Index - BDTI Value - VLCC 10Y value - VLCC NB Source: Nordea/Clarksons 16 •

  17. Product tanker freight rates and values (2001 – 2012) Value Freight • Deliveries peaked earlier USDm Index than for crude tankers 2 000 60 • Modest product tanker 1 800 orderbook 50 1 600 • Closer to market balance 1 400 40 1 200 1 000 30 800 20 600 400 10 200 0 0 11% Orderbook Freight Index - BCTI Value - MR 45k. 10Y Value - MR 47k. NB Source: Nordea/Clarksons 17 •

  18. Chemical tankers freight rates and values (2001 – 2012) Freight & • Modest freight rates since 2008 Value as double digit fleet growth Index coincided with weak trade 2,50 development • Increased cargo volumes, but 2,00 suffers from overhang of capacity 1,50 • Small orderbook is a key factor for improved market ahead 1,00 0,50 - 9% Orderbook 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Freight index. 1Y TC Value index. NB Value index. 5Y Source: Nordea 18 •

  19. Container ships freight rates and values (2001 – 2012) Freight Value • Marginal exposure for Index USDm Nordea 250 80 • Reduced rates and 70 softening vessel values 200 through 2011 60 • Modest consumer 50 150 demand in western economies a main 40 contributor 100 30 • Signs of improvements in the US economy 20 positive 50 10 • Assumed continued pressure on rates and 0 - values the next 12 months Freight Index Timecharter - Container Value - 3.5k teu. 10Y 27% Orderbook Value - 3.5k teu NB Source: Nordea/Clarksons 19 •

  20. Other shipping markets • Liquified Natural Gas – LNG • Strong present market • Realisation of important LNG export projects in the Middle East have lifted fleet utilisation and profitability • Positive outlook • Liquified Petroleum Gases – LPG • Strong freight market through the 2nd half of 2011 • Major contributor were high Middle East LPG exports (+17%) and low fleet growth (2%) • Positive market conditions expected ahead • Car carriers • Highly industrialised segment with limited fleet growth • Significant scrapping during 2009 helped restore the market • Robust demand from US consumers • Conditions expected to remain favourable 20 •

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