DRY CARGO TONNAGE PROCUREMENT

Transcription

1 DRY CARGO TONNAGE PROCUREMENT Capital Markets Day Henrik Lykkegaard Madsen Vice President Copenhagen, Denmark 1 June 2012 NORDEN Dry Cargo Tonnage Procurement 1

2 AGENDA Business model Fleet overview Tonnage strategy aspects Regional trends in shipbuilding NORDEN Dry Cargo Tonnage Procurement 2

3 ASSET LIGHT BUSINESS MODEL NORDEN is the no. 1 foreign charterer of Japanese tonnage Long term charter contracts with options have been an important element in the expansion of NORDEN since the late 90 s Flexible fleet *Active (on order) Capacity Coverage and customer focus Employment Sale and purchase Technical competencies inhouse Option-based flexibility 3-7 year firm periods Owned 29 (5) LT chartered w. POP 40 (13) LT chartered 23 (1) Contracts of affreightment TC out FFA market Customer relations Logistical efficiencies 2-10 year firm periods Quick and easy cover Flexibility and scale Arbitrage Single-trip charters Other chartered (90) Spot market People Brand Systems * Active fleet per 30 June 2011 Active fleet per 31 March 2012 NORDEN Dry Cargo Tonnage Procurement 3

4 DRY CARGO CORE FLEET OVERVIEW Vessel type Owned (on order) LT TC (on order) w/pop w/o POP Size (DWT) Typical length Main cargoes 3 (-) 1 (-) 0 (-) >150, metres Iron ore and coal Capesize 4 (-) 3 (1) 0 (-) , metres Iron ore and coal Post-Panamax 5 (-) 11 (7) 0 (1) 65-82, metres Iron ore, coal, bauxite, grain Panamax Handymax Handysize 4 A (1 A ) 13 (4) 18 (2) 7 (3) 11 (-) 12 (-) 40-60, metres 25-40, metres Iron ore, coal, bauxite, cement, cement clinker, grain, fertililser, petcoke Cement, clincker, grain, petcoke, steel, logs, alumina, wood pellets, fertilizer, alumina A Of which 1 units in 50%-owned joint venture * Per 31 March 2012 NORDEN Dry Cargo Tonnage Procurement 4

5 TONNAGE STRATEGY ASPECTS Portfolio management Buy or lease Design Timing Financing NORDEN Dry Cargo Tonnage Procurement 5

6 PORTFOLIO MANAGEMENT HANDYMAX TC period option Minimum Firm Duration Firm Period Optional Duration Optional Period TC POP Own NORDEN Dry Cargo Tonnage Procurement 6

7 PORTFOLIO MANAGEMENT PANAMAX TC period option Minimum Firm Duration Firm Period Optional Duration Optional Period TC POP Own NORDEN Dry Cargo Tonnage Procurement 7

8 TYPICAL TC WITH PURCHASE OPTION Purchase vessel at pre-determined price (Can be exercised at any time during year) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Typical arrangement Handymax 7 year minimum period Option to purchase after year 5 Options to extend for further 3 years one year at a time Flat pre-agreed rates first 7 years Slightly increasing rates years 8-10 Optional period Upside is retained if vessel prices go up Downside is limited Cost and earnings can be matched first 7 years Extensions only if profitable NORDEN Dry Cargo Tonnage Procurement 8

9 OWNERSHIP vs TC w/pop Ownership Full asset upside Full operational flexibility Flexibility to exit any time Influence on design and quality Upgrades/flexibility with yards Long term TC w/pop Asset upside for a premium No Owners liabilities Hedge against OPEX escalation New regulations No upfront cash commitment No residual value risk Optionality NORDEN Dry Cargo Tonnage Procurement 9

10 VESSEL SPECIFICATIONS Size within segment Fuel efficiency Other specifications CO 2 fittings Log fittings Ice class NORDEN Dry Cargo Tonnage Procurement 10

11 SIZE OF VESSELS IS INCREASING Mill. dwt Handysize Handymax Panamax Post- Panamax Capesize Conventional size range Source: Clarksons pre On order NORDEN Dry Cargo Tonnage Procurement 11

12 NEW FUEL EFFICIENT DESIGNS Impact of slowsteaming and different markets Comparison of different designs against the standard Tess 52 type vessel - used in calculating the Baltic Supramax Index (BSI) clearly shows the advantage of newer designs and slowsteaming Tess52 doing 14 knots earning USD 10,000 p/d USD/day Tess52 doing 14 knots earning USD 20,000 p/d USD/day MES56 - old design NEO56 - new design MES56 - old design NEO56 - new design Service speed Slowsteam Service speed Slowsteam NORDEN Dry Cargo Tonnage Procurement 12

13 NEWBUILDING PRICES AT HISTORICAL LOWS Yards are close to marginal cost limited downside in newbuilding prices Gross margin in YEN declined d by 18% Newbuilding price in USD increased by 28% Yard sector consolidation expected Panamax newbuilding price (Index = 100) Panamax newbuilding USD Panamax excl steel cost - USD Panamax excl steel cost - YEN Sources: Clarksons, Bloomberg US 10yr gov. rates NORDEN Dry Cargo Tonnage Procurement 13

14 FINANCING Significant financing missing over the next two years 9 Bank terms if available are more strict Government backed financing 7 available in main shipbuilding nations for a few high quality 6 names 5 Japanese financing is particularly interesting US government bond yield and BBB spread (%) US 10-yr government bond yield US 10-yr government bond yield incl. BBB spread Source: Bloomberg NORDEN Dry Cargo Tonnage Procurement 14

15 REGIONAL TRENDS IN SHIPBUILDING Far East dominance Japanese shipbuilding under pressure Deliveries by country as a % of world total 100% 90% Aging workers 80% High yen value High costs Consolidation expected 70% 60% 50% Setting up overseas facilities (China, Philippines and Vietnam) 40% Japan is focusing on simple 30% designs and high productivity 20% Quality in China is improving 10% 0% China South Korea Japan Source: Clarksons NORDEN Dry Cargo Tonnage Procurement 15

16 Thank you for your attention ANY QUESTIONS? NORDEN Dry Cargo Tonnage Procurement 16