Results Q2 - 2016
August 24, 2016
Forward-Looking Statements
- Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
- In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.
- Certain shipping, steel, Chinese and global industry information, statistics and charts contained herein have been derived from several sources. You are hereby advised that such industry data, charts and statistics have not been prepared specifically for inclusion in these materials and Golden Ocean has not undertaken any independent investigation to confirm the accuracy or completeness of such information
Agenda
- Highlights
- Financials
- Fleet and newbuildings
- Macro Update
- Q&A
Highlights Q2-16
•The Company reports a net loss of \$39.2 million and a loss per share of \$0.37 for the second quarter of 2016 and a net loss of 107.5 million for the first half of 2016.
•In June 2016, the Company agreed with one yard to postpone delivery of six newbuildings with 7 to 9 months for each newbuilding
•In August 2016, the company effected a 1-for-5 reverse share split in order to comply with Nasdaq regulations
Profit & Loss
|
2016 |
2016 |
2016 |
|
|
|
Apr - Jun |
Jan-Mar |
Jan-Jun |
|
|
| (in thousands of \$) |
|
|
|
|
|
|
|
|
|
•
Revenues net of
voyage
expences
and |
|
| Operating revenues |
55 569 |
45 010 |
100 579 |
charterhire expences
increased
by
\$11.2 million compared
to Q1-16 |
|
| Gain on sale of newbuildings and amortization of deferred gain |
65 |
101 |
166 |
|
|
| Operating expenses |
|
|
|
|
|
| Voyage expenses |
16 224 |
21 718 |
37 942 |
|
|
| Ship operating expenses |
25 574 |
25 093 |
50 667 |
•
Ship
operating expenses
relatively |
|
| Charter hire expense |
15 911 |
11 009 |
26 920 |
stable. The company
have strong
focus
on
operational
costs |
|
| Administrative expenses |
3 861 |
3 025 |
6 886 |
|
|
| Impairment loss on vessels and newbuildings |
985 |
0 |
985 |
|
|
| Provision for uncollectible receivables |
0 |
1 800 |
1 800 |
•
Impairment taken on Golden Lyderhorn |
|
| Depreciation |
15 848 |
14 946 |
30 794 |
in Q2-16. Expect marginal impact on
the Q3 result |
|
| Total operating expenses |
78 403 |
77 591 |
155 994 |
|
|
| Net operating loss |
-22 769 |
-32 480 |
-55 249 |
|
|
| Other income (expenses) |
|
|
|
|
|
| Interest income |
574 |
257 |
831 |
|
|
| Interest expense |
-11 038 |
-9 314 |
-20 352 |
•
Further
MtM
loss on
interest
rate |
|
| Impairment loss on marketable securities |
0 |
-10 050 |
-10 050 |
hedges
impacts
the
result
with
\$6.8
million |
|
| Loss on derivatives |
-4 937 |
-12 884 |
-17 821 |
|
|
| Equity results of associated companies, including impairment |
116 |
-3 068 |
-2 952 |
•
Small gain
on
bunkers hedges |
|
| Other financial items |
-1 182 |
-657 |
-1 839 |
|
|
| Total other expenses |
-16 467 |
-35 716 |
-52 183 |
•
Net result
better
than
Q1-16 due to |
|
| Tax expense |
20 |
-40 |
-20 |
improved
market conditions |
|
| Net loss |
-39 216 |
-68 236 |
-107 452 |
|
|
Balance sheet
|
2016 |
2015 |
|
|
|
Jun 30 |
Dec 31 |
|
|
| (in thousands of \$) |
|
|
|
|
| ASSETS |
|
|
|
|
| Short term |
|
|
|
|
| Cash and cash equivalents |
210 773 |
102 617 |
•
\$280.7 million in cash
including
cash |
|
| Restricted cash |
15 779 |
351 |
classified
as restricted |
|
| Other current assets |
89 559 |
100 692 |
•
Decrease
of
\$42.9 million during
the |
|
| Long term |
|
|
quarter |
|
| Restricted cash |
54 129 |
48 521 |
|
|
| Vessels, net |
1 764 813 |
1 488 205 |
•
Vessels
increased
with
\$36 million |
|
| Vessels under capital lease, net |
6 880 |
8 354 |
following
delivery
of
Golden Fulham |
|
| Newbuildings |
188 609 |
338 614 |
and ordinary
depreciation |
|
| Other long term assets |
73 770 |
85 516 |
|
|
| Total assets |
2 404 312 |
2 172 870 |
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
| Short term |
|
|
|
|
| Current portion of long-term debt and obligations under capital lease |
14 601 |
36 129 |
•
No bank debt
classified
as Short Term |
|
| Other current liabilities |
57 382 |
43 905 |
|
|
| Long term |
|
|
•
Debt
increased
with
debt
on
delivered |
|
| Long-term debt and obligations under capital lease |
1 067 983 |
925 647 |
newbuilding |
|
| Other long term liabilities |
8 385 |
8 540 |
|
|
|
|
|
•
Equity declined
by \$39.8 million |
|
| Equity |
1 255 961 |
1 158 649 |
following
the
negative result
for the |
|
| Total liabilities and equity |
2 404 312 |
2 172 870 |
quarter |
|
Fleet development
- •In May 2016, the Company took delivery of the Capesize, Golden Fulham, built at JMU in Japan
- Final installment of \$41.1 million was paid at delivery and \$25 million was drawn in debt
- •In May 2016, the owner of Golden Lyderhorn exercised their option to sell the vessel to Golden Ocean
- Put option price was \$9.5 million, net of Sellers Credit
- •In July 2016 the Company agreed to sell Golden Lyderhorn to an unrelated third party at a price of \$3.5 million
- The vessel was delivered to new owners on August 22, 2016
|
Capesize |
Kamsarmax
/Panamax |
Iceclass
Panamax |
Ultramax |
| Sailing |
22 |
8 |
10 |
5 |
| Newbuilding |
9 |
- |
- |
3 |
| BB/TC in + JV |
8/2 + 1(JV) |
1 |
- |
1 |
| Total |
42 |
9 |
10 |
9 |
Employment
- 10 capesizes on index-linked long term TC-out
- Four Kamsarmax vessels on long term TC-out at fixed rate
- Two Panamax vessels on long term TC out. One of the contracts expires within the next twelve months
- Remaining fleet trading spot
- Cape fleet included in Capesize Chartering RSA agreement
- Golden Lyderhorn delivered to new ovner August 22, 2016
Newbuildings
| Type of vessel |
2016 |
2017 |
| Capesize |
2 |
6 |
| Supramax |
3 |
- |
Capesize
(Sold) |
1 |
- |
- Took delivery of Golden Fulham in May 2016
- Six Capesizes agreed postponed to between Q1- and Q4-17. Seven to nine months on each.
- Remaining recourse capex relates mainly to one vessel that is sold
- In negotiations for further postponements
- All remaining Capesize newbuildings are financed
- The three Supramax vessels are unfinanced
Vessel operating expenses
- Based on 5 Supramaxes, 20 Panamax/Kamsarmax and 29 Capesize
- One vessel docked in Q1, two more to be docked during 2016
Macro Update
Birgitte Ringstad Vartdal, CEO Golden Ocean Management AS
Supply, demand and utilization rate - dry bulk ships 10,000 dwt +
China – dry bulk imports recover
Chinese state-owned enterprises stepping up investments
- The Chinese stimulus package, unveiled in Q1 2016, is expected to account for 5-7% of Chinese GDP, meaning up to 5 trillion RMB
- Chinese authorities are currently stepping up efforts to revive economic growth, fearing a fallout in the second biggest trade partner, EU
- State-owned enterprises are stepping up investments at the strongest pace since 2008-'09, running at almost 25% increase compared to last year
Chinese stimulus package targeting infrastructure, real estate
- Infrastructure investments are high on the agenda; Spending on roads and railways is up by 14% and 10%, respectively, during the first seven months of 2016 compared to last year
- Public investment on real estate is also being revived, growing by 6% in 1H 2016 y-o-y
- The investments are highly steel-intensive, impacting positively on demand for steel:
Source: Lorentzen&Stemoco/Natioonal Bureau of Statistics, China
China steel consumption vs Government spending
Billion RMB
Most miners are selling iron ore with profit again
- Australia and Brazil are increasing their share of the Chinese market, now accounting for 85% of all iron ore exports to China
- Both Australia and Brazil are expected to continue winning market share in China
- Most overseas miners are producing with profit on today's iron ore spot price, currently being in the high US\$50/t
- Higher prices will be undermined by more supply coming in 2H 2016 from Rio Tinto, BHP Billiton and Vale, pressuring high-cost producers in China
Chinese iron ore production vs iron ore imports
Chinese domestic monthly coal production (million tonnes)
Coal imports
Seaborne imports by major importing countries
India coal stocks high India coal stocks at all thermal power stations
Grain seasonality: Latin America vs. the US
Soybeans Soymeal Maize Wheat
Deliveries of Bulk Carriers
Chinese yard performance the key factor to output Dry bulk deliveries by Yard country
2015 Deliveries = 49.2 dwt (10-Year average = 53m dwt)
- Japan delivered 18.5m dwt (10-Year average = 19m dwt)
- China delivered 24.6m dwt (10-Year average = 24.5m dwt)
- S Korea delivered 4.5m dwt (10-Year average = 7m dwt)
- Other yards delivered 1.4m dwt (10-Year average = 2.6m dwt)
Orderbook 2016
• China = 708 / 59.2m dwt Japan = 327 / 22.6m dwt S Korea = 41 / 7m dwt Other = 52 / 3.3m dwt
Yard Country Delivery Performance in 2015
China 2015 Delivery Performance
On Chinese orders
- Capesize = 92%
- Panamax = 22%
- Supramax = 34%
- Handysize = 81%
On Foreign orders
- Capesize = 49%
- Panamax = 49%
- Supramax = 64%
- Handysize = 56%
2016 Progress
- Delivery progress on ship exports are between 25% and 29%.
- Delivery progress for domestic market is between 4% and 40%.
- 7-Month annualised required delivery 58%.
Fleet development
Order books and age profile
- Supramax has the largest orderbook
- Panamax has the smallest orderbook
- Older ships that get demolished are smaller than the new deliveries
- Average size scrapped vs delivered
- Capes 187k vs 195k
- Pmax 71k vs 82k
- Smax 45k vs 60k
- Hsize 26k vs 36k
Tonnage balance will slowly improve on supply growth heading towards zero and expected demand growth.
Upside potential
- Stronger growth in imports to China due to stimuli and/or price arbitrage
- More cancellation and slippage at yards
- Higher scrapping due to low market or new regulations
- Stronger growth in other Asia with demand for coal and steel
Source: Clarksons Platou
Downside risk
- Reduced steel production and further slowdown in economic growth
- Higher replacement of coal to other energy sources
- Lower scrapping if rates above OPEX
Thank you for your attention !