Results Q1 - 2016
May 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
3
- Highlights
- Financials
- Fleet and newbuildings
- Macro Update
- Q&A
Highlights Q1-16
- The Company reports a net loss of \$68.2 million and a loss per share of \$0.22 for the first quarter of 2016.
- Excluding one-offs of \$26.7 million the net loss is \$41.5 million
- One-offs relates mainly to Impairment of financial assets and mark to market loss on interest rate hedges
- Limited further downside on financial assets
- In February 2016, the Company agreed amendments to all its bank facilities
- No repayments until end of Q3-18
- Moderate increase in margin only on deferred amounts
- Cash sweep mechanism is in place in order to deleverage when the market improves
- Covenants are amended or waived for the same period
- Pre-agreed drawdown of USD 25 million per remaining Capesize newbuilding eliminate funding risk at delivery
- The Company completed a private placement and a subsequent repair issue, which generated net proceeds of \$205.4 million.
- Issued 357.1 million new shares in total at NOK 5.00
- The shares are restricted shares in the US
- The Company expect the restricted shares to become unrestricted at the end of September 2016
Amended bank terms ensures attractive cash break even rates
Profit & Loss
|
2016 |
2015 |
2015 |
|
| INCOME STATEMENT |
Jan-Mar |
Jan-Mar |
Jan-Dec |
|
| (in thousands of \$) |
|
|
|
|
| Operating revenues |
45,010 |
18,083 |
190,238 |
• Revenues net of voyage expences and
charterhire expences down by \$14.7
million compared to Q4-15 |
Gain (loss) on sale of newbuildings and amortization of
deferred gain |
101 |
- |
(10,788) |
|
| Operating expenses |
|
|
|
|
| Voyage expenses |
21,718 |
13,414 |
78,099 |
|
| Ship operating expenses |
25,093 |
7,050 |
83,022 |
• Ship operating expenses relatively |
| Charter hire expense |
11,009 |
- |
30,719 |
stable, one vessels DD during the |
| Administrative expenses |
3,025 |
1,152 |
12,469 |
quarter |
| Vessel impairment loss |
- |
140,962 |
152,597 |
|
| Provision for uncollectible receivables |
1,800 |
- |
4,729 |
|
| Depreciation |
14,946 |
9,818 |
52,728 |
|
| Total operating expenses |
77,591 |
172,396 |
414,363 |
|
| Net operating loss |
(32,480) |
(154,313) |
(234,913) |
|
| Other income (expenses) |
|
|
|
|
| Interest income |
257 |
3 |
849 |
• Further impairments on financial assets. |
| Interest expense |
(9,314) |
(1,567) |
(28,270) |
|
| Impairment loss on securities |
(10,050) |
- |
(23,323) |
|
| Loss on derivatives |
(12,884) |
- |
(6,939) |
• Negative MtM on interest rate hedges |
| Other financial items |
(3,725) |
(415) |
(6,930) |
impact the result with \$12.5 million |
| Bargain purchase gain arising on consolidation |
- |
80,949 |
78,876 |
|
| Total other (expenses) income |
(35,716) |
78,970 |
14,263 |
|
| Tax expense |
(40) |
- |
(189) |
• Net result, exluding non-recurring |
| Net loss |
(68,236) |
(75,343) |
(220,839) |
items was minus \$41.5 million vs 29.4
million in Q4-15 |
| Basic loss per share (\$) |
(0.22) |
(0.88) |
(1.46) |
|
Balance sheet
| BALANCE SHEET |
2016 |
2015 |
|
| (in thousands of \$) |
Mar 31 |
Dec 31 |
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
| Short term |
|
|
• \$314.4 million in cash including cash |
| Cash and cash equivalents |
253,582 |
102,617 |
classified as restricted |
| Restricted cash |
7,866 |
351 |
• Increase of \$151 million during the |
| Other current assets |
81,761 |
100,692 |
quarter |
| Long term |
|
|
|
| Restricted cash |
52,841 |
48,521 |
|
| Vessels, net |
1,728,485 |
1,488,205 |
• Vessels increased with \$240 million
following delivery of four newbuildings |
| Vessels under capital lease, net |
8,110 |
8,354 |
|
| Newbuildings |
199,230 |
338,614 |
|
| Other long term assets |
78,381 |
85,516 |
• One newbulding delivered and sold |
| Total assets |
2,410,256 |
2,172,870 |
|
| LIABILITIES AND EQUITY |
|
|
|
| Short term |
|
|
|
|
|
|
• No bank debt classified as Short Term |
| Current portion of long-term debt and obligations under capital lease |
15,174 |
36,129 |
|
| Other current liabilities |
49,167 |
43,905 |
• Debt increased with debt on delivered |
| Long term |
|
|
newbuilding less ordinary debt
repayments |
| Long-term debt and obligations under capital lease |
1,041,647 |
925,647 |
|
| Other long term liabilities |
8,498 |
8,540 |
|
|
|
|
• Equity increased by \$137.1 million |
| Equity |
1,295,770 |
1,158,649 |
following the Private placement net of |
| Total liabilities and equity |
2,410,256 |
2,172,870 |
loss incured over the quarter |
Fleet development
- Fleet development
- In January 2016, the Company took delivery of the two Capesizes, Golden Barnet and Golden Bexley, built at Daehan in Korea.
- Final installment of \$52.2 million was paid at delivery and \$56.7 million was drawn in debt
- In January 2016, the company also took delivery of the two Newcastlemaxes Golden Scape and Golden Swift, built at Bohai in China
- Final installment of \$60.4 million was paid at delivery and \$60.5 million was drawn in debt
- In February 2016, the Company took delivery of, and simultaneously sold, the Front Caribbean, and chartered the vessel in for a period of twelve months.
- Final installment of \$33.4 million was paid at delivery and sales proceeds of \$46.2 million was received
- According to preagreed terms at the time signing the sales contract the vessel was immediately chartered back to us for 12 months at a rate of 14,000\$/d
- In February 2016, the Company agreed with the lessor of the charterered-in Supramax vessel Golden Hawk to reduce the daily charterhire rate from 13,200\$/d to 11,200\$/d for a period of two years against paying back in total \$1.75 million over the remaing charter period. Timing of payment depends on the development of the Baltic Exchange Supramax index
- In January 2016, the Company entered into a Capesize revenue sharing agreement with three other owners of Capesize vessels
Current Fleet
|
Capesize |
Kamsarmax
/Panamax |
Iceclass
Panamax |
Ultramax |
| Sailing |
21 |
8 |
10 |
5 |
| Newbuilding |
10 |
- |
- |
3 |
| BB/TC in + JV |
8/2 + 1(JV) |
2 |
- |
1 |
| Total |
42 |
10 |
10 |
9 |
EMPLOYMENT
- All 10 capesizes on index-linked long term TC-contracts to RWE delivered of which the last two early May 2016
- Four Kamsarmax vessels on long term TC-out
- 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
Newbuildings
| Type of vessel |
2016 |
2017 |
| Capesize |
7 |
2 |
| Supramax |
3 |
- |
| Capesize (Sold) |
1 |
- |
• No further capex paid since February 2016
• Two Capesizes agreed postponed from Q1 to Q4-16
• Remaining recourse capex relates mainly to two vessels, of which one is sold and one with delivery in Q2-16
• Continued work on further postponements for the remaining newbuilding
• 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 Vartdal, CEO Golden Ocean Management AS
World Economy
Global economic growth 1970 - 2019
Steel industry – the main driver for dry bulk tonnage demand...
World steel production
Seaborne trade of dry bulk commodities (major importers)
Iron ore and coal export 0 20 40 60 80 100 120 140 08.1 09.1 10.1 11.1 12.1 13.1 14.1 15.1 16.1 M.tons Iron ore Coal Grain/soybean Other commodities 0 5 10 15 20 25 30 08.1 09.1 10.1 11.1 12.1 13.1 14.1 15.1 16.1 M.tons Bauxite Alumina Fertilizers Cement Steel products Nickel ore
Chinese iron ore imports expected to increase as domestic producers are shedding capacity
Chinese steel production and exports Chinese iron ore production and imports
- Chinese steel production expected to flatten (or decline slightly) towards 2019
- However, Chinese steel mills will continue to increase requirements for imports of iron ore, as a result of declining domestic production
2019E
0% 10% 20% 30% 40% 50% 60% 70% 80%
Infrastructure and property investments about 70% of Chinas steel demand
- Road infrastructure developments still seeing strong growth of 10% first quarter y-o-y, investments in railway are up 2% for the same period
- Real estate development growing by 4.8% Jan-Feb 2016 y-o-y
- Industrial production activity has bottomed out seeing 6.8% growth y-o-y in March
Steel demand fundamentals still strong
Chinese steel exports
By destination – monthly shipments
Mill tons/month
Chinese economic activity indicators
Total electricity generation and by source
| 2016 ytd March output change (%) |
|
| Total generation |
3.13 |
| Thermal |
$-0.13$ |
| Hydro |
18.9 |
| Nuclear |
30.6 |
| Wind |
33.3 |
Strong and stable growth in Indian coal imports expected Chinese imports expected to remain flat
- Coal remains China's main source of energy (~63%)
-
International coal prices have fallen below China's domestic prices, making imports more commercially attractive
-
Strong growth in demand for energy expected as ~300 million people are still without electricity in India
- Coal is still India's primary source of energy (~59%)
- India is planning to double its coal production to 1.5 bn tonnes by 2020
- Infrastructure bottlenecks and lack of private mining capacity are likely to cause delays
Cereals trade
Exports of grain and soybean – Major exporters
Mill tons
Chinese bauxite import
By source – mill tons per month
Mill tons/month
Dry bulk trade
Major importing countries
World seaborne trade by commodity
Bulk Carrier deliveries and demolition trend
Deliveries of Bulk Carriers
Handysize Hmax/Supramax Pmax/P.Pmax Capesize
Total delivered 2016 (May 1)
= 20.7 m dwt |
| ---------------------------------------------- |
| Handysize (10-39,999dwt) |
= 2.2 m dwt |
| Hmax/Supramax (40-64,999dwt) = 5.9 m dwt |
|
| Pmax/Kamsar (65-84,999dwt) |
= 3.6 m dwt |
| Post-Panamax (85-119,999dwt) = 0.7 m dwt |
|
| Capesize (120,000dwt +) |
= 8.3 m dwt |
Bulk Carriers sold for scrapping
Handysize Hmax/Supramax Pmax/P.Pmax Capesize
| Scrapped ytd 2016 (may 1) |
= 17.8 m dwt |
| Handysize (10-39,999dwt) |
= 1.64 m dwt |
| Hmax/Supramax (40-64,999dwt) = 2.33 m dwt |
|
| Pmax/Kamsar (65-84,999dwt) |
= 4.81 m dwt |
| Post-Panamax (85-119,999dwt) = 0.09 m dwt |
|
| Capesize (120,000dwt +) |
= 8.96 m dwt |
Reduction in the original delivery schedule
- Only half of scheduled deliveries YTD is delivered
- Slippage continues
- 30 Valemaxes ordered by Chinese owners at Chinese shipyards del. 2018E
- This equals 12mill dwt, but ~19mill dwt over 200k dwt are 15 years or older
- Excluding the 30 Valemaxes, only 4 vessels contracted YTD
- It remains to be seen what actually gets delivered…
Adjustments to the original 2016 delivery
Contracting
Discrepancy between expectations and reality
- What we see, is not necessarily what we get
- Challenging market conditions ahead will force supply changes
- Owners to postpone deliveries and cancellations are likely to occur
- Tier III regulations in effect from January 1st
Total orderbook split by status
Total fleet delivery & estimated removals
23 26 27 30 49 86 102 100 63 48 49 -1 -3 -1 -6 -11 -7 -25 -35 -24 -17 -31 -45 -29 -20 71 27 13 48 37 25 -60 -40 -20 0 20 40 60 80 100 120 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016f 2017f 2018f Millio nDwt Scrapping Delivery Forecast, Orderbook Delivered Scrapping Forecast
Orderbook April 1, 2016
Fleet growth vs seaborne trade growth
Dry Bulk Market Fundamentals
Source: Clarksons Platou
Supply Demand Utilization rate
29
Asset Values of Bulk Carriers
| Handymax |
40-42k dwt until Nov-01; 45k between Dec-01and May-08; 52k Jun-08 to Dec-09; 56k from Jan-10. |
| Panamax |
60k to 8/93, 68k 9/93-1/97, 70k 2/97-10/01, 73k from 11/01, 76k from 01/10 |
| Capesize |
165-170k until Nov-01. 170,000 dwt until Jan-12. |
| Mill.\$ |
|
| 180 |
|
| 160 |
|
| 140 |
|
| 120 |
|
| 100 |
|
| 80 |
|
|
|
| 60 |
|
| 40 |
|
| 20 |
|
| 0 |
|
|
|
Thank you for your attention !