Wilh. Wilhelmsen ASA
> Capital Markets Day
Jan Eyvin Wang – President and CEO
17 September 2014, Lysaker
> Disclaimer
This presentation contains forward-looking expectations which are subject to risk and uncertainties related to economic and market conditions in relevant markets, oil prices, currency exchange fluctuations etc. Wilh. Wilhelmsen ASA group undertake no liability and make no representation or warranty for the information and expectations given in the presentation.
> 1989 – Wilhelmsen Lines established
Wilhelmsen Lines 1989
Trades 4
9 1
> 1995 – NAL/NOSAC acquired and integrated
> 1999 – WL merges with OW – WWL and ASL established
> 2002 – EUKOR established
> 2014 – WW Group A Unique global presence
- Terminals 10
- Technical Service Facilities 41
Shaping the maritime industry 7
> Car carrying used to be simple…
PCTC trade pattern 2000
> But globalization has made it complex
PCTC trade pattern 2014
> Our speakers
Ari Marjamaa Vice President Head of Global Market Intelligence WWL
The global outlook for the automotive and RoRo markets
Chris Connor President & CEO WWL
Wallenius Wilhelmsen Logistics Leveraging a strong position in a changing marketplace
Ole-Andreas Torgersen Partner, Lawyer Selmer
Anti-trust A brief overview of the regulatory framework and the process
The global outlook
for the automotive and RoRo markets
Ari Marjamaa Vice President Head of Global Market Intelligence WWL
Wilh.Wilhelmsen Capital Markets Day, 17 September 2014, Lysaker
Challenging market environment Economic Growth has returned, but so has uncertainty
World economy is better, but not well:
- Global growth fragile
- China still key to outlook
- The acronyms are shifting
- Geopolitical uncertainties
- Major regions developing positively
Auto outlook
General outlook for auto markets positive Underlying global growth in seaborne shipments
Global auto sales
Million units, 2007-2020FC
Auto sales per region show growth in most markets
Growth 2010-13 & 2013-16FC in %, size of circle indicates sales in 2013
Exports from Japan continue the decline The Japanese OEMs grow their exports from other countries
Decreasing Japanese exports, but increasing JP OEM exports from other regions grow Projected change in seaborne exports 2013-2020FC by production region, million units
New manufacturing hubs changing the landscape Majority of the world auto export growth from emerging locations
Mexico becoming a manufacturing powerhouse
Exports by destination, million units, 2013-18FC
New manufacturing hubs changing the landscape Majority of the world auto export growth from emerging locations
Asian share of Thai exports, %
H&H: Construction
Construction market key driver for heavy equipment European construction spending finally starting to show growth momentum
H&H: Construction
US construction indices see positive development Severely hit in the beginning of 2014 by weather
0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1,0 1,1 1,2 0,00 0,05 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 07 08 09 10 11 12 13 14 15 Private residential and non residential spend split (1000 USDbn) Total spend (1000 USDbn) Total private non residential spending Total private residential spending US total construction spending 0,00 0,05 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65 0,70 1/1/06 1/1/08 1/1/10 1/1/12 1/1/14 1/1/16 Index Traffic of prospective buyers Future sales conditions (6m) Current sales conditions Housing Market Index 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1,0 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0,0 1/1/06 1/1/08 1/1/10 1/1/12 1/1/14 1/1/16 Million units Housing permits Housing starts US total construction spending 1000 USDbn Housing Market Index Builder's confidence index, seasonally adj. US Housing starts and permits Seasonal adjusted rate January's significantly poor weather conditions is a major factor weighing on the index. Lower levels of buyer traffic translated into downgraded expectations for sales in February January starts suffered due to adverse weather conditions (the 15th coldest in 120 years, in terms of heating degree days)
Source: Global Insight, Bureau of the Census, National Association of Home Builders , Wells Fargo, GMI
H&H: Agriculture
Large AG equipment have seen strong sales trend in the US, but has turned negative
US sales of large AG equipment
Large tractors (100hp+ and 4WD) and combine sales (units), 12m rolling sales growth (%)
Mining
Light in muted mining markets again? Australian iron ore production at record high and still growing
- Miners have been hard at work
- Australian production level record high
- Effects on Chinese steel production capacity
- Australia to remain main iron ore location
Summing up
Positive drivers for auto and heavy equipment
- Challenging market environment where economic growth has returned, but so has uncertainty
- General outlook for auto markets positive with underlying global growth in seaborne shipments
- Exports from Japan continue the decline, but the Japanese OEMs grow their exports from other countries
- New manufacturing hubs changing the landscape, with the majority of the world auto manufacturing growth in emerging locations
- Construction market key driver for heavy equipment with European construction spending finally starting to show growth momentum
- Large AG equipment have seen strong sales trend in the US, but has turned negative
- Light in muted mining markets again as Australian iron ore production hits record high and still growing
Wallenius Wilhelmsen Logistics Leveraging a strong position in a changing market place
Chris Connor President & CEO WWL
Wilh.Wilhelmsen Capital Markets Day, 17 September 2014, Lysaker
- Agenda 01. A changing marketplace
- 02. Leveraging a strong position
- 03. Taking on the Challenge
An unprecedented pace of change
26
Market fragmentation by the numbers
Customers are increasing the pressure
- Slow growth in recent years has increased cost focus
- Top Management is pushing hard on stretch targets for savings
- Build up of procurement departments, increased use of procurement consultants and driving a very price-focused discussion
New Sulphur Regulations are here in a few months
Sulphur regulation – A four stream approach
- SRC in place
- Leveraging deep experience in low sulphur operation
- Strong will to find sustainable solutions
- Need for more than one solution
The fundamental drivers for the future are positive…
The growth of nations
- New emerging markets are increasing in importance, e.g. Mexico, Indonesia, Nigeria, Turkey and Thailand
-
Changing balance in the world, with developed markets being counterbalanced by new regions (e,g. S America, China, India, SEA)
-
The global count of members of the middle class is growing
- Growth across many countries, particularly in emerging markets
- Increasing number of people with ability to consume consumer and capital goods
The market place is growing… …driving demand for capital goods... …and heavy equipment
Infrastructure & energy needs
- Significant infrastructure development needs in the world today
- Resource industries will still be a central part of world growth
- Future resource industries will be even more equipment intensive (deeper mines, deeper water oil exploration)
31
Leveraging a strong position
Part of a strong group
A business model that reduces volatility and risk
A global integrated supply chain
Our land-based network continues to grow
Melbourne Thailand Myanmar
Description:
Opportunity to develop and operate the new RoRo terminal
Status:
WWL awarded operations and construction started in early August
Mexico
Description:
Receiving, inland distribution, PDI, storage, accessorisation
Status:
In 2013, WWL Mexico processed more than 1.4 million cars at its six sites, with 1000 employees
Description:
In-plant processing, VPC and inland transport
Status:
Operations at the main auto plants and in port, own inland transport operations
Description:
Entry into Inland distribution. JV to invest in trucks
Status:
Operations started – first trucks on the ground August 8th
Description:
Build and operate VPC for BMW in Galveston, operations added in Baltimore
Status:
Operations in Baltimore started and agreement for Galveston in place
A healthy fleet
- Modern fleet
- Advanced vessels, tailored to our cargo mix
- Larger tonnage has enhanced capacity for heavier cargo
- Leveraging group synergies
8 post panamax vessels 2014-2016
Taking on the Challenge
Changing to stay a step ahead
One centralized Global Ocean Tonnage Centre
- Two geographical business units instead of four
- Offshoring administrative activities
- Customer focused organization
Centralized Global Ocean Tonnage Centre
Ensuring cost focus & continuous improvement
Optimizing the Fleet
- Flexibility through Scenario Planning
- Higher utilization & Energy Efficiency
- Maximise Group Synergies
Best practice operations
- Improved planning and analytics
- Process re-engineering for flexibility and speed
Anti-trust A brief overview of the regulatory framework and the process
Ole-Andreas Torgersen
Attorney-at-law Selmer Law Firm
Wilh.Wilhelmsen Capital Markets Day, 17 September 2014, Lysaker
Collusion vs. cooperation between competitors
The insight; collusion is "bad"
Adam Smith, Wealth of nations (1776)
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. " "
But not all cooperation between competitors is "bad"
Horizontal co-operation agreements can lead to substantial economic benefits, in particular if they combine complementary activities, skills or assets. Horizontal co-operation can be a means to share risk, save costs, increase investments, pool know-how, enhance product quality and variety, and launch innovation faster. " "
European Commission Guidelines on the applicability of art 101 TFEU to horizontal co-operation agreements
The shipping sector
Global business
Maritime (and other transport) has high focus for the competition authorities
- Important economic sectors: affect prices in a range of downstream markets
- International aspects: affect level of trade
- Clear potential benefits of cooperation
EU Commission policy
- Gradual removal of sector specific regulation
- Today, the maritime sector is subject to general competition law rules
Enforcement by competition authorities
National enforcement
- Most countries enforced by NCAs which can impose significant fines
- EU: European Commission / European Competition Network
- Some countries treat certain antitrust infringements as criminal offences
International cooperation
- Increasing cooperation:
- ‐ Allocation of cases
- ‐ Coordinated investigations
- ‐ Information exchange
- However, lack of coherent approach to fines
Initiation of investigation
Cases are brought to authorities attention through several sources
Most cartel cases are initiated by a leniency application
- First mover principle: conditional immunity for the first company to inform about a secret cartel activity
- EU: also possibility of leniency for other companies than the first mover
- Confidential procedure
The course of an investigation process
Fines for antitrust infringements
In both EU and US fines for antitrust infringements are based on
• Affected sales EU (EEA) / affected volume of commerce US
Compliance efforts and cooperation with authorities
In antitrust, compliance efforts are generally not rewarded
- Compliance measured by success
- Different from other areas, notably anti-corruption
Cooperation with competition authorities may, however, have significant impact
- Leniency: up to 100% reduction
- Settlement (admit to the Commission's objections): 10% reduction, shorter procedure
- ‐ US plea bargaining: a party that pleads guilty and cooperates with the agency can receive a reduced sentence and avoid trial
- Cooperation during investigation and procedure (mitigating circumstance)