Wallenius Wilhelmsen Logistics ASA Company Presentation
EXECUTIVE SUMMARY VERSION - Updated 29th March 2017
DISCLAIMER
This presentation (the "Presentation") has been prepared by Wallenius Wilhelmsen Logistics ASA ("WWL" or the "Company" and together with its subsidiaries the "WWL Group"). The Presentation has been prepared and is delivered for information purposes only. It has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place.
The contents of the Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. Each recipient should consult with its own professional advisors for any such matter and advice.
The Company makes no representation or warranty (whether express or implied) as to the correctness or completeness of the information contained herein, and neither the Company nor any of its subsidiaries, directors, employees or advisors assume any liability connected to the Presentation and/or the statements set out herein. This Presentation is not and does not purport to be complete in any way. By receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the Company, its financial position and prospects and that you will conduct your own analysis and be solely responsible for forming your own view of any refinancing and the potential future performance of the Company's business.
The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the WWL Group and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely views and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any other company in the WWL Group, or any of its advisors or any of their parent or subsidiary undertakings or any such person's affiliates, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation to update any forward-looking statements or to conform these forward-looking statements to the WWL Group's actual results. Investors are advised, however, to inform themselves about any further public disclosures made by the Company, such as filings made with Oslo Børs or press releases.
This Presentation does not constitute any solicitation for any offer to purchase or subscribe any securities and is not an offer or invitation to sell or issue securities for sale in any jurisdiction, including the United States. Distribution of the Presentation in or into any jurisdiction where such distribution may be unlawful, is prohibited. The Company and its advisors require persons in possession of this Presentation to inform themselves about, and to observe, any such restrictions.
This Presentation speaks as of the date set out on the front page, and there may have been changes in matters which affect the WWL Group subsequent to the date of this Presentation. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the WWL Group have not since changed, and the Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation.
This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Asker and Bærum District Court as exclusive venue. By receiving this Presentation, you accept to be bound by the terms above.
Today's Presenters
Craig Jasienski President & CEO
- Number of years in industry: >30 years
- Born: 1969
- Key Experience:
- CEO, Eukor Car Carriers
- CEO, United European Car Carriers (UECC)
- Various leadership positions in WWL AS
Rebekka Glasser Herlofsen CFO
- Number of years in industry: >20 years
- Born: 1970
- Key Experience:
- CFO, The Torvald Klaveness Group
- Director, Business Development, Bergesen d.y. ASA
- Board Member, Statoil ASA & DNVGL
- Chair of the Board, Cermaq
Agenda
Executive Summary
Business Portfolio
Market Outlook
Financial Review
Summary and Q&A
Why we believe WWL is an attractive company
Shipping industry pioneers adapting to changing market conditions
Among the largest listed shipping / logistics companies globally
8 th largest listed shipping / logistics company globally
Market cap (USDbn)
Source: Factset
1) APMM adjusted to reflect transport and logistics share of market cap
2) WWL ASA is based on present WWASA share price per 24.03.2017
WWL ASA is the undisputed market leader globally, with an unmatched product and network
OUR PRODUCTS & SERVICES1)
1) 2016 normalized financials based on management accounts to show indicative size of main segments
2) Inland Distribution revenue and EBITDA excludes VSA pass-through (660 MUSD in 2016)
New effective structure realizes cost synergies up towards 100 MUSD and enables accelerated growth within the Logistics Services portfolio
Creating the world's leading, most agile and efficient shipping and logistics platform
- All vessels under one single management
- One common structure
- Clear separation between Ocean and Logistics Services
costs
• Strong focus on business development and active portfolio management
Significant cost reductions and efficiency gains from a "cleaner" and more transparent organizational structure
From a structure of jointly controlled entities... ...to an integrated and more efficient WWL structure
1) Ownership post Wallenius' contemplated sell-down
2) Hyundai Motor Group will continue to own 20% of EUKOR
Note: ARC retains a separate and independent management structure
New structure will allow up towards 100 MUSD in cost synergies and provide B revenue growth opportunities
Logistics Services portfolio growth driven by organic growth, new services & segments, business development and aggressive portfolio management
Organic growth of existing
- Relentless focus on best-in-class processes, IT-systems and efficiency
- → increase EBIT-margins
- Dedicated Logistics Commercial organization
-
→ expand service scope and customer base
-
Build on and innovate existing services
- → become the logistics provider of choice for industry players today
- Explore new services and segments
-
→ be relevant for the industry players of tomorrow
-
Investments and M&A
- → primarily focused on Marine Terminals and Technical Services
- Continuously evaluate portfolio
- → regular decisions to divest, invest or retain
The RoRo shipping market has gone through some structural changes – WWL will be well positioned for the future
Improving market fundamentals gives us tailwind into the future
Agenda
Executive Summary
Business Portfolio
Market Outlook
Financial Review
Summary and Q&A
WWL consisting of two main segments
A clear market leader and the #1 operator globally, both in terms of CEU1) capacity and number of vessels
Source: WWL Global Market Intelligence
Note: Average WWL vessel capacity has increased from 5,400 to 6,300 CEU from 2010 to 2017
1) CEU: car equivalent unit
1
Unrivalled global RoRo network and unique agility to meet changing demand 1
127 vessels with more than 1,300 sailings and 9,000 port calls per year
Overview of key trade routes
Significant synergies from fleet optimisation of the combined fleet, while 1 maintaining three distinct brands in the marketplace
Three distinct brands… …and a fleet of 127 vessels with more than 800,000 CEU capacity
- No further CAPEX planned past six post Panamax newbuildings with expected delivery in 2017/ 2018 (CAPEX of ~400 MUSD)
- Additional capacity need will be acquired in the charter market
- WWL ASA strives to have fleet flexibility through combination of owned, long- and short-term T/C tonnage
1
Blue chip customers comprising all major OEMs1) globally
- Majority of volume from Auto
- High & Heavy and Breakbulk maximize cubic utilization
- Unique handling capabilities of High & Heavy and Breakbulk cargo
Size of Cargo Segments Main customers include all major OEMs globally
Note: Share of CBM refers to share of Cubic Meter transported for various segments in WWL ASA Group (excluding ARC)
Through our Factory to Dealer strategy we have built a truly global network of 2 Logistics Services and are well positioned for future growth
State-of-the-art Logistics Services set-up enabling customers to reduce costs and increase efficiencies throughout their outbound logistics chain
Main customers include all main OEMs globally Logistics Services Portfolio Main Customers 1) Marine Terminals Technical Services Inland Distribution Auto High & Heavy Breakbulk Stevedoring Custom clearance Receive and delivery Cargo handling Port distribution Storage Accessory fitting Pre delivery inspections Repairs and rectifications Storage management Receipt and dispatch Vehicle preparation Trucking Rail Primarily procurement model
The Logistics Services universe is highly fragmented 2
Fragmented Logistics Services industry – typical size of companies is 5-30 MUSD in EBITDA
Strong Senior Management Team with +20 years industry experience on average
Experienced Board of Directors with broad industry knowledge and presence – independent Chair and two independent Board Members
Agenda
Executive Summary
Business Portfolio
Market Outlook
Financial Review
Summary and Q&A
The RoRo shipping market has gone through some structural changes – WWL will be well positioned for the future
Improving market fundamentals gives us tailwind into the future
Healthy global auto market growth expected over the next years driven by firm growth in smaller markets
Global auto sales development Million units, 2016-2024E
A
Improving outlook for the H&H segment – continued strong construction activity B coupled with recovery in resource segments to influence WWL positively
Continued solid growth for construction segment 2007-2020E1)
Improving outlook for mining shipments 2005-2020E2)
1) Source: IHS Construction
2) Source: Parker Bay (Mining)
C Large untapped potential exists for WWL Breakbulk segments
Market balance expected to gradually improve going forward
Agenda
Executive Summary
Business Portfolio
Market Outlook
Financial Review
Summary and Q&A
WWL pro-forma income statement for year-end 2016 shows EBITDA of ~0.6bn USD
WWL ASA Group 2013-2016 volume development
- Adjusted, un-audited pro-forma revenue and EBITDA result excluding following one-offs:
- Gain demerger and share of profit from associate Treasure (387 MUSD)
- Step up gain VSA (160 MUSD)
- Net step up loss JV of WWASA to subsidiaries (-113 MUSD)
1) WW ASA reported Revenue and EBITDA (by proportionate method) less Treasure ASA and Glovis share of result
2) The accrual of anti-trust provisions are reflected in the opening balance of the group and have no impact on the P&L
WWL pro-forma balance sheet year-end 2016
Unaudited Pro-forma Balance Sheet WWL ASA IFRS, 2016 USD Billion
Comments
- Net interest bearing debt per 31.12.2016 of ~3.1bn USD, of which cash and cash equivalents and financial investments of ~0.7bn USD
- Fair value of assets and liabilities will be recognized at the date of the merger (except for 100% owned WW ASA entities)
- Opening balance for WWL ASA will be reported as part of Q2 reporting
- A total of USD ~310M in provisions remain to cover potential extraordinary costs in jurisdictions with ongoing anti-trust investigations
- Provisions made are based on detailed bottom-up assessment in all operating entities (WW ASA provision increased with 31 MUSD and OW provisions taken in full)
WWL has access to a broad range of capital markets
WWL ASA Group interest bearing debt 20162) USD Billion
Comments
- Bank loans are the "base funding" of the WWL fleet
- Wilhelmsen Lines AS, Wallenius Lines AB or the respective ship-owning company is the borrower with no parent (WWL ASA) guarantee
- Vessels are mortgaged as security, and compliance with financial covenants such as NIBD/EBITDA, minimum liquidity and current ratio and/ or loan to market value are required by the banks on a quarterly basis
- Investments and operations funded from several capital sources, including the commercial bank market (incl. export credit agencies), through financial leasestructures and from the Norwegian bond market
- Limited newbuilding commitments (total CAPEX of ~400 MUSD), at attractive terms and fully financed
- Dividend is high on the agenda for management and majority owners
- New dividend policy will be decided by Board following completion of the merger
- Annual return since WW ASA IPO June 2010 is ~20% (based on share price development per Q1 2017, dividend payment as well as split of Treasure ASA)
Agenda
Executive Summary
Business Portfolio
Market Outlook
Financial Review
Summary and Q&A
Why we believe WWL is an attractive company