Get documents about "Key Points 3Q 2000 - PDF
Document Sample
Key Points 3Q 2000 1
Key Points Page
1. Highlights 3Q00 2
- NGC 3
- SPT 5
- China Activities 6
- IMS 8
2. Key Figures 9
3. Key statistics 10
4. NGC 11
5. NB order 35
6. The IMS share 41
1
A Marine Transportation Service Company
Key Points 3Q 2000 1
SKA Shareprice (NOK) and IMS Quarterly Annualized EBITDA (USD)
35000 160
140
30000
120
25000
SKA shareprice 100
does not reflect the 20000
USD '000
improved IMS
NOK
80
EBITDA level 15000
60
10000
40
5000
20
0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
95 96 97 98 99 00
IMS EBITDA Quarterly Annualized
SKA Average Quarterly Share Price*
Source: EcoWin
2
A Marine Transportation Service Company
Key Points 3Q 2000 1
NGC: T/C earnings and EBIT Break-even level
400 T/C earnings
USD000'/vessel/month
EBIT B/E
350
300
250
NGC is now a
viable business 200
due to its low cost
150
focus. 1H-92
2H-92
1H-93
2H-93
1H-94
2H-94
1H-95
2H-95
1H-96
2H-96
1H-97
2H-97
1H-98
2H-98
1H-99
2H-99
1H-00
YTD 2000
Semi - annual
• Significant improvements in cost since low cycle ‘92/’93.
• Low cycle in 1999 at a higher level than in 1993
• Sizable growth in earnings in YTD 2000.
• EBIT break-even presently at USD 239,000/vessel/month
• The goal for 2000 is a EBIT break-even level of 236,000/vessel/month
• Earnings/month/vessel in 3Q00 was 20% higher than 3Q99
• Estimated EBIT break even for the NGC Vessels (12.88 vessels) after delivery of newbuildings
is $229,000/vessel/month.
3
A Marine Transportation Service Company
Key Points 3Q 2000 1
• NGC: Earnings on t/c basis are stable with t/c rates at USD
301,000 per month/vessel vrs USD 300,000 in 1H00 (USD
228,000 per month in all 1999).
• NGC: The EBIT B/E cost reduction progress is according
NGC stable with to our plan of USD 236’ per vessel per month for the full
positive outlook year 2000 vrs USD 250’ in 1999.
• NGC: Extensive offhire for Norgas Discoverer and Norgas
Navigator for repair. A total of 100 days in this quarter as a
result of an unfortunate collision and repairs which equal
MUSD 1.2 in lost EBITDA earnings for NGC.
• NGC: The underlying conditions support that we are
seeing more of a gradual recovery rather than the steep
recovery experienced during the last cyclical rebound from
2H93.
4
A Marine Transportation Service Company
Key Points 3Q 2000 1
SPT: Best quarter this year
• SPT reported an EBITDA result of MUSD 2.1 in 3Q00 compared to 1.2 in
2Q00, accumulated MUSD 4.8 (MUSD 2.6 in 3Q99 and MUSD 11.4 in 1999).
• Last year’s result was a record year, and this year will see a more average
result. The EBITDA contribution from SPT is still significant considering the
SPT continues to be capital employed in this business unit.
a significant • The Aframax tanker market was volatile during the quarter and continues to
EBITDA-contributor present a challenge in the pricing of our services. The lightering volumes are
for the IMS group still high, and imports remain high despite the high oil price and stock draw
down.
• SPT operated 771 tanker days during 3Q00, accumulated 2030 days (660 in
3Q99 and 2750 for all 1999), and this equals 8.4 tankers as an a verage during
the quarter.
• The capacity utilisation for the SPT fleet is still high, the operational regularity
and its on-time performance are satisfactory. The level of service is high,
although the tight ship market has at times made it difficult to secure spot
tonnage to alleviate customary delays in the lightering schedules.
5
A Marine Transportation Service Company
Key Points 3Q 2000 1
China Activities: Our presence in China is a strategic
advantage
• IMS’s strategy in China is to develop the market potential for gas
transport in a logistically demanding market through the joint
venture transportation company named TNGC and to establish an
Team in China key
to success in fleet
organisation that will contribute to even more cost-effective fleet
renewal project operations.
• NGC has by this strategy established its own training and
recruitment centre in Wuhan, Hubei Province; called WUT-STC
which also offers courses to external customers. WUT-STC is
currently adding an Inert Gas System to the training centre.
• The current fleet replacement program by IMS for the NGC fleet of
gas carriers at the Chinese yards could not have taken place as it
has without the presence of the team we have in China allowing us
to proceed on the basis of our know-how and relationships in China.
6
A Marine Transportation Service Company
Key Points 3Q 2000 1
China Activities: cont.
• The EBITDA result in 3Q00 was minus USD 32’ compared to minus USD 135’ and
minus USD 152’ accumulated (minus USD 245’ for 3Q99 and minus USD 935’ for
1999). The result is affected by high bunker cost and low freight rates.
• PC reported an EBITDA result for its two units of USD 61’ compared to USD 115' in
2Q00, USD 292' accumulated (USD 107’ for 3Q99 and USD 547 for 1999).
• Princess of Penang was drydocked during the quarter and the offhire equals USD
161’ in lost revenue.
• TNGC reported an EBITDA result in 3Q00 of minus USD 8’ compared to minus USD
22’ in 2Q00, minus USD 42’ accumulated (USD 34’ for 3Q99 and USD 31’ for 1999).
• TNGC results are still affected by high oil prices and the high LPG prices which affect
the LPG volumes imported in addition to the continued high domestic production of
domestic LPG along the river.
• In 2Q00, TNGC innovated and penetrated into the Pentane transportation market on
the Yangtze river and remains the largest operator. This is a higher paying cargo than
LPG.
• TNGC relies on its various operating licenses in China to be renewed on a regular
basis.
7
A Marine Transportation Service Company
Key Points 3Q 2000 1
• IMS: Firm contract for 4 new 8,400 cbm ethylene carriers for
delivery 2002 and with an option for six more vessels. The yard
contract price is MUSD 20.8 per vessel and with all associated
pre-delivery cost they will cost us about MUSD 22 per vessel.
This will enable us to renew the NGC fleet at competitive terms
IMS underpriced and will strengthen our position as the second largest ethylene
transporter.
• IMS: Share price up 36% since 1 January 00, but still considered
fundamentally undervalued compared to its peers. Our improved
earnings on EBITDA basis is not matched by corresponding
improvement in the share price. The year to date annualised
EBITDA earnings of USD 24 mill and with a multiple of 7 less the
net debt gives a value of the SKA share of NOK 154.
• IMS: Current portfolio of own shares is 97,647 or 1.6%. IMS will
continue within its guidelines and limits to buy own shares at
prices deemed favourable.
8
A Marine Transportation Service Company
Key Points 3Q 2000 1
IMS Consolidated - Key Figures
USD mill 3Q00 2Q00 1Q00 4Q99 all 99
Gross freight revenues 42.9 37.9 33.3 29.5 133.4
EBITDA 6.5 5.9 5.4 3.0 14.8
EBIT 2.3 2.1 1.7 (0.5) 1.1
EBITDA improved Net finance (1.6) (1.4) (1.2) (1.7) (6.3)
Interest coverage ratio* 2.9 4.1
Total liquidity 17.0 22.5
Interest bearing debt 86.0 88.0
Net debt 65.0 64.0
Liquidity ratio 17% 21%
Debt ratio 56% 57%
Short-term debt/total debt 10% 15%
Book equity 77.6 76.8
EBITDA YTD annualised (USD mill) 24.0 22.6
EBITDA annualised (USD mill) 26.0 23.6
*EBITDA over net financial changes
9
A Marine Transportation Service Company
Key Points 3Q 2000 1
Key information for the business segments
Key statistics
3Q00 2Q00 3Q99 Acc00 1999
NGC Idle time 1.6% 1% 5% 2.3% 7%
NGC Offhire days 9.5% 1% 7% 5% 7%
Extencive offhire NGC Drydockings 2 0 2 3 5
due to docking of NGC On-time performance 100% 100% 100% 99% 90%
SPT No. of Full Service Lightering operations 163 137 138 422 551
Norgas Discoverer
SPT No. of Support Lighterings 35 36 49 99 182
and Norgas SPT Tanker Operating days 771 660 660 2030 2750
Navigator SPT Daily lightering volume (bbls/d) 1,082,667 972,000 1,008,000 958,000 990,000
SPT Share of US Seaborne Crude Imports 13.3% 13.2% 11.8% 12.4% 11.8%
SPT Contract coverage Full Service Lighterings (COA/Total) 77% 73% 73% 74% 76%
IMS Share price (end of each quarter/year - NOK) 73.50 64 49 73.50 54
Average of daily share price 71 62 53.67 63.89 44
10
A Marine Transportation Service Company
Key Points 3Q 2000 1
NGC Pool Earnings on T/C Basis
“Norgas Average” monthly timecharter equivalent 1983 – 3Q 2000, Nominal amounts
Average result
on T/C basis in
NGC average t/c USD per month
earnings 450,000 Average 1989/1995: USD 404,671
1983 327,720
1984 278,320
historically follows 1985 259,052
400,000
a 7 year cycle 1986 232,508
T/c equivalent USD per calendar month
1987 315,940
350,000
1988 384,305
1989 429,806
300,000 1990 413,049
1991 367,030
1992 236,873
250,000
1993 192,508
1994 268,742
Average high-high 200,000 1995 379,537
low-low is Average 1993/1999: USD 210,254
1996 323,890
1997 273,806
symmetric to 150,000
2000 YTD
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
1998 258,384
average of the 1999 228,000
period Q1 00 298,000
Q2 00 302,000
Q3 00 301,000
Years Average result
• Average of the high and low: USD 307,463 on T/C basis in
• Average of the period 1989 -1999: USD 306,511 USD per month
1983 - 1999 303,731
1992 - 1999 291,545
1994 - 1998 280,680
11
A Marine Transportation Service Company
Key Points 3Q 2000 1
12,000
10,000
Net Profit Effect (USD 000)
NET T/C TO
8,000
PROFIT – The
Operational
6,000
Gearing is high
4,000
2,000
New vessels will 0
further increase 10000 20000 30000 40000 50000 60000
the IMS operational Net change T/C per month/vessel (USD)
gearing
Somargas Additional Gearing on IMS
NGC Existing Gearing on IMS
• Currently, an increase in the net tc earnings of USD 10,000 per vessel per month equals an
improved EBITDA effect of USD 1.5 mill for IMS
• After the delivery of the 4 new vessels, an increase in the net t/c earnings of USD 10,000 per
vessel per month equals an improved EBITDA and thus bottom line effect of USD 1.78 mill on
IMS
12
A Marine Transportation Service Company
Key Points 3Q 2000 1
IMS Quarterly EBITDA Vs NGC net T/C earnings
10000 450
400
8000
350
6000
Improved EBITDA
300
USD'000 per month
relative to net T/C 4000
earnings due to
USD'000
250
improvements in
2000
cost position,
200
improved market
position and fleet 0
150
utilisation
-2000
100
-4000 50
-6000 0
93 94 95 96 97 98 99 00
IMS Quarterly EBITDA
NGC Net T/C earnings monthly per Quarter
13
A Marine Transportation Service Company
Key Points 3Q 2000 1
NGC: Stable earnings – long-term outlook positive
• NGC posted average earnings on a time charter basis in 3Q00 of
USD 301,000 compared to USD 302,000 per month/vessel for
2Q00 and USD 298,000 for 1Q00 (USD 251’ in 3Q99 and USD
228’ average in 1999).
Improved EBITDA
• The result is affected by high bunker costs and extensive offhire.
relative to net T/C
earnings due to • The NGC segment earnings on an EBITDA basis were MUSD 4.7
improvements in in 3Q00 compared to MUSD 5.3 for 2Q00, accumulated MUSD
cost position and 14.6 (MUSD 2.7 for 3Q99 and MUSD 6.5 for 1999).
improved markets
• The stronger EBITDA result is on the same level as 2H95 – a point
in time when we experienced the last peak of the cycle and with
average t/c earnings at a higher level and at USD 361,000 per
vessel/month.
• The improved EBITDA earning capacity is contributed to the
focused efforts on efficiency gains as well as the reduced cost of
operations at NGC.
14
A Marine Transportation Service Company
Key Points 3Q 2000 1
NGC Crew expenses - with our present forecast on the results from the
“China Clipper” project (Based on 14 NGC vessels)
900
850
Average USD per year per vessel
Substantial cut in
crew cost for the 800
NGC vessels
750
700
650
600
1994 1995 1996 1997 1998 1999 3Q 2000* FP 2000
* 3Q 2000 figure is annualized
15
A Marine Transportation Service Company
Key Points 3Q 2000 1
NGC POOL, IDLE TIME*
NGC POOL, IDLE TIME* ALL COMMISSIONS* PAID BY NGC --% OF
ALL COMMISSIONS* PAID BY NGC % OF
GROSS FREIGHT AND DEMURRAGE
GROSS FREIGHT AND DEMURRAGE
Annual bottom line
Reduced idle time effect in USD
and commission
costs 4.0 % 1,000,000
7500 16.00%
6500 14.00% 3.5 % 850,000
5500 12.00% 700,000
3.0 %
4500 10.00%
550,000
3500 8.00% 2.5 %
400,000
2500 6.00%
2.0 % 250,000
1500 4.00%
500 2.00% 1.5 % 100,000
1995 1996 1997 1998 1999 2000 YTD 1994 1995 1996 1997 1998 1999 2000 YTD
Bottom line effect (USD '000 per year)
Idle time % Bottom line effect (compared to 1993 level)
Comm.% of gr.fr.
*idle time commenced recording from Jan ‘95 and *(incl. address commissions paid to customers)
onwards 16
A Marine Transportation Service Company
Key Points 3Q 2000 1
P&I Insurance Claims
P&I Insurance Claims H&M Insurance Claims
H&M Insurance Claims
40
NGC - Focus on 16
35 Crew claims
efficiency and 14
30 Cargo claims 12
quality of operation
25 10
No. of claims
No. of claims
20 8
15 6
10 4
5 2
0 0
88 89 90 91 92 93 94 95 96 97 98 99 2000 88 90 92 94 96 98 2000
17
A Marine Transportation Service Company
Key Points 3Q 2000 1
Planned and unplanned offhire - in % of capacity per year
In %
8
The Trend for 7
unplanned offhire is 6
good - the planned
5
take somewhat more
4 3%: Our
time due to our new goal for
policy for choosing 3 actual
planned
drydocking locations 2 offhire
1
0
91 92 93 94 95 96 97 98 1999 3rd Q -
00
Actual planned offhire Actual unplanned offhire
Number of Dry-Dockings:
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
3 4 5 10 3 9 2 8 5 3
18
A Marine Transportation Service Company
Key Points 3Q 2000 1
Bunker Price vs Crude Oil Spot
170 40
160
150 35
140
30
130
Has the Oil price
Bunker Price
Brent Spot
120 25
reached its Peak? 110
100 20
90
15
80
70
10
60
50 5
The oil price is Mar May Jul Sep Nov 00 Mar May Jul Sep
down 24% from the
Bunker oil price, 380 cst, Rotterdam Source: Ecowin
10 year high of $ Commodity prices Brent Oil (USD), daily
37,80 per barrel
reached on Sept. 20 • The current price of $ 28.65 represents a 171% price increase s ince 1 st of
January 1999 and a 15% increase since the beginning of this year.
• Are we finally seeing enough increases in oil for price relief? From Oct. 1
OPEC increased the quota by 800.000 b/d. The US inventory figures have
begun to rise and concern about shortages in the Northern Hemisphere
winter are beginning to ease.
19
A Marine Transportation Service Company
Key Points 3Q 2000 1
I.M.Skaugen Price Paid for 180/380 Bunkers
220
210
200 SPT US Gulf ports
190 NGC European ports
Corresponding to
180 NGC Middle East ports
the increase in the 170 NGC Asian ports
oil price the price Bunker Price 160
NGC US,Carib,S.Am
of bunkers has 150
been increasing 140
130
120
110
The average price 100
paid for 380 CST 90
by NGC in 2000 to 80
70
date is 65% higher
60
than the average 50
price paid for the
Sep-99
Sep-00
May-99
May-00
Nov-98
Nov-99
Jan-99
Jan-00
Jul-99
Jul-00
Mar-99
Mar-00
same period in
1999
Average price paid by NGC for 380 CST:
Jan-Sept. 1999: $89/mt
Jan-Sept. 2000: $147/mt 20
A Marine Transportation Service Company
Key Points 3Q 2000 1
Freight rates Bunkers as a % of Voyage Related Cost vs Freight
Rates
Bunker as a % of Voyage Releated
are increasing
Bunkers as a but higher 70%
percentage of bunkers have 60%
Voyage Related resulted in 50%
Costs
costs has been bunkers taking 40%
30%
increasing since 3% more of
20%
1999 our Gross 10%
Freight. 0%
Fe - 9 9
Ju 9 9
Fe - 0 0
Ju 0 0
M 99
Ap -99
M 00
Ap -00
D -99
Au l - 9 9
Au l - 0 0
M r-99
M r-00
J a 99
N -99
Se -99
O -99
Se -00
00
J u 99
J u 00
n-
n-
b-
b-
-
p-
-
-
n
n
ov
ar
ar
ec
g
p
g
ay
ay
ct
Ja
SPT NGC
Freight rates have
been increasing
• Bunkers for 2000 to date are for NGC 14% of Gross Freight as compared to 11%
but bunkers are a
for the same period in 1999. SPT for the same periods are 9% in 2000 and 6% in
higher percentage
1999
of gross freight
• NGC bunkers for 2000 are an average of 55% of voyage related costs compared
to 40% for the same period in 1999. Similarly, SPT bunkers for 2000 have been
39% of voyage related costs compared to 26% for same period in 1999
21
A Marine Transportation Service Company
Key Points 3Q 2000 1
300 350
NGC Earnings Vs Ethylene Price
300
250
250
NGC Earnings Index (1984=100)
Ethylene Price Index (1994=100)
200
NGC Earnings and 200
ethylene price: 150
close correlation 150
100
100
50
50
0 0
Q1/94
Q2/94
Q3/94
Q4/94
Q1/95
Q2/95
Q3/95
Q4/95
Q1/96
Q2/96
Q3/96
Q4/96
Q1/97
Q2/97
Q3/97
Q4/97
Q1/98
Q2/98
Q3/98
Q4/98
Q1/99
Q2/99
Q3/99
Q4/99
Q1/00
Q2/00
Q3/00
SEA Spot Ethylene Price EU Contract Ethylene Price US Contract Ethylene Price NGC Earnings Index (rhs)
Source: DeWitt ethylene report, NGC
22
A Marine Transportation Service Company
Key Points 3Q 2000 1
Commodity Prices Ethylene and Butadiene Vs SKA (Indexed)
150
140
The sharp oil price
130 increase has created
a gap between
120 commodity prices
110
and the SKA share
The SKA share has
historically followed 100
Indexed Prices
the same trend as 90
key commodity
80
prices
70
60
50
40
30
20
J F MA M J J A S ON D J F MA M J J A S ON D J F MAM J J A SO N D J F M AM J J A SO N D J F M AM J J A SO
96 97 98 99 00
Commodity Prices Ethylene [index 1997]
Commodity Prices Butadiene [index 1997]
Norway I.M. Skaugen ASA, close daily [index 1997] Source: EcoWin
23
A Marine Transportation Service Company
Key Points 3Q 2000 1
Main Commodity Prices - Indexed
200 150
140
175
Crude oil price 130
remains high...
150 120
Brent Crude monthly avg. index
Benzene & Butadiene Index
110
125
100
100 90
... which in turn
80
has effect on other 75
main commodities 70
50 60
50
25
40
0 30
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00
Commodity Prices Benzene [index 1985]
Commodity Prices Butadiene [index 1985]
Commodity Prices Brent oil [index 1985]
Source: EcoWin
24
A Marine Transportation Service Company
Key Points 3Q 2000 1
Global economic growth outlook
Growth of Global Real GDP (annual % change)
8
Global GDP growth
in 2000 is expected
at 4,6% - the 6
average growth 1970-1999 was 3,66%
fastest pace since
1988 ... 4
2
Average global
GDP growth 1970-
0
1999 at 3,6%...
2001F
1971
1973
1974
1991
1993
1994
1970
1972
1975
1976
1977
1978
1979
1990
1992
1995
1996
1997
1998
1999
2000F
91
93
94
90
92
95
96
97
98
99
18
18
18
18
18
18
18
18
18
18
Real GDP Growth
1997 1998 1999 2000F 2001F
Global growth 4.2% 2.4% 3.4 % 4.6% 4.3 %
OECD 3.2% 2.5% 2.8% 3.9 % 3.4%
EMU 11 2.2% 2.8% 2.3% 3.7 % 3.3%
Strongest ASEAN
Asian NIEs
3.6%
5.9%
-9.6%
-2.6%
2.7 %
7.7%
5.0
7.5
%
%
5.1 %
6.2 %
momentum in Emerging World 5.8% 1.6% 4.1% 5.8 % 5.7 %
Asian Economies... USA
Japan
4.5%
1.6%
4.4 %
-2.5%
4.2 %
0.2%
5.1%
1.7 %
4.0 %
2.8 %
Germany 1.8% 2.2% 1.5% 3.0 % 2.8 %
France 2.0% 3.2% 2.9% 3.7% 3.5%
Italy 1.5% 1.5% 1.4% 3.0 % 2.7 %
United Kingdom 3.5% 2.6 % 2.1% 3.0% 2.5 %
Canada 4.0% 3.3 % 4.5 % 4.6% 3.5 %
China 8.8% 7.8% 7.1 % 7.5% 7.5%
Russia 0.9% -4.9% 3.2% 6.0 % 4.0 %
Source: GS Research/IMF
25
A Marine Transportation Service Company
Key Points 3Q 2000 1
Highlights
• Total ethylene production capacity to grow by nearly 30% over the next 4
Based on a study years
by MSI
commissioned by
GATX & IMS • Total chemical gas trade to grow by 4% annually, with continuing shift
from long-haul to short-haul
• Asian trades will account for 70% of all trade growth
The study was key
to concluding that
• Asian ethylene trade volumes is predicted to double by 2010
the timing is good
• LPG trade growth forecasted at 1,8% annually
This also • LPG newbuilding- and secondhand prices are predicted to rise 32% and
supported our 44% respectively*
choice re vessel
size
* Based on 15.000 cbm vessel
Source: MSI
26
A Marine Transportation Service Company
Key Points 3Q 2000 1
Supply and demand
• The Historical long term trendline for growth in demand of transportation is
about 4-5% annually in volumes transported.
Orderbook in our • The newbuilding orderbook in this segment (semi refrigerated LPG fleet
segment is from 4,000 up to 22,000 cbm) stands currently at 17 units incl 4 options,
considered
which amounts to gross 9.3% growth in present fleet to be delivered prior to
modest
end of 2003.
• This corresponds to about 5% increase in the fleet for delivery in 2000,
1.9% for 2001, 1.7% for 2002 and 0.4% for 2003 - all these figures
excluding the 10 IMS newbuildings and exclusive of any scrapping.
Year change in demand change in supply
Long term trend 2000 4-5% 5%
growth in demand 2001 4-5% 1.9%
has been 4-5%
2002 4-5% 1.7%
2003 4-5% 0.4%
27
A Marine Transportation Service Company
Key Points 3Q 2000 1
European and Asian demand will rise further in 2000 with Asia re-emerging as the key
demand centre. More than half of all new petchem project investments will be in Asia.
Ethylene Capacity Additions by Region (000tonnes)
Planned (000tonnes) 2000 2001 2002 2003 2004
Appr. 28,5mn Asia 2420 900 500 600 -
tonnes of additional W.Europe 510 930 220 - -
ethylene capacity FSU 140 340 - - -
Middle East 1600 1120 500 - -
next 5 years...
North Africa 700 - - - -
Americas 3772 850 1000 1550 -
Other/not incl. above - - 100 1650 9000
4% annual total chemical gas trade growth - led by the Asian recovery. The upturn
masks the continuing shift in trade pattern from long-haul to short-haul – long haul is
Trade patterns are down 33% from 1995 at 16% of total trade.
shifting from long-
haul to short haul... Total Asian Intra-Regional Trade Vs Long-haul Imports
3000 The Changing Balance of Chemical Gas Trade
250
'000 tonnes
2000 200
Long Haul Short Haul Total Trade
150
1000
100
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
50
0
Intra-Regional Trade Long-haul Import
1993
1992
1996
1997
1999
1998
1991
1994
1995
2003
2000
2002
2001
2004
2005
Source: MSI 28
A Marine Transportation Service Company
Key Points 3Q 2000 1
Asian trades will account for 70% of all trade growth over the next six years. MSI also
predicts that Ethylene trade volumes will more than double by 2010 as recovery in SEA
gains ground.
Longhaul Chemical Gas Trade 1990-2005 Shorthaul Chemical Gas Trade 1990-2005
Ethylene trade 1000
will more than 900
800
3300
2800
double by 2010... 700
'000 tonnes
'000 tonnes
2300
600
500 1800
400 1300
300
800
200
100 300
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
Ethylene Propylene Butadiene VCM Ethylene Propylene Butadiene VCM
The low rate of growth in Asian intra-regional trades continues as regional petchem
companies struggle with high debt and losses accumulated during the recession. MSI
Asian Intra – accordingly predicts longhaul imports will re-emerge.
Regional Trade...
Asian Annual Intra-Regional Chemical Gas Trade vs
Longhaul Import
Annual % Change
100
80
60
40
20
0
-20
-40
-60
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
Asian Intra-Regional Chemical Gas Trade
Source: MSI Asian Longhaul Chemical Gas Imports
29
A Marine Transportation Service Company
Key Points 3Q 2000 1
The main trade routes indicating the strong recovery in the longhaul trades over the
forecast period
Main Chemical Gas Trades
3000 14000
Strong recovery in 2500
12000
'000 tonnes( Intra Europe)
10000
2000
the longhaul
'000 tonnes
8000
1500
trades... 1000
6000
4000
500
2000
0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Intra Asia Middle East Exports European Exports
American Exports Intra Europe (rhs) Total (rhs)
Worldwide seaborne LPG exports in 1999 were up 2,1% from 1998. Focus of new
Seaborne LPG production shifted from Middle East to Africa, following OPEC’s quotas. Shipments to
export up 2,1% Europe and Asia regained momentum, with China leading the way with 17% growth.
from 1998...
Worldwide Seaborne LPG Exports (Mn tonnes) Worldwide Seaborne LPG Imports (Mn tonnes)
1997 1998 1999 1997 1998 1999
Middle East 24.9 25.4 24.9 Middle East 0.1 0.1 0.1
Asia/Pacific 5.3 5.0 4.9 Asia/Pacific 25.2 24.6 26.1
EEA 9.1 9.3 9.7
Africa 5.5 6.8 8.3
Turkey 2.0 2.3 2.6
North Sea 7.1 6.7 6.7
Africa 1.0 1.2 1.5
Nth America 0.9 1.0 1.0
USA 1.9 3.0 1.5
Sth America 2.0 2.1 2.2
Mexico 0.8 0.7 0.7
Russia 0.1 0.1 0.1 S. America 5.1 4.8 5.4
Total 45.8 47.1 48.1 Total
Source: MSI 45.2 46.0 47.3
30
A Marine Transportation Service Company
Key Points 3Q 2000 1
MSI predicts further growth in LPG trade in the coming ten years with average annual
growth of 1,8%. Supply growth will be driven by North and West Africa, and demand
growth focused on China and India.
LPG Exports in Gas Carriers Below 15 000 Cbm.
6000 12000
5000 10000
'000 tonnes
4000 8000
3000 6000
Annual LPG trade 2000
1000
4000
2000
growth of 1,8%... 0 0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Asia/Pacific Middle East Europe/Africa
Americas Total
Source: MSI 31
A Marine Transportation Service Company
Key Points 3Q 2000 1
MSI predicts a steady increase in newbuilding prices to a peak in 2003. LPG carrier
newbuilding prices is predicted to see a modest 3% increase this year, before a rapid
acceleration will be seen during 2001-2003
Mill. US$
90 90
LPG Newbuilding Prices
80 80
12,000Cu.m 15,000Cu.m (June 1999)
Increase in $Mn
45,0
15,000Cu.m (April 2000)
70 70
newbuilding prices 40,0 60 60
75,000 F/R
up to 2003... 35,0 50 50
52,000 F/R
35,000 F/R
30,0 40 40
25,0 12,000 S/R
30 30
20,0
20 20
5,000 S/R
15,0
10 10
0 0
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000
Influenced by improved freight rates and newbuilding prices, a dramatic recovery for
secondhand gas carrier prices over the next three to four years is predicted. Prices are
Rapid recovery in
expected to rise from $ 24 million to $ 34,6 million in 2003
secondhand
prices... $Mn
LPG Carrier Secondhand Prices
Eight Year Old Vessel
40,0
12,000Cu.m 15,000Cu.m Series1
35,0
30,0
25,0
20,0
15,0
10,0
5,0
0,0
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Source: MSI/ 32
A Marine Transportation Service Company
Key Points 3Q 2000 1
Caribbean Worldscale History - Weekly Basis
(70,000 mt)
350
300
Volatile Aframax 250
market
Worldscale Rate
200
150
100
50
0
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
51
1
3
5
7
9
WS-1996 WS 1997 WS 1998 WS 1999 WS 2000
33
A Marine Transportation Service Company
Key Points 3Q 2000 1
ChinaLPG Market 1991 - 1999
(Production figures are commercial LPG production, excluding cunsumption by refineries as feedstock)
16,000 16,000
14,000 14,000
• Chinese LPG demand
12,000 12,000
The Chinese LPG continues its
market volumes exponential growth 10,000 10,000
are growing
'000 mts
'000 mts
• Import volume is still 8,000 8,000
growing, but now with a
6,000 6,000
slightly slower growth
rate than domestic 4,000 4,000
production.
2,000 2,000
0 0
1991 1992 1993 1994 1995 1996 1997 1998 1999
Output Import Export Demand
Source: Xinhua News Agency 34
A Marine Transportation Service Company
Key Points 3Q 2000 1
Newbuilding order
• This project caps several years of hard work to place NGC firmly on the map
Completes the as a gas carrier of the future. It completes in our view a proje ct that started
turnaround of NGC less than a decade ago to create a viable business out of NGC by focusing
on 1. quality of our operations, 2. Achieve lowest cost, 3. Develop a service
company culture and 4. Implement global direct marketing.
Improved fleet
composition • The most successful companies in our business today have a mixture of
age composition in their fleet such as NGC now will have. Further, the
lowest cost operators also have the lowest capital costs. With the low
Lower capital cost acquisition price, we will achieve this status despite high financing charges
by high leverage and the use of mezzanine type loan capital
N/B cheaper than • Some of the second-hand vessels we considered to buy in the past have
second-hand now been sold to our competitors giving further industry consolidation.
vessels Unigas bought the Pugliola and Anth Veder the 2 Tarquin eth. Vessels - at
prices equal to or above what we declined to buy these at 6 months ago
when we opted for the Somargas newbuilding alternative.
35
A Marine Transportation Service Company
Key Points 3Q 2000 1
Newbuildings not • I.M. Skaugen ASA, Oslo (OSE: SKA) has finalised the agreement with the
only a viable, but Zhonghua Shipyard in Shanghai, China for an order of up to 10 vessels of
attractive 8,400 cbm size ethylene gas carriers.
alternative • A new company, owned 50% by GATX Capital Corporation, San
Francisco, a subsidiary of GATX Corporation (NYSE: GMT) and 50% by
I.M. Skaugen (IMS) will be the buyer of the first 4 vessels. The order is
thus now firm for 4 vessels and with an option to build 6 more vessels - at
same price and terms.
• Strengthens NGC’s position as 2nd largest ethylene carrier in the world.
Strategically • Contract reduces average age of the whole NGC fleet with about 5 years
important to • NGC capacity increases by about one third with the 4 vessels
strengthen NGC’s
position as 2nd • The NGC EBIT B/E will be further reduced due to acquisition cost being
largest ethylene low
carrier • ‘Simple and Efficient’ design; Improved Change of grade and port
turnaround operations
• Increased earnings capacity compared to the ”Norgas Average” vessel
36
A Marine Transportation Service Company
Key Points 3Q 2000 1
China is 15-30% • Newbuilding prices have declined about 35% over the last 5
lower on price than years and is today more attractive than most second hand
Korea alternatives available. The Order book for our segment is
considered modest.
• This is another sign that the China strategy is paying off for
IMS. China is the lowest priced area now to build such vessels
with 15-30% lower prices than Korea.
Vessels designed • These vessels are further at least 5 -7.5% lower priced than
to be ”cash cows” ”last done” in China (8/99) and with a higher specification.
• IMS order represents about 28% of the yard’s capacity if all our
options are exercised.
• The 6 Option vessels are at the same price and terms as the 4
firm vessels and with flexibility to chose another size.
Timing is as good • Good timing with lowest ever price to be paid for such
as it can get for newbuilding.
this investment.
37
A Marine Transportation Service Company
Key Points 3Q 2000 1
Delivery schedule and declaration of options for new
vessels from Zhonghua Shipyard, Shanghai
Delivery schedule of the 4 firm vessels:
– Hull 429 March 2002
Options give IMS – Hull 430 July 2002
full flexibility – Hull 431 November 2002
– Hull 432 January 2003
Can change
vessel size at Declaration of options Delivery of option vessels
same basic terms – 2 vessels: August 2001 1st vessel: April 2003
(adjusted only for 2nd vessel: July 2003
actual, additional – 2 vessels: February 2002 3rd vessel: October 2003
cost) 4th vessel: January 2004
– 2 vessels: August 2002 5th vessel: April 2004
6th vessel: July 2004
Can bypass or
sell any option
38
A Marine Transportation Service Company
Key Points 3Q 2000 1
New vessels reduce the average age of the whole NGC Fleet by about 5 years (basis 2002)
Size (cbm) built 30 years years in 2002
NGC Vessels
Norgas Carine 8,406 1989 2019 17
Norgas Challenger 6,363 1984 2014 12
Norgas Chief 8,070 1983 2013 11
Norgas Discoverer *) 7,418 1971 2006 4
Norgas Energy 6,126 1979 2009 7
Norgas Navigator 6,006 1977 2007 5
Norgas Patricia 8,238 1991 2021 19
Norgas Pilot 6,080 1977 2007 5
Norgas Pioneer 6,133 1979 2009 7
Norgas Trader 7,334 1981 2011 9
Norgas Traveller 7,187 1982 2012 10
Norgas Sailor 6,080 1976 2006 4
Norgas Victory 8,936 1982 2012 10
Norgas Voyager *) 7,418 1972 2007 5
Sub total 99,795
Average 7,128 9
NEWCO Vessels
Newbuilding 1 8,400 2002 2032 30
Newbuilding 2 8,400 2002 2032 30
Newbuilding 3 8,400 2002 2032 30
Newbuilding 4 8,400 2003 2033 31
Sub total 33,600
Total 133,395
Average 7,411 14
* Norgas Voyager and Norgas Discoverer are listed with 35 year life due to vessel design and recent upgrading 39
A Marine Transportation Service Company
Key Points 3Q 2000 1
GATX – strong financial partner….
• GATX Capital Corporation is a diversified global financial services
IMS has teamed up company that provides financing for transportation, industrial and high
with the well known technology assets.
GATX Capital • The Company owns or manages assets with an original cost of
Corporation approximately $10 billion.
• GATX Capital is a subsidiary of Chicago-based GATX Corporation
(NYSE: GMT).
• GATX Corporation is a unique finance and leasing company combining
asset knowledge and services, structuring expertise, creative partnering
and risk capital to serve customers and partners worldwide.
GATX Corporation
is among the 15 • GATX primarily focuses on leasing assets that include rail rolling stock,
largest logistics jet commercial aircraft, ships and information technology.
providers in the • Further information on GATX Capital Corporation can be found at
world www.gatxcapital.com. For further information on GATX Corporation
please visit www.gatx.com.
40
A Marine Transportation Service Company
Key Points 3Q 2000 1
The IMS share: An EBITDA multiple model
• During 1999 the company had an EBITDA result of MUSD 14.9 (MUSD 10 for
1998, MUSD 16.4 for 1997). Our annualised EBITDA earnings per 3Q2000
are at MUSD 24. We regard the annualised earnings level in 3Q2000 of
MUSD 26 as reflecting the improved cycle for the NGC segment compared to
the weaker cycle of last year.
• We believe that an estimated earnings model is the correct model to use for
our type of company and thus a model based on the EBITDA earnings of the
company multiplied by an assessed factor and deducting the net debt of
MUSD 65.
• Today most analysts estimate this multiple should be about 7 or 8 (for the
time being) and deducting for the net debt gives a value of MUSD 100 or
MUSD 125 which equals USD 16 or USD 20 per share (NOK 154 or NOK
183) and using 6,009,944 shares.
41
A Marine Transportation Service Company
Key Points 3Q 2000 1
IMS Share price (NOK), quarterly IMS EBITDA (USD)
120
and NGC T/CEarnings (USD).
100
IMS share strongly
under priced
compared to its 80
own history and the
Index
market 60
40
20
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
95 96 97 98 99 00
IMS Indexed Shareprice [index 1995-01-01]
IMS Quarterly EBITDA [index 1995-01-01]
NGC Earnings Index [index 1995-01-01]
42
A Marine Transportation Service Company
Key Points 3Q 2000 1
Stock/Index December 31, 1999 June 30, 2000 Sept. 30, 2000 Change +/- %
31.12.99 31.06.00
I.M. Skaugen ASA 54 64 73.50 36.11% 14.84%
OSE Total Index 1359.6 1373.58 1520.47 11.83% 10.69%
The I.M. Skaugen
OSE Shipping Index 973.2 962.98 1120.59 15.14% 16.37%
ASA share has
outperformed major Dow Jones Transportation Index 2977.2 2645.37 2521.64 -15.30% -4.68%
market indicies over S&P Transportation Index 596.91 563.43 593.89 -0.51% 5.41%
the past 9 months S&P Chemicals Index 526.77 375.24 370.86 -29.60% -1.17%
S&P Oil International Integrated Index 958.36 945.8 1014.38 5.85% 7.25%
Source: EcoWin 43
A Marine Transportation Service Company
Key Points 3Q 2000 1
170 170
160 160
150 150
140 140
130 130
The I.M. Skaugen
ASA share has 120 120
Index
outperformed major
110 110
market indicies over
the past 9 months 100
I.M. Skaugen 100
90
excersiced 90
options at price 50
80 80
70 70
60 60
Jan 14 Feb 14 Mar 14 Apr 14 May 12 Jun 14 Jul 14 Aug 14 Sep 14 Oct
Norway I.M. Skaugen ASA, close daily [index 1999-12-30]
USA S&P Chemicals index, close daily [index 1999-12-30]
Norway Total index, close daily [index 1999-12-30]
Norway Oslo SE Shipping index, close daily [index 1999-12-30]
Source: EcoWin 44
A Marine Transportation Service Company
Key Points 3Q 2000 1
P/CF NORWEGIAN SHIPPING SHARES (1988-01e)
14,0
13,1
12,0
10,0
7,7
8,0
7,1
6,8
6,3 6,4
6,0 5,7 5,5 5,6 5,6
5,2 5,3
4,3
4,0 3,4
2,0
0,0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
• Shipping shares look inexpensive in a historical perspective
• Timing?
Source: 45
A Marine Transportation Service Company
Related docs
