Investor presentation - April 2020 - Wallenius Wilhelmsen
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April 2020 Investor presentation
Global LV sales expected to drop 12%, downgrades across all major markets
COVID-19 status update Auto IHS Markit Sales and Deepsea estimates 2020-2027
LV Sales
+3.6%
-4.2%
LV Sales, million units
IHS Markit assume 2020 global LV sales set at -12.2% +6.3% +5.4%
98.6 100.6
78.8m for 2020, down 12% with downgrades 93.7 91.9 94.3 96.2
89.7 88.3
across all major regions, and risk of further 83.8
78.8
downgrade 8,9 9,2 9,5 9,9 10,5 11,0
8,3 8,1 8,6
20.7 7,6 19.5 19.6 19.9 20.1
20.3 19.0 19.4
Supply 17.2 18.6
20.6 20.5 21.0 20.7 21.0 21.1
20.6 18.0 18.8 19.8
Temporary plant closures in all major regions e.g. 28.5 29.5 30.5 31.4
27.5 25.3 22.8 24.3 26.1 27.5
Europe, NA, Korea and Japan, while Chinese
operations appear to be recovering 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
? LV deep-sea volume, million units
Deepsea trade +3.3%
-1.0% -11.9%
IHS Markit assume deepsea volume to see +5.8% 16.5
15.7 15.9 16.3
decline from 14.9m in 2019 to 13.1m in 2020, 15.1 14.9 15.2
13.9 14.5 1.2 1.2
1.1 13.1 1.2 1.2
equal to a drop of 12%, with risk of further 1.1
1.1 1.1 1.1
1.4 1.5 1.6 1.6
1.4 1.3 1.0 1.3 1.3 1.3
downgrade 1.3 1.4 1.1 1.2 1.3 1.3 1.3
1.1 1.3 1.3
2.6 2.7 1.2 2.9 3.1 3.2 3.5 3.6
2.5 2.7
Demand 2.5
2.8 3.0 3.1 3.3 3.4 3.3 3.3 3.3
2.6 2.8
Large uncertainty to how fast consumers will
5.1 5.0 4.1 4.4 4.4 4.7 4.6 4.7 4.8 4.8
turn back to dealers, governmental stimulus such
as tax brakes might contribute to rebound
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Source: IHS Markit
ME/Africa S America Jp/Ko S Asia NA Europe G China
2
Global H&H sales are expected to slow down amid the Covid-19 outbreak
COVID-19 status update H&H Retail sales 1,2 OEM sales estimates 3
Sa l es (YoY)
Government policies Sa l es (YoY)
10% +17%
Construction
Mixed government responses, but H&H deemed 5%
«essential» in several key markets and exempt 0% +2%
from shutdowns due to the coronavirus outbreak 01/19 03/19 05/19 07/19 09/19 11/19 01/20 -5%
-10% -5% -8%
-15% 2018 2019 2020e 2021e
Production suspension
Temporary plant closures in a number of affected Sa l es (YoY)
Sa l es (YoY)
regions e.g. Europe and Brazil, while Chinese 30%
+21%
operations appear to be recovering
Mining
20%
+4% +4%
10%
? 0%
Guidance withdrawals
01/19 03/19 05/19 07/19 09/19 11/19 01/20 -10% -7%
OEMs are withdrawing FY2020 guidance due to 2018 2019 2020e 2021e
the uncertainty around the ultimate magnitude
of COVID-19 on financial and operational results Sa l es/Reg. (YoY)
Sa l es (YoY)
20%
Agriculture
+12%
10%
Demand implications +5%
0%
01/19 03/19 05/19 07/19 09/19 11/19 01/20 -1%
Reduced capex spend and postponed investment -10% -4%
decisions due to current global economic -20% 2018 2019 2020e 2021e
conditions and an uncertain outlook
Source: 1) Caterpillar | 3 month rolling retail sales (Units last 3 months y-o-y) 2) Tractor sales and registrations in key markets | US Large Tractors (2WD 100+HP & 4WD), Australia Large tractor (100+HP), Brazil (All),
Germany (70KW+), UK (50+HP) 3) FactSet data and Analytics (30.03.20) | OEM Revenue Consensus Estimate (y-o-y). Construction: Volvo, Caterpillar, CNH, Komatsu, Hitachi, Terex. Mining: Sandvik, Caterpillar, 3
Hitachi, Epiroc. Agriculture: AGCO, CNH, Deere. Sales in construction/mining/agriculture equipment divisions onlyOperations in Covid-19 epicentres are partially disrupted
Operational impact Overview of WalWil locations and status as of March 31 st
▪ Adjusting trading patterns and schedules in
response to fluctuation in demand in the
ocean business
▪ Terminals, though in many places
congested, at this time remain open and
operating
▪ Countries with strict lockdown rules, such
as South Africa and India, forces closure of
landbased sites
▪ Some sites in US and Mexico temporarily
closed or disrupted due to little or no
activity at some plants
▪ European sites remain open, but with some
operational disruptions
▪ Other sites in Asia and Oceania are mostly
open, but with some disruptions, and some
closures
4Ocean segment drivers and preventive measures
Item Key characteristics Measures to adjust costs
▪ Auto contract duration typically 1-3 years, and 3-5 years for H&H
Revenue ▪ Rates are fixed for the contract period, but no volume minimum
▪ Contracts representing 20% of revenue up for renewal in 2020
▪ Approximately 70% of total costs are variable in ocean segment ▪ Adjust speed, adjust sailing schedules and idling of vessels
Variable
▪ Variable costs consist of cargo, bunker and voyage expenses ▪ Tighter bunker inventory management
cost
▪ Approximately 30% of total costs are fixed in ocean segment ▪ Redelivery of chartered vessels: Average charter hire saved per day
for redelivery candidates in range USD 18 000 – 20 000
▪ Ship operating and charter expenses considered short term fixed, and
▪ Cold lay-up for 10 vessels (OPEX reduction per vessel per day in lay-
Fixed cost will move in steps, dependent on number of vessels operated
up of USD 3000 – 4000) and defer drydocking
▪ Early recycling of up to four vessels, estimated positive cash impact
of about USD 4 – 7 million per vessel
▪ CAPEX primarily related to planned dry-dockings, including ballast ▪ Reduce capex to critical maintenance and dockings
water treatment systems installations
▪ Cancellation of 4 scrubber installations, cash impact of USD 20m in
CAPEX ▪ Scrubber installation program for 16 vessels total (of which USD 5 million was estimated for 2020)
▪ Two newbuildings expected in Q2 2020 and late 2020
5Landbased and group drivers and preventive measures
Item Key characteristics Measures to adjust costs
▪ Inland distribution and technical services typically depend on factory
throughput, and terminals on ocean volumes
Revenue ▪ The anti-cyclical storage business may experience higher volumes
Variable ▪ Approximately 75% of total costs are variable in landbased segment ▪ Adjusting variable costs in line with customer activity and volumes
▪ Approximately 25% of total costs are fixed in landbased segment
and fixed
cost
▪ Maintenance CAPEX related to equipment, sites and buildings ▪ Reduce CAPEX to critical maintenance, delay growth CAPEX
CAPEX ▪ Growth CAPEX related to expansions of existing sites and new site
developments
Other measures taken on group-wide level
▪ SG&A: Limit/ban travel and entertainment, pause/cancel projects, postpone/cancel salary increase
Group ▪ Dividend: Dividend cancelled
fixed cost
6Limited capital expenditures going forward
Comments Overview of main capital expenditures 2020 (USDm)
▪ CAPEX reduced to a minimum, prioritizing safety 160 170
and maintenance critical expenditures C 15
A▪ Landbased CAPEX estimated at ~USD 10m for rest B 40
of year mainly related to required maintenance
▪ Ocean CAPEX rest of year primarily related to: D 50
- Drydocking and ballast-water treatment
B C 40
systems estimated to ~USD 40m
- Scrubber installations estimated to about
C
D 50
USD 40m in 2020, for which we have
committed financing of USD ~15m D 40
55
- Two newbuildings remaining, with final
D -115 15 Q2
instalments amounting to ~USD 40m per
vessel. Financing of ~USD 50m per vessel will D 40 20 Q3
be drawn after delivery. Estimated delivery
for the two newbuildings in May 2020 and 10
20 Q4
around year-end 2020 A
Landbased Ocean Group Total CAPEX Financing secured CAPEX net
of funding
7Very little refinancing requirements near-term and a solid liquidity position
Debt maturity profile (USDm) Liquidity position EoY 2019 (USDm)
Installments (bank loans and leases) 2 397 4 043 775
Balloons (bank loans and leases) 70
Bonds
1 190
Credit facilities (drawn)
377
Total
1 137 398
657
218
90
495 349
85 52
494 358
9 47
438
2020 2021 2022 2023-> Total Cash Undrawn Total
facilities
A strong balance sheet coupled with distant debt maturities gives confidence in a global trough
8Covenants are measured on business unit level rather than group level
Unit / segment Wallenius Wilhelmsen
Typical covenants within the segment Limitation on ability to pledge assets
Ocean Landbased
Minimum liquidity Minimum liquidity
Current assets / current liabilities Net debt / EBITDA
Loan to value clauses Equity ratio
Fixed charge / interest coverage
9Preparing for post Covid-19 rebound
Auto shipments in WW Ocean1 H&H shipments in WW Ocean2
Shipments Shipments
(1000 units) Growth y/y (1000 units) +3.1% Growth y/y
2,000 50% 1,800 40%
-38% +0.4%
40% 1,600 -41% 30%
30% 1,400 20%
1,500
20% 1,200 10%
10% 1,000 0%
1,000
0% 800 -10%
-10% 600 -20%
500 -20% 400 -30%
-30% 200 -40%
0 -40% 0 -50%
’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18
WW Ocean LV shipments WW Ocean LV growth y/y WW Ocean H&H shipments (CEU) Global growth y/y
Global growth y/y EUKOR H&H shipments (CEU) WW H&H growth y/y
RoRo shipping saw a significant rebound in the aftermath of the 2008/2009 financial crisis
Source: 1) IHS Markit | World (major exporters) LV Deepsea exports (Value > 8 kUSD). 2) IHS Markit | World (major exporters) construction & rolling mining equipment and agriculture equipment exports (Avg.
equipment value >20 kUSD). WW H&H shipments do not include Commercial vehicles such as Buses & Trucks 10Q&A
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