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Results Q3 - 201222 November 2012
Agenda
HighlightsFinancialsOperationsMacro UpdateQ&A
Highlights
GOGL results Q3 2012
EBITDA before impairment:$24.1 million
Loss: -$17.1 million
Loss per share: $0.04
Cancelled two newbuildingcontracts in November 2012
53,4
64,0
56,5
27,3 25,7 24,1
13,0
6,4
-17,1
-30,0
-20,0
-10,0
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
Q1 2012 Q2 2012 Q3 2013
Operating revenues EBITDA Net profit
FinancialsBirgitte Vartdal, CFO Golden Ocean Management AS
Profit & Loss
Key figures:
(in thousands of $)2012 2012
Jul-Sep Apr-Jun
Operating revenue 56 473 64 036Vessel voyage expenses -9 516 -11 440Provision for bad debt -2 575 -3 624Vessel operating expenses -10 591 -10 133Charter hire expenses -6 658 -8 213Administrative expenses -3 580 -3 011Depreciation and amortisation -8 622 -8 377Impairment -25 200 -2 900Other gain/ (losses net) 583 -1 915Operating profit -9 685 14 423Interest income 437 339Interest expense -5 239 -5 515Interest swap -1 713 -1 694Other financial i tems -916 -1 153Taxation 0 0Profit for the period -17 116 6 400
Profit attributable to:Owners of the parent -17 145 6 316Non-control ling interest 29 84Profit for the period -17 116 6 400
Revenues down on lowertrading activity, lowerearnings on Feng and lowerspot rates
Voyage expenses and charterhire expenses down on lowertrading activity
Total provision $6.2 million onFeng
Impairment related to sailingvessels
Lower interest rate andJPY/USD exchange rateimpact finance costs
(in thousands of $) 2012 2011Sep 30 Dec 31
ASSETSVessels and equipment, net 618 222 637 441Vessels held under finance leases, net 142 587 147 991Vessels under construction 207 935 216 965Other assets 10 502 10 681Total non-current assets 979 246 1 013 079Cash and cash equivalents 101 222 138 284Trade and other receivables 17 085 22 789Other current assets 7 165 37 920Total current assets 125 472 198 993
Total assets 1 104 718 1 212 071
EQUITY AND LIABILITIESEquity attributable to equity holders of the parent
Share capital 45 350 45 699Additional paid in capital 102 686 104 801Other reserves 12 481 14 110Retained earnings 367 537 364 779Non-controll ing interest 541 496
Total Equity 528 594 529 885Long term debt 364 942 455 385Obligations under finance leases 119 780 124 859Other long term liabil ities 2 281 2 508Deferred income
- -Total non-current liabilities 487 004 582 752Current Liabilities
Long-term debt - current portion 51 874 62 962Obligations under finance leases – current portion 6 725 6 426Other current l iabil ities 30 521 30 046
Total current liabilities 89 120 99 434Total liabilities and shareholders’ equity 1 104 718 1 212 071
Balance Sheet
Equity ratio ~ 48 %
• Ordinary downpayments• Bought back CB in September• MVC payments in October
• Long term debt down fromextraordinary downpayments
• Impairment sailing vessels
• Two installments paid
•Cash down on paid installments,paid down debt, repurchaseshares and CB
OperationsBirgitte Vartdal, CFO Golden Ocean Management AS
Vessels: Deliveries, charters and newbuildings
July 2012: Sanko went into formal rehabilitation proceedings in JapanReduced payments on Golden Feng (original charter rate $46,000 net/day)until July, no hire after JulyVessel taken back in August 2012Vessel currently trading spot
July 2012: Reduced contract price for three vessels at JinhaiwanGolden Nantong, Golden Excellence and Golden Explorer extended tofourth quarterAggregate new price for the vessels is $86.65 million
November 2012: Cancelled two newbuilding contracts at JinhaiwanGolden Excellence and Golden Explorer passed cancelling date again
November 2012: Golden Bull started on the five year charter at $16,788/day
Corporate transactions and covenants
Asset values continued to drop during the quarter$15.5 million in extraordinary downpayments in July 2012$14.3 million in extraordinart downpayments in October 2012
Share repurchasePurchased 6 238 204 shares to date
Convertible bond repurchasePurchased $5.9 million of CB back in September at 99 cents
Increase the interest rate hedgeBought $100 million of interest rate swaps for 7 years
Overview of newbuilding program
Jinhaiwan Pipavav
Capesize 1 0
Kamsarmax 2 0
Iceclass panamax 4 1
Installments paid(MUSD)
168.6 21.4
Loan drawn(MUSD)
43.2 14.4
As per 30.09.2012. Cancelled contracts also include installments and loans.
Open positions on sailing vessels
Capesize exposure - Sailing vessels Core Fleet
2012 2013 2014
Total vessel days 277 2 108 2 108
Open vessel days 10 697 1 633
Open position (%) 3 % 33 % 77 %
Average net rate on fixed days 24 493 30 872 23 510
No of vessels 6 6 6
Panamax exposure - Sailing vessels Core Fleet
2012 2013 2014Total vessel days 794 6 038 5 925
Open vessel days 59 1 397 3 352
Open position (%) 7 % 23 % 57 %
Average net rate on fixed days 16 115 17 453 19 523
No of vessels 17 17 17
Cash cost breakeven
AssumptionsCash B/E includes OPEX, quarterly loan repayment, interest and admin costsB/E rates is calculated for owned sailing vessels
Cash cost breakeven for sailing vessels(2013 estimates)
Capesize 16,200 $/dayPanamax/Kamsarmax 12,100 $/day
Based on 13 Panamax/Kamsarmax and 6 Capesize vessels
Vessel operating expenses
Macro UpdateHerman Billung, CEO Golden Ocean Management AS
Still robust underlying growth in seaborne dry trade…
Source: Platou Economic Research
0
10
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100
08.1 09.1 10.1 . 11.1 . 12.1
Mill tons / month
Iron ore Coal Grain/soybean Steel products
Yr/Yr change %9 mos 2012/2011
+ 6.9 %
Dry bulk market strengthening
Source: Pareto Shipping
Freight rates moving up in Q3 2012
Series Date Previous Current Change Percent %
Cape TCAvg 2012-11-20 16734 16809 75 0.45 %
Panamax TCAvg 2012-11-20 7210 7453 243 3.26 %
SM TCAvg 2012-11-20 7187 7269 82 1.13 %
Handy TCAvg 2012-11-20 6018 6056 38 0.63 %
Freight market development
Source: Fearnleys
Still some seasonalityvisible.
Coal and Grain seasons.
Monsoon season.
Baltic Dry Index, seasonal pattern
Premium quality ore is becoming an increasingly attractive product
Source: Pareto Shipping
World production and Fe grades
0
500
1,000
1,500
2,000
2,500
3,000
3,500
43%
44%
45%
46%
47%
48%
49%
50%
51%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
World production (rhs) World Fe Grade (lhs)
Mt
• The Fe grade of the average globaliron ore product is declining overtime
• This trend is in particular apparentin China, where the average grade iswell below the global average
• China’s import need is not onlyabout need for volumes, but alsoabout need for higher grade materialto offset its domestic low grade ironore
• With a falling average grade overtime, the relative value of a highgrade product is expected toincrease over time
New Iron Ore Project developments until 2015
Baffinland 18 mtArcelorMittal 8mtTotal 26 mt
Source: Platou Economic ResearchIn total 625 – 650 mill tons
New discovereddeposits Qinghai
50 – 75 mt
Rio Tinto (jv Orissa 40 mt
W.Africa 60 mt
Rio Tinto 53 mtBHP Billiton 46 mtFortescue 59 mtOthers 159 mtTotal 317 mt
KumbaXstrata
IMC
50 – 70 mt
Vale 103 mtAngelo Minas 27 mtTotal 130 mt
Steam coal imports growing robustly
Source: Pareto Shipping
Steam coal steaming ahead
China’s imports will be about 194 mill. tons ‘ in ’12
Downward revision from 205 mill. tons in last update
Sourcing from Indonesia and Australia
Fallout from Fukushima
Bulk carriers: existing fleet and order book by year of delivery
Source: Platou Economic Research
ON Deliveried Rest ON ORDER IN %DWT EXIST.FLEET* ORDER 2012 2012 2013 2014 2015+ OF EXIST.FLEETBULK CARRIERSHandy
10-14,999 2.9 0.1 0.0 0.0 0.1 0.0 0.0 3.215-19,999 5.2 0.1 0.3 0.0 0.0 0.0 0.0 1.420-29,999 31.8 1.3 1.1 0.4 0.6 0.2 0.0 4.130-39,999 46.1 10.0 7.1 1.0 5.7 2.1 1.3 21.8Total Handy 86.0 11.5 8.5 1.5 6.4 2.3 1.3 13.4
Handymax / Supramax40-52,999 54.5 4.3 1.6 1.0 2.7 0.5 0.1 7.853-64,999 (blt > 1999) 82.3 16.2 15.7 4.5 8.6 2.8 0.3 19.7Total Handymax/Supramax 136.8 20.5 17.3 5.5 11.2 3.3 0.4 15.0Total Handy/Handymax 222.8 32.0 25.8 7.0 17.6 5.6 1.7 14.3
Panamax / Kamsarmax65-84,999** 137.9 33.5 17.4 13.1 13.9 5.7 0.8 24.3
Post Panamax85-119,999 43.2 7.4 9.3 2.2 3.7 1.1 0.4 17.1
Capesize120,000 + 265.5 40.1 35.0 14.1 20.8 5.1 0.2 15.1
TOTAL 669.5 113.1 87.6 36.3 56.1 17.5 3.2 16.9No of vessels 9 382 1 393 1042 398 704 229 62
* Scrapped vessels removed from the fleet when sold for scrap. ** Incl 60,000 - 64,999 built year 2000 and before
What lies ahead? Part I
Source: Fearnleys
“Theoretical” orderbookfor about 130 million DWTin 2012....
78% of the 2011orderbook was delivered –slippage to remain anissue.
Chinese Greenfield yardssupposed to deliver 57mdwt in 2012, up from 29mdwt in 2011.
China overall is supposedto increase its newbuildingdeliveries by 60%.....
Soft earnings and difficultfunding conditions also toreduce actual deliveries.
Deliveries and Order book by main Builder nation
Source: Fearnleys
What lies ahead? Part II
118 “greenfield” yards inChina
Monthly average outputabout 3.6 mdwt.
Combined order bookabout 68 mdwt
71 yards have deliveredless than 2 ships latest 12months (49: zero)
Only 77 of them haveships on order
32 yards have five or lessvessels on order
88% of the order book isscheduled for delivery byend 2013
2012 2013 2014 2015# of vessels 357 395 92 12DWT 26,4 32,7 7,6 1,3
Historic deliveries and Orderbook for Chinese Green field yards
Dry bulk market recovering from demand-supply imbalance
Source: Pareto Shipping
Tonnage overhang reduced, demand catching up with supply
5.3%3.8%
13.4%11.3%
10.0% 6.8%
5.2%4.1%
7.0%7.7%
14.9% 15.4%
13.3%
6.3%
2.3% 2.6%0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2008 2009 2010 2011 2012e 2013e 2014e 2015eDwt demand growth Dwt supply growth
y/y growthWe estimate dwt supply growth toincrease by 13% in 2012, versus aton-mile demand growth of 10%
Market balance turns positive in2013 with net supply growth at 6%,below tonnage demand growth of7%
Dry Bulk Market fundamentals expected to improve in 2014-15
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00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
PercentMill dwt
Supply Demand Utilization rate
Source: Platou Economic Research
… and then slowly improve up to 91% in ‘15
Source: Pareto Shipping
Dry bulk fleet utilization
95.7
92.791.6
88.5
86.3 86.8
89.290.5
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2008 2009 2010 2011 2012e 2013e 2014e 2015eUtilization 2001-2011 avg
Utilization % • We forecast utilization to improve in2013 and onwards, yet stay belowthe historical average of 92% and 10-year avg of 93%
• Rates should stay below pre-financial crisis levels, but slowlyincrease from the lows in 2012
Q & A
Thank you for your attention !
