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Presentation of the results of the OT Logistics Capital Group
corresponding to the I half of 2017 28 September 2017
2
AGENDAKEY EVENTS
FINANCIAL AND OPERATIONAL RESULTS
PLANS FOR THE FUTURE
SUMMARY
APPENDICES
Increase in the area of agro
transshipments, revival of the iron ore
and steel trade. Coal market under
pressure
3
The most important informationin the I half of 2017
Financial results
Continuation of acquisition processes
Market
After the I half of the year
an increase of shares in the Croatian port of Luka
Rijeka up to 32.56%Operation and finance
control over the port Luka Rijeka thanks to the
agreement of shareholders holding in total 56.56% of
shares
Revenue increase by 24.4% up to PLN 433.2 million as a
result of consolidation of new companies in the
Group. Net profit reached in H1
2017 10.2% Net losses came to PLN
4.34. million.
4
Consolidation of results of new companies from the Capital Group
Since the first quarter of 2017 results of newly acquired or established companies have been consolidated, companies which did not form part of the Group in that period in 2016
Consolidation of the results of the following companies has been started: Sealand Logistics, C. Hartwig Adria, OT Nieruchomości, and railway companies STK (along with its subsidiaries) and Kolej Bałtycka
The consolidation and final settlement of the acquired assets had an impact on the increase of consolidated revenues and the results of the OT Logistics Capital Group
The consolidation of new companies changed the structure of revenues in the sectors of operation of OTL
Expansion in the countries of the North-South Corridor
32.56% - shares of OT Logistics in the share capital of Luka Rijeka d.d.
An agreement of shareholders results in the control over the port (56.56%)
PLN 107.8 million – the value of current OT Logistics investments in Luka Rijeka
PLN 165 million – means obtained for the development of the port as part of the public offer of Luka Rijeka in 2015
Increase of share in the Luka Rijeka share capital from 20.81% to 32.56%
An important step in the construction of a transport corridor between the North and the South of
Europe
* All conversions made at the rate of HRK = 0.571 PLN
PLN 96 mln
revenue of Luka Rijeka in 2016.
Net profit PLN 3.5 million
19
Potential of Luka Rijeka
Potential to significantly increase the volume of transshipments.In the I half of 2017 an increase of transshipments by 40% y/y was registered (1.4 million t vs 0.99 million t)
Perspectives for developmentbased on the contracts and know-how GK OT Logistics
New opportunitiesof cooperation with global concerns
Luka Rijeka: Goods transshipments(expressed in millions of tonnes)
2,2
8,2
2016 potencjalnezdolności
przeładunkowe
* All conversions made at the rate of HRK = 0.571 PLN
7
Finalisation of talks in Montenegro
OT Logistics S.A. finalised negotiations with the State Treasury in Montenegro concerning the acquisition of 50% of shares in the company AD Montecargo (railway transport provider) and 30% shares in Luka Bar AD BAR (sea port operator). It opened the door for formal acceptance of terms of purchase of shares by the relevant institutions in Montenegro
At the end of April 2017 the Company received information about the termination of the privatisation process by the government in Montenegro, without completing the sales transaction
In May 2017 the Privatisation Committee in Montenegro rejected the appeal made by OT Logistics concerning the cancellation of privatisation of the Bar port and the railway undertaking AD Montecargo
8
STK S.A., a railway undertaking being a part of OT Logistics Capital Group, was granted the international GMP+ Certificate, attesting the highest quality and safety of grain and feed transport.
Development of services in the agro sector
OT Logistics Capital Group leased modern carriages of the Tagnpps type Each of them has a loading capacity of ca. 60 tons, which enables to load a block train which will carry the total of over 2 thousand tons of grain.
In April a new warehouse has been launched in OT Port Gdynia, dedicated to agro cargoes, which increases the transshipment potential of agricultural goods in the port of Gdynia
9
AGENDAKEY EVENTS
FINANCIAL AND OPERATIONAL RESULTS
PLANS FOR THE FUTURE
SUMMARY
APPENDICES
10
Revenues in the 1H of 2017 by sectors of operation
Transport34% of revenue
Ports8% of revenue
Forwarding56% of revenue
OT Logistics S.A., Deutsche Binnenreederei, Żegluga Bydgoska,
STK, Kolej Bałtycka, OT Rail Wrocław,
Odra Rhein Lloyd
OT Logistics S.A., C.Hartwig Gdynia, Rentrans International Spedition, Rentrans Cargo, Sealand Logistics,
C. Hartwig Adria
OT Port Gdynia, OT Port Świnoujście, OT Port Gdańsk, OT Port Wrocław
34%
56%
8%2% Przewozy
Spedycja
Usługi Portowe
Pozostałe (w tym najemnieruchomości)
GK OTL: Revenue structure [%]
28%
58%
19%
2%
H1 2016 H1 2017
11
The most important factors affecting the results of the sectors
Transport HarboursForwarding
Growth despite prolonged maintenance shutdowns affecting customers
Increase of sea freight rates in the import from the Far East
Slightly higher volume of transshipments of ore and steel Coal market under pressure
Early termination of the season of agro transshipments, lower volumes
Stable results of shipping companies
Delays in the tenders for hydra-engineering works
Consolidation of railway transport
Charging the costs of general management and sale of that sector with the costs of reorganisation of CSS and as a result of consolidation of railway transport companies
GK OTL: The result of EBITDA [PLNm]
12
GK OTL: Revenue [PLNm]
GK OTL: Net result [PLNm]
30,6 34,1
0
10
20
30
40
H1 2016 H1 2017
4,4
-4,3
-10
-5
0
5
10
H1 2016 H1 2017
Financial results H1 2017
+11.4%
348,1
433,2
0
100
200
H1 2016 H1 2017
+24,4%
Increase of revenue from sales by 1/4 due to consolidation of new companies from the Group, especially railway companies
EBITDA increase by 11.4% up to PLN 34.1 million, EBITDA profitability at a level comparable to last year
The costs of global management burdened with the costs of construction of the corporate centre for the Groupand the Central Sales Department - commercial and marketing functions related to promotion, sales support and product marketing focused in the dominant company
Foreign exchange differences (stronger PLN) affected the net result
Transport sector: The result of EBITDA[PLNm]
13
Transport sector: Revenues (external entities)[PLNm]
The result of the transport sector in H1 2017 Transport sector: Margins[%]
Transport sector: Net result[PLNm]
14,0
19,9
0
5
10
15
20
25
H1 2016 H1 2017
+42.2%
5,3
0,30
5
10
H1 2016 H1 2017
11,7% 12,8%11,7% 11,1%
4,4%0,2%
0%
5%
10%
15%
H1 2016 H1 2017
Brutto EBITDA Netto
-94.7%
97,8
149,0
0
25
50
75
100
125
150
175
H1 2016 H1 2017
+52.4%
Forwarding sector: The result of EBITDA[PLNm]
14
Forwarding sector: Revenues (external entities)[PLNm]
The result of the forwarding sector H1 2017Forwarding sector: Margins[%]
Forwarding sector: Net result[PLNm]
10,1
5,4
0
2
4
6
8
10
H1 2016 H1 2017
9,3
-0,4
-1
2
4
6
H1 2016 H1 2017
6,8% 5,9%4,5%
2,0%4,1%
-0,1%
-5%
0%
5%
10%
H1 2016 H1 2017
Brutto EBITDA Netto
-46.5%
200,7242,4
0
50
100
150
200
250
H1 2016 H1 2017
+20.8%
Port sector: The result of EBITDA[PLNm]
15
Port sector: Revenues (external entities)[PLNm]
Financial results of the port sector H1 2017Port sector: Margins[%]
Port sector: Net result[PLNm]
15,5
8,4
0
5
10
15
20
H1 2016 H1 2017
-46.0%
6,1
0,8
0
5
10
H1 2016 H1 2017
20,8%
8,7%
18,4%
10,4%7,2%
1,0%0%
5%
10%
15%
20%
25%
H1 2016 H1 2017
Brutto EBITDA Netto
-86.9%
41,736,3
0
10
20
30
40
50
H1 2016 H1 2017
-13.0%
1 675,9 1 628,7
0
500
1000
1500
2000
H1 2016 H1 2017
16
Transshipments OT Port Gdynia[thousands tonnes]
HQ 2017 – The volume of transshipments in the Group’s harbours in Poland
Transshipments OT Port Świnoujście[thousands tonnes]
-2.8%
2 016,3 1 857,0
0
500
1 000
1 500
2 000
H1 2016 H1 2017
-7.9%
Smaller volume of global transshipment due to minimal transshipments of coal and coke. Due to the incorporation of Polish mining companies by energy companies coal was used on the domestic market
Higher volume of transshipments of agro commodities and ore
The Port in Świnoujście executes investments which increase the potential of agro transshipments \, gaining independence from transshipments based on coal and steel products. Launch of a new, big cereal warehouse planned for the II half of 2018
10,0
100,0
25,4
0
50
100
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
OT Logistics bonds with future maturity date
obligacje w PLN
20192017 2018 2020
17
Increasinginvestmentsof the Group
1,711,25
2,07
3,253,62
0
1
2
3
4
2012 2013 2014 2015 2016
Net Debt/EBITDA
61,0 65,0
0
25
50
75
2015 2016
Debt ratio [%]
Expenses incurred in connection with takeovers and investments contributed to
increase the indebtedness of the Group
In February 2017 the Company took out a loan to redeem bond of the series B
and C. OT Logistics has a mandate letter with the banking consortium, which
established financing up to PLN 365 million and EUR 2 million
It is expected that debt ratios will remain at the level of
(debt/EBITDA not higher than 4.0)
Redemption date
Interest rate Value Currency
Series B17 February
2017WIBOR 6M + 4 pp. 30000 PLN
Series C17 February
2017permanent 4000 EUR
Series D20 November
2018WIBOR 6M + 3.90 pp. 100000 PLN
Series E18 August
2018permanent 10000 PLN
Series F23 February
2020WIBOR 6M + margin 25445 PLN
18
AGENDAKEY EVENTS
FINANCIAL AND OPERATIONAL RESULTS
PLANS FOR THE FUTURE
SUMMARY
APPENDICES
What can shape the results of the Group in subsequent quarters?
External factors Internal factors
19
The influence of optimisation
Taking advantage of synergies resulting from acquisitions; integrating railway companies
Strengthening the competencies of the Commercial Department, termination of the implementation of CSS IA and HR
Construction of the agro terminal in Świnoujście, construction of the Port in Gdańsk
Taking over operational control over the port Luka Rijeka
Improvement of the economic situation
Investments in infrastructure in Poland
Economic situation in the coal, steel and cereals market
Government investments in the revitalisation of waterways in Poland
End of maintenance shutdowns in customers’ facilities
Seasonal variations –supplies of energy fuels, end of harvest time
20
Government plans - a support for the sector in which we operate
Expected benefits from the planned and executed investments
with the use of public funds supported with the funds from the European Union
PLN 60 billion -Investments within the government development plan for inland waterways over the next 15 years
PLN 31.5 billion - the cost of investment in modernisation of the middle and lower section of the Vistula from Warsaw to Gdańsk
PLN 16.5-22.6 billion- the value of the investment in activating the Oder Waterway
PLN 3 billion - Joint Polish and German project of dredging the Oder River and the associated hydro technical structures
PLN 800 million- The investment involving a canal across the Vistula Spit
PLN 610 million - planned investment of the Gdynia Sea Harbour in the reconstruction and development of port infrastructure between 2015 and 2017
Poland acceding the AGN Convention in 2016 -European Agreement on Main Inland Waterways of International Importance will enable it to obtain additional funds for modernisation of waterways
PLN 4 billion -the programme of improvement of railway access to the Baltic Sea
PLN 107 billion -announced government investments in the programme of development of highways and expressways in Poland by 2023
PLN 67.5 billion -planned investments in the development of national infrastructure by 2030
21
In July 2017, OT Logistics' barges will carry coal to Wrocław from the port in Gliwice.
OT Logistics plans to transport to Wrocław 20 thousand tons of coal per month till the end of year. Barges have to cover the distance of 200 km, along Silesian Canal and Odra River. The cruise requires passing through 27 locks.
Improvement of navigability of Oder
In September 2017 20 partners signed the Oder Declaration - among them Polish local government authorities, representatives of business and economic institutions
Creation of the Oder Waterway - in 2017 a tender is to be announced for the technical project meant to deepen and purify the Gliwice Channel which will allow to transport coal from Gliwice to Opole and Wrocław
Nowadays, river transport in Poland accounts for 0.4% Commitments with the European Union was based on the assumption that in 2030 it will reach 30%
22Source: MIR “Strategy of development of transportation until 2020, including a 2030 perspective”
53 57 63 69
2015 2020 2025 2030
313358
393444
2015 2020 2025 2030
1,4 1,72,0
3,3
2015 2020 2025 2030
122 134148
168
2015 2020 2025 2030
CAGR 1.8%
CAGR 2.2%
CAGR 6.1%
CAGR 2.4%
Demand of road transport [billion tkm]Demand of rail transport [billion tkm]
Demand of sea transport [billion tkm]Demand of inland water transport [billion tkm]
An increase of demand of transport in Poland- Long-term forecasts
23
AGENDAKEY EVENTS
FINANCIAL AND OPERATIONAL RESULTS
PLANS FOR THE FUTURE
SUMMARY
APPENDICES
24
Summary
The Group executes a strategy of development in the agro sector, increases transshipments in ports and provides services of railway transport domestically
The Group generates positive cash flows from operation activities (PLN +14.3 million) which confirms a positive direction of development
The Group increased considerably agro transshipments in Gdynia (+24% y/y)
The Group has increased the scale of operation in the forwarding and railway transport market thanks to the acquisition of Sealand Logistics, STK and Kolej Bałtycka
The Group is performing the acquisition of the port Luka Rijeka and thanks to shareholders’ agreement takes over operational control
Further optimisation activities in order to support future results of the Group in subsequent quarters
25
AGENDAKEY EVENTS
FINANCIAL AND OPERATIONAL RESULTS
PLANS FOR THE FUTURE
SUMMARY
APPENDICES
26
Capital Group OT Logistics in 2021
Leader of transportation and logistics services in
Central and Eastern Europewith an annual revenue of
EUR 1 billion.
New strategy of development - where are we heading
27
Where are we heading within the next 5 years
Becoming number 1 in the handling of agricultural products within the Baltic Sea basin (excluding Russia) and the Adriatic Sea basin
Market share in the market of agro transshipments in Polish harbours at 50%1
Doubling transshipments in Rijeka harbour2
Developing port terminals3
Developing inland and railway transportation by changing the service profile4
Forwarding - becoming one of Poland's top 10 forwarders 5% share in container maritime forwarding The presence on the TFL (transport, forwarding, logistics) market in the countries of the North-South corridor
5
Building the position of Central European railway-forwarding operator through an organic growth and creating strategic alliances6
28
Q&AContact
OT LogisticsMonika Sadowska+48 694 448 [email protected]
NBS CommunicationsMaciej Szczepaniak+48 514 985 [email protected]
THANK YOUFOR YOUR ATTENTION