PACIFIC BASIN SHIPPING LIMITED OUR BUSINESS
Who We Are
We own and operate dry bulk cargo ships. Our business is customer focused, providing over 550 industrial users, traders and producers of dry bulk commodities with a high-quality, reliable and competitive freight service under spot and long-term cargo contracts. We are headquartered and listed in Hong Kong and operate globally with a large fleet of ships trading worldwide
Seamless Service Provided by Our Excellent Team
380 shore staff | 2,300+ crew | 880 shipments |
in 13 key locations | served on our owned ships | completed in 1H2022 |
around the world | in 1H2022 | |
240
owned and operated ships
13
Offices
Exceptional fleet
We operate one of the world's largest fleets of interchangeable modern Handysize and Supramax ships, equipping us for efficient trading and reliable service any time and anywhere
Experienced team
Our staff operate globally with a local presence; our network of customer- facing offices ensures we create strong bonds, collaboration and trust with our customers, driving insight and knowledge back into our business so we can deliver the best service
Our business is people driven, and our success hinges on the strength and quality of our relationship with customers, suppliers and other business partners. We blend an effective cargo and customer-focused business model with talented, team-focused people with a passion for delivering excellent service
Customers first
Our business principles
■■ We are passionate about our customers, our people, our business and our brand
■■ We honour our commitments, and we value long-term relationships over short-term gain
■■ We offer a personalised, flexible, responsive and reliable service, and look for ways to make it easier to do business with us
■■ We target excellence and success through dedication and teamwork, and we see all our colleagues as corporate ambassadors
■■ We take a sustainable business approach and promote high standards of safety and environmental stewardship
■■ We are caring, good humoured and fair, treat everyone with dignity and respect, and encourage diversity of opinions and cultures
Our customer-focused business model drives innovative customer engagement and service, high service reliability, enhanced
550+ customer satisfaction and an excellent industry
customersreputation
p.22 Sustainability Highlights
CONTENTS
1H2022 Highlights
- Business Highlights
- Financial Highlights
Our Business
04 Our Fleet
FEATURED
IN THIS REPORT…
1H2022 Highlights
2
The Half Year in Review 6
05 Our Global Reach
The Half Year in Review
BUSINESS HIGHLIGHTS
Our Best Ever
Interim Results
During the first half of 2022, we generated our best interim results in Pacific Basin's history, producing an underlying profit of US$457.5
$566.9m | $465.1m | 48% | $698.6m | ||||||
$668.4m | |||||||||
28% | $362.5m | ||||||||
$244.6m | |||||||||
$160.1m | |||||||||
1H20 | 1H22 | 1H22 | 2020 | 2021 | 1H22 | ||||
$79.2m | 1H21 | 1H21 1H22 | 1H21 | ||||||
1H20 | 1H20 |
CHIEF EXECUTIVE'S REVIEW
Our Best Interim Results in Our Company's History
In the first half of 2022, we generated our best interim results ever, producing an underlying profit of US$457.5 million, a net profit of US$465.1 million and an EBITDA of US$566.9 million. This yielded an exceptionally strong return on equity of 48%, with basic EPS of HK74.5 cents.
p.31 Group Performance
Review
Excellent Performance Driven by Strong Revenue Generation and Competitive Cost Base
Our core business generated average Handysize and Supramax daily time-charter equivalent ("TCE") earnings of US$26,370 and US$33,840 net per day in the first half, representing an increase of 83% and 85% compared to the same period in 2021, respectively. In the period we outperformed the average Handysize (BHSI 38k dwt tonnage-adjusted) and Supramax (BSI 58k dwt) indices by US$4,370 per day and US$8,210 per day respectively. Our
06 | Chief Executive's Review |
10 | Market Review |
million, a net profit of US$465.1 million and an EBITDA of US$566.9 million. This yielded an exceptionally strong return on equity of 48% with basic EPS of HK74.5 cents.
Our financial position continues to strengthen with available committed liquidity of US$698.6 million and a net cash position of US$68.9 million as at 30 June 2022.
-$222.4m |
-36% |
EBITDA (US$) | Net Profit/(Loss) (US$) | Return on Equity | Available Committed |
Liquidity (US$) | |||
as at 31 December and 30 June |
Our record interim results refl ect the strength in minor bulk demand over the period and the signifi cant scale and competitiveness of
Our results benefited from significantly higher average TCE earnings compared to the same period last year, strong operating activity results, and a competitive cost structure. We continued to significantly outperform the market index rates, especially in our Supramax business, which delivered an exceptional performance over the period.
Looking forward, we have covered the majority of our third quarter days at US$23,690* net per day
performance continues to benefit from our diverse cargo and customer base and the close customer interaction facilitated by our extensive global office network.
Our operating activity contributed US$30.7 million, generating a margin of US$3,330 net per day over 9,200 operating days in the first half. While margins varied over the period, they still remain historically
1 5 | Our Performance |
1 8 | Core Business Vessel Costs |
20 | Cash and Borrowings |
Sustainability and Governance
22 | Sustainability Highlights |
26 | Corporate Governance |
The Board has declared an interim basic dividend of HK35 cents per share, representing 50% of our net profit for the period, and an additional special dividend of HK17 cents per share, representing 25% of our net profit for the period. The basic dividend and the special dividend together amount to a total dividend of HK52 cents per share, equal to US$348.0 million or 75% of the net profit.
Strong Minor
Bulk Fundamentals
The minor bulk freight market in the first half of 2022 was driven by broad based global demand for commodities, further supported by low fleet growth and continued fleet inefficiencies.
Minor bulk rates continue to be supported despite concerns over global economic growth, on-going conflict in Ukraine, and Covid-related impacts on the Chinese economy.
Delivering Excellent Results
■ Our core business achieved | ■ Our P&L break-even was |
Handysize and Supramax | US$10,260 and US$10,600 |
net daily TCE earnings | per day for Handysize and |
of US$26,370 and | Supramax respectively; our |
US$33,840 respectively, | costs remain competitive |
generating a total contribution | despite higher crewing and |
of US$468.2 million before | repatriation related costs |
overheads | and increased depreciation |
■ Our operating activity | as a result of the reversal |
of a vessel impairment | |
achieved a strong daily | provision in 2021 |
margin of US$3,330 net | ■ In light of a softening global |
over 9,200 operating days, | |
generating a contribution | economy we expect dry |
of US$30.7 million before | bulk demand to moderate in |
overheads | the second half of 2022, but |
favourable supply dynamics | |
make us optimistic about | |
the long-term potential of | |
the market |
Fleet Optimisation for the Future
- We currently own 117 Handysize and Supramax ships and have around 240 owned and chartered ships on the water overall
- During the period we sold five of our older Handysize ships, while taking delivery of one Ultramax vessel purchased in 2021
- We remain committed to our long-term strategy of further growing our Supramax fleet and renewing our Handysize fleet with younger, larger and more efficient vessels, thereby further optimising our fleet to more easily meet tightening environmental regulations
- We are well positioned to comply with IMO carbon intensity reduction rules coming into force in 2023 through technical enhancements, operational measures and gradual fleet renewal
Find out more in our Chief Executive's
Review on p.6
Martin Fruergaard
Chief Executive Officer
Pacifi c Basin's business. I am confi dent that our excellent customer- focused business model, consistent strategic focus, large owned fl eet and healthy balance sheet will allow us to thrive in this exciting market and continue to deliver attractive earnings and return signifi cant cash to our shareholders
for Handysize and US$28,970* net per day for Supramax respectively, underpinning continued strong earnings in what is typically the seasonally stronger part of the year.
Our financial position continues to strengthen with available committed liquidity of US$698.6 million and a net cash position of US$68.9 million as at 30 June 2022.
In light of the strong earnings, cash position and our confidence in the longer-term outlook for minor bulk shipping, the Board has declared an interim basic dividend of HK35 cents per share, representing 50% of our net profit for the period, and an additional special dividend of HK17 cents per share, representing 25% of our net profit for the period. The basic dividend and the special dividend together amount to a total dividend of HK52 cents per share.
* Indicative 3Q 2022 TCE only, voyages are still in progress
high and our operating activity represents an ongoing opportunity to utilise the commercial and operating skills of the Pacific Basin team to generate supplementary earnings for the business.
Our overheads and vessel operating expenses remain well controlled despite more expensive crew travel, quarantine and other pandemic-related manning costs.
p.15 Our Performance
Further Strengthening Our Balance Sheet
We continue to maintain a conservative balance sheet, which will allow us to invest over the cycle, while still distributing excess cash to shareholders through dividends.
During the period we structured an offer to holders of our US$175.0 million convertible bond to incentivise early conversion. This resulted in a reduction of our outstanding convertible bond to US$70.1 million. This offer has allowed us to further optimise our capital
28 Other Information |
Financial Statements
- Group Performance Review
- Financial Statements
- Notes to the Financial Statements
- Auditor's Review Report
02
Business Highlights
The Half Year in Review
15
OUR PERFORMANCE
Our business generated an underlying profit of US$457.5 million (1H 2021: US$150.4 million) representing our strongest interim results ever. Our results benefited from significantly higher average TCE earnings compared to the same period last year, strong operating activity results, and competitive cost structure.
06
Chief Executive's Review
Sustainability and Governance
22
SUSTAINABILITY HIGHLIGHTS
Operating Performance | |||
Six months ended 30 June | |||
US$ Million | 2022 | 2021 | Change |
Core business Handysize contribution | 265.4 | 105.2 | +>100% |
Core business Supramax contribution | 202.8 | 65.9 | +>100% |
Operating activity contribution | 30.7 | 11.9 | +>100% |
Our Commercial Activities
Core Business
Our core business is to optimally combine
Pacific Basin's active approach to sustainability is rooted in our culture and, governed by policies and systems, is integrated into our daily business behaviour and operating practices. We believe that many of the responsible actions we take - our commitment to sustainability - make us competitively stronger and enhance our financial performance, reputation and the longevity and future value of our business
Our Sustainability Strategy and Focus Areas
Our sustainability initiatives and reporting are guided by broad strategic objectives and responsibilities that are core to our culture, strategy and long-term vision, and make a difference within and outside our Group:
Key to navigation symbols
Linkage to related details within the Interim Report
Linkage to related details on our website www.pacificbasin.com
ESG | Linkage to related details in our |
Capesize contribution1 | 0.7 | 2.1 | -67% | |||
Operating performance before overheads | 499.6 | 185.1 | +>100% | |||
Adjusted total G&A overheads | (41.8) | (34.1) | -23% | |||
Taxation and others | (0.3) | (0.6) | +50% | |||
Underlying profit | 457.5 | 150.4 | +>100% | |||
Vessel net book value (incl. assets held for sale) | 1,840.3 | 1,720.0 | +7% | |||
+/- Note: In our tabulated figures, positive changes represent an improving result and negative changes represent a worsening result | ||||||
Having redelivered a chartered 95,000 dwt Post-Panamax, we now refer to our owned 115,000 dwt bulker as a Capesize vessel, consistent with industry definitions | ||||||
Our Cargo Volumes in 1H 2022 | ||||||
Minerals | 11% | |||||
Salt | 5% | |||||
Sand & Gypsum | 4% | Agricultural Products & Related | 29% | |||
Soda Ash | 2% | |||||
Energy | 13% | 36.5 | Grains & Agricultural Products | 15% | ||
Coal | 8% | Fertiliser | 12% | |||
Sugar | 2% | |||||
Petcoke | 4% | |||||
Wood Pellets | 1% | Million Tonnes | ||||
Metals | 16% | (1H21: 39.4 mt) | ||||
Ores | 7% | Construction Materials | 31% | |||
Concentrates | 5% | |||||
Alumina | 3% | Cement & Cement Clinkers | 13% | |||
Others | 1% | Steel & Scrap | 11% | |||
Logs & Forest Products | 7% |
our owned and long-term chartered ships with multi-shipment contract cargoes and spot cargoes to achieve the highest daily TCE earnings. Our core business also uses short- term chartered ships to carry contract cargoes to maximise the utilisation and TCE of our owned and long-term chartered ships.
Operating Activity
Our operating activity complements our core business by matching our customers' spot cargoes with short-term chartered ships, making a margin and contributing to our Group's results regardless of whether the market is weak or strong. Through our operating activity, we provide a service to our customers even if our core ships are unavailable.
Our Mission | |
Our Purpose | To be the best in our field by continuously refining |
our business model, our service and our conduct | |
To safely and sustainably deliver by sea the | in everything we do |
agricultural products, raw materials and | Our Vision |
other bulk commodities that are essential to | |
people's lives and society's progress | To be the leading ship owner/operator in dry bulk |
shipping, and the first choice partner for customers | |
and other stakeholders |
With You for the Long Haul
As well as serving key players across the grain, minor bulk and other industries, Pacific Basin serves leading companies in sustainable forestry in Canada, the United States, New Zealand and Australia.
Environmental stewardship
Reducing our fleet's consumption of fuel and other inputs and the resulting impacts of emissions, use of resources and climate change
Community engagement
Maintaining mutually beneficial partnerships with our customers, suppliers and other stakeholders in our communities, while always demonstrating responsible business practices
Safety, workplace and business practices
Rewarding the skills, experience, behaviour and loyalty of our staff and enhancing engagement with fair remuneration and a commitment to health and safety, development and training, equal opportunity and a comfortable and fulfilling workplace
Corporate governance
Evolving management and governance practices for best-in-class risk management, transparency and stakeholder confidence
Sustainability Report 2021 |
High-level KPIs
(Key Performance Indicators)
15
Our Performance
22
Sustainability Highlights
1H2022 Highlights
2
BUSINESS
HIGHLIGHTS
Our Best Ever
Interim Results
During the first half of 2022, we generated our best interim results in Pacific Basin's history, producing an underlying profit of US$457.5 million, a net profit of US$465.1 million and an EBITDA of US$566.9 million. This yielded an exceptionally strong return on equity of 48% with basic EPS of HK74.5 cents.
Our financial position continues to strengthen with available committed liquidity of US$698.6 million and a net cash position of US$68.9 million as at 30 June 2022.
$566.9m | $465.1m | 48% | $698.6m | ||||||
$668.4m | |||||||||
28% | $362.5m | ||||||||
$244.6m | |||||||||
$160.1m | |||||||||
1H22 | 1H22 | 2020 | 1H22 | ||||||
$79.2m | 1H20 | 1H21 | 1H21 1H22 | 1H21 | 2021 | ||||
1H20 | 1H20 | ||||||||
-$222.4m | |||||||||
-36% |
EBITDA (US$) | Net Profit/(Loss) (US$) | Return on Equity | Available Committed |
Liquidity (US$) | |||
as at 31 December and 30 June |
The Board has declared an interim basic dividend of HK35 cents per share,
Delivering Excellent Results
Fleet Optimisation for the Future
representing 50% of our net profit for the period, and an additional special dividend of HK17 cents per share, representing 25% of our net profit for the period. The basic dividend and the special dividend together amount to a total dividend of HK52 cents per share, equal to US$348.0 million or 75% of the net profit.
Strong Minor
Bulk Fundamentals
The minor bulk freight market in the first half of 2022 was driven by broad based global demand for commodities, further supported by low fleet growth and continued fleet inefficiencies.
Minor bulk rates continue to be supported despite concerns over global economic growth, on-going conflict in Ukraine, and Covid-related impacts on the Chinese economy.
■■ Our core business achieved Handysize and Supramax net daily TCE earnings
of US$26,370 and
US$33,840 respectively, generating a total contribution of US$468.2 million before overheads
■■ Our operating activity achieved a strong daily
margin ofnet over 9,200 operating days, generating a contribution of US$30.7 million before overheads
■■ Our P&L break-even was US$10,260 and US$10,600 per day for Handysize and Supramax respectively; our costs remain competitive despite higher crewing and repatriation related costs and increased depreciation as a result of the reversal of a vessel impairment provision in 2021
■■ In light of a softening global
economy we expect dry bulk demand to moderate in the second half of 2022, but favourable supply dynamics make us optimistic about the long-term potential of the market
■■ We currently own 117 Handysize and Supramax ships and have around 240 owned and chartered ships on the water overall
■■ During the period we sold five of our older Handysize
ships, while taking delivery of one Ultramax vessel purchased in 2021
■■ We remain committed to our long-term strategy of further growing our Supramax fleet and renewing our Handysize fleet with younger, larger and more efficient vessels, thereby further optimising our fleet to more easily meet tightening environmental regulations
■■ We are well positioned to comply with IMO carbon intensity reduction rules coming into force in 2023 through technical enhancements, operational measures and gradual fleet renewal
Find out more in our Chief Executive's
Review on p.6
FINANCIAL HIGHLIGHTS
1H2022 Highlights
3
30 June | 30 June | 31 December | |||||||||
2022 | 2021 | 2021 | |||||||||
Results | US$ Million | US$ Million | US$ Million | ||||||||
1,722.8 | |||||||||||
Revenue | 1,142.0 | 2,972.5 | |||||||||
Time-Charter Equivalent ("TCE") Earnings | 1,225.5 | 712.2 | 2,091.4 | ||||||||
EBITDA1 | 566.9 | 244.6 | 889.9 | ||||||||
Underlying profit | 457.5 | 150.4 | 698.3 | ||||||||
Profit attributable to shareholders | 465.1 | 160.1 | 844.8 | ||||||||
Balance Sheet | 2,884.5 | ||||||||||
Total assets | 2,300.2 | 2,745.4 | |||||||||
Total cash and deposits | 516.3 | 227.0 | 459.7 | ||||||||
Available committed liquidity | 698.6 | 417.1 | 668.4 | ||||||||
Net cash/(borrowings) | 68.9 | (539.5) | (128.4) | ||||||||
Shareholders' equity | 2,036.7 | 1,229.4 | 1,831.2 | ||||||||
Capital commitments | 1.3 | 29.9 | 16.8 | ||||||||
Cash Flows | 511.5 | ||||||||||
Operating | 221.1 | 850.4 | |||||||||
Investing | 82.3 | (98.3) | (334.0) | ||||||||
Financing | (462.0) | (132.2) | (433.0) | ||||||||
Net change in cash and cash equivalents | 131.8 | (9.4) | 83.4 | ||||||||
Per Share Data | HK cents | HK cents | HK cents | ||||||||
Basic EPS | 74.5 | 26.4 | 139.1 | ||||||||
Dividends (including HK17 cents special dividend) | 52.0 | 14.0 | 74.0 | ||||||||
Operating cash flows | 82.0 | 36.4 | 140.0 | ||||||||
Shareholders' equity | 303 | 198 | 296 | ||||||||
Share price at period end | HK$3.00 | HK$3.13 | HK$2.86 | ||||||||
Market capitalisation at period end | HK$15.8bn | HK$15.1bn | HK$13.8bn | ||||||||
Ratios | 27% | ||||||||||
Net profit margin | 14% | 28% | |||||||||
Return on average equity (annualised) | 48% | 28% | 58% | ||||||||
Total shareholders' return | 26% | 114% | 105% | ||||||||
Net cash/(borrowings) to net book value of owned vessels | 4% | (31)% | (7)% | ||||||||
Net cash/(borrowings) to shareholders' equity | 3% | (44)% | (7)% | ||||||||
Interest cover | 49.3x | 16.0x | 30.1x | ||||||||
1 EBITDA (earnings before interest, tax, depreciation and amortisation) is gross profit less indirect general and administrative overheads, excluding: depreciation and amortisation; exchange differences; share-based compensation and unrealised derivative income and expenses
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Pacific Basin Shipping Limited published this content on 16 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 August 2022 09:11:06 UTC.
