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Q3 2014 EARNINGS CALL – Maersk Oil

Maersk Oil · Nov 11, 2014 · 63 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q3 2014 EARNINGS CALL – Maersk Oil – slide 1
    A.P. Mller Mrsk A/S Interim Report Q3 2014 11 November 2014 - Conference call 9.30am CET webcast available at www.maersk.com
  2. Q3 2014 EARNINGS CALL – Maersk Oil – slide 2
    page 3 Group Financial Highlights 9M 2014 Group Financial Highlights Reported profit increased by 76% to USD USDm 9M 2013 9M 2014 5.0bn (USD 2.8bn) positively impacted by 6,000 the divestment of DSG, partly offset by 5,006 5,000…
  3. Q3 2014 EARNINGS CALL – Maersk Oil – slide 3
    page 4 Group Financial Highlights Q3 2014 Group Financial Highlights Reported profit increased by 25% to USD USDm Q3 2013 Q3 2014 1.5bn (versus USD 1.2bn in Q3 2013) 2,000 positively impacted by continued portfolio 1,495 trimming…
  4. Q3 2014 EARNINGS CALL – Maersk Oil – slide 4
    page 5 Maersk Line results Q3 Q3 FY (USD million) 2014 2013 Change 2013 Highlights Q3 2014 Revenue 7,074 6,782 +4% 26,196 Maersk Line increased profit by 24% to USD 685m (USD 554m) and ROIC of 13.5% EBITDA 1,178 999 +18%…
  5. Q3 2014 EARNINGS CALL – Maersk Oil – slide 5
    page 6 Maersk Line cost reductions Unit cost including VSA income Unit costs declined by 0.9% or 25 USD/FFE USD/FFE to 2,597 USD/FFE compared to Q3 2013 3,100 3,054 driven by network efficiencies and -323 decreased bunker…
  6. Q3 2014 EARNINGS CALL – Maersk Oil – slide 6
    page 7 Maersk Oil results Q3 Q3 FY (USD million) 2014 2013 Change 2013 Highlights Q3 2014 Revenue 2,174 2,210 -1.6% 9,142 Maersk Oils profit increased by 18% to USD Exploration costs 210 256 -18% 1,149 222m, driven by higher…
  7. Q3 2014 EARNINGS CALL – Maersk Oil – slide 7
    page 8 APM Terminals results Q3 Q3 FY (USD million) 2014 2013 Change 2013 Highlights Q3 2014 Revenue 1,109 1,122 -1.2% 4,332 APM Terminals delivered a profit of USD 345m EBITDA 256 242 +5.8% 892 (USD 203m) and a ROIC of 22.5%…
  8. Q3 2014 EARNINGS CALL – Maersk Oil – slide 8
    page 9 Maersk Drilling results Q3 Q3 FY (USD million) 2014 2013 Change 2013 Highlights Q3 2014 Revenue 525 507 3.6% 1,972 Maersk Drillings profit increased by 30% to USD 192m, driven by a USD 73m after tax gain EBITDA 227 237…
  9. Q3 2014 EARNINGS CALL – Maersk Oil – slide 9
    page 10 APM Shipping Services results Q3 Q3 FY (USD million) 2014 2013 Change 2013 Highlights Q3 2014 Revenue 1,536 1,662 -7.6% 6,438 APM Shipping Services improved reported profit by 4.4% to USD 119m and delivered a ROIC of…
  10. Q3 2014 EARNINGS CALL – Maersk Oil – slide 10
    page 11 Continued focus on performance Invested ROIC % ROIC % ROIC % Development in invested capital since Q2 Business capital 2012 Q3 2014* Q3 2013* FY 2013 (USDm) Group 51,117 12.7% 9.5% 8.2% Maersk Drilling 96% Maersk…
  11. Q3 2014 EARNINGS CALL – Maersk Oil – slide 11
    page 12 A strong financial framework Well capitalised position Active portfolio management Net debt reduction of USD 3.5bn since Q4 2013 Cash flow from divestments has been USD 11.0bn with divestment (USDbn) gains of USD 5.1bn…
  12. Q3 2014 EARNINGS CALL – Maersk Oil – slide 12
    page 13 Consolidated Financial Information Income statement (USD million) Q3 2014 Q3 2013 Change FY 2013 Revenue 12,169 12,081 0.7% 47,386 EBITDA 3,199 3,113 2.8% 11,372 Depreciation, etc. 1,108 1,117 -0.8% 4,628 Gain on sale of…
  13. Q3 2014 EARNINGS CALL – Maersk Oil – slide 13
    page 14 Guidance for 2014 The Group still expects a result for 2014 significantly above Maersk Drilling still expects an underlying result below the 2013 result of USD 3.8bn. The underlying result is still 2013 (USD 551m) due to…
  14. Q3 2014 EARNINGS CALL – Maersk Oil – slide 14
    page 15 Creating a premium conglomerate The Group will create value through profitable growth and by creating winning businesses The Groups Q3 deliveries on our long term ambitions; A very satisfactory performance Continued…
  15. Q3 2014 EARNINGS CALL – Maersk Oil – slide 15
    page 16 Interim Report Q3 2014
  16. Q3 2014 EARNINGS CALL – Maersk Oil – slide 16
    Appendix
  17. Q3 2014 EARNINGS CALL – Maersk Oil – slide 17
    page 18 Maersk Group Key facts Founded in 1904 Represented in over 130 countries, employing around 90,000 people Market capitalization of around USD 51bn end Q3 2014 Facilitating global containerised trade Maersk Line…
  18. Q3 2014 EARNINGS CALL – Maersk Oil – slide 18
    page 19 Strategic and financial targets communicated at the Capital Markets Day 2012 MAERSK LINE MAERSK OIL APM TERMINALS MAERSK DRILLING APM SHIPPING SERVICES Self-funded 400,000 boepd USD 1bn NOPAT USD 1bn NOPAT USD 0.5bn…
  19. Q3 2014 EARNINGS CALL – Maersk Oil – slide 19
    page 20 solid progress on targets since Maersk Line Achieved industry cost leadership Reported EBIT-margin gap of 5%-points above peers for eight consecutive quarters Entered into a 10 year vessel sharing agreement with MSC on…
  20. Q3 2014 EARNINGS CALL – Maersk Oil – slide 20
    page 21 Strategic focus on creating winning businesses Return BELOW WACC in 2013 Return ABOVE WACC in 2013 Industry Top quartile performance in 2013 BU outperform industry but below WACC return BU outperform industry and…
  21. Q3 2014 EARNINGS CALL – Maersk Oil – slide 21
    page 22 Capital allocation Businesses Investment guidelines Maersk Line Invest up to own cash flow from operations when required to defend market position and preserve cost leadership Maersk Oil Continued investment program to…
  22. Q3 2014 EARNINGS CALL – Maersk Oil – slide 22
    page 23 Re-allocation of the Groups Capital Invested capital Q3 2014 Portfolio strategy towards 2017 (% of Group total) Growing the business by around 30% (baseline Q2 2012) At least 75% of invested capital within Other…
  23. Q3 2014 EARNINGS CALL – Maersk Oil – slide 23
    page 24 Active portfolio management Cash flow from divestments has been USD 11.0bn with divestment gains of USD 5.1bn pre-tax since 2009 USDbn Cash flow from divestments Divestment gains (pre-tax) Selected divestments…
  24. Q3 2014 EARNINGS CALL – Maersk Oil – slide 24
    page 25 Funding in place with liquidity reserve of USD 13.2bn Loan maturity profile at the end of Q3 2014 Funding USDbn BBB+/Baa1 credit ratings (both stable) from S&P and Moodys respectively 8 Liquidity reserve of USD 13.2bn…
  25. Q3 2014 EARNINGS CALL – Maersk Oil – slide 25
    page 26 Shareholders and share performance Share fact box Maersk B relative share performance Performance YTD (06 November 2014) Listed on NASDAQ MAERSK-A (voting right) OMX Copenhagen MAERSK-B (no voting right) Maersk B 0.4%…
  26. Q3 2014 EARNINGS CALL – Maersk Oil – slide 26
    page 27 Terms for the share buy- back (SBB) program Acquire a maximum amount of DKK 5.6bn (around USD 1bn) within the coming 12 months starting 1 September 2014. The amount corresponds to 5-10% of daily trading volume in the…
  27. Q3 2014 EARNINGS CALL – Maersk Oil – slide 27
    page 28 Maersk Line Capacity market share by trade no.3 12% no.2 no.6 no.3 no.1 no.2 Intra 8% 5% Europe 22% Pacific Atlantic Asia-Europe Pacific Intra 6% Asia no.3 Latin Africa West- Oceania America Central Asia 16%…
  28. Q3 2014 EARNINGS CALL – Maersk Oil – slide 28
    page 29 Industry is fragmented and dominated by families and government-supported players Capacity market share (%) Controlling owner Type of owner Maersk Line 15.5% 1 APM foundation Family (Listed) MSC 13.9% 2 Aponte family…
  29. Q3 2014 EARNINGS CALL – Maersk Oil – slide 29
    page 30 Maersk Line rate development versus Chinese outbound rate indices (USD/TEU) (USD/TEU) 1500 350 1400 300 1300 1200 250 1100 200 1000 150 900 800 100 okt-12 jan-13 apr-13 jul-13 okt-13 jan-14 apr-14 jul-14 okt-12…
  30. Q3 2014 EARNINGS CALL – Maersk Oil – slide 30
    page 31 EBIT-margin gap to peers remains at high level Gap of 9pp in H1 2014 while most peers are loss-making EBIT margin gap, (%-pts) Gap to peers Objective H1 2014 EBIT-margin, (%) 12% Maersk Line 9% CMA CGM 4% 10% OOCL…
  31. Q3 2014 EARNINGS CALL – Maersk Oil – slide 31
    page 32 Maersk Line EBIT-margin gap to peers EBIT-margin, % EBIT-margin gap, %-points 25% 25% 20% 20% 15% 12.9% 15% 8.5% 10.5% 9.0% 8.5% 9.3% 9.1% 10% 7.9% 8.4% 10% 5.8% 7.0% 6.7% 6.8% 5.3% 5.4% 5.8% 5.4% 5.4% 5.4%…
  32. Q3 2014 EARNINGS CALL – Maersk Oil – slide 32
    page 33 Maersk Line is growing capacity less than volume Both nominal and offered capacity growing less than volume Index, (Q2 2012 = 100) 115 +10% Maersk Line volume growth 110 105 Maersk Line nominal capacity growth:…
  33. Q3 2014 EARNINGS CALL – Maersk Oil – slide 33
    page page34 34 leading to better vessel utilization Capacity turn, (FFE/TEU) 1.00 CAGR 4.6% 0.95 0.90 0.85 0.80 0.75 0.70 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Notes: Capacity turn = Volume / Nominal capacity…
  34. Q3 2014 EARNINGS CALL – Maersk Oil – slide 34
    page 35 Reducing the number of vessels by redelivery of charter vessels Large reduction in number of achieved by redelivering vessels despite slow steaming uncompetitive charter vessels Vessels, () Ratio, (%) Chartered Owned…
  35. Q3 2014 EARNINGS CALL – Maersk Oil – slide 35
    page 36 We increased capacity much less than industry Growing capacity less than industry also compared to top 15 carriers Index, (Q2 2012 = 100) Industry volume Nominal capacity growth, (Q2 2012 Q2 2014) Industry nominal…
  36. Q3 2014 EARNINGS CALL – Maersk Oil – slide 36
    page 37 Maersk Line has a vast toolbox for cost cutting Network Speed equalization Improve rationalization & Slow steaming utilization Container Maersk Line- Improve efficiency MSC* VSA procurement Inland Deployment…
  37. Q3 2014 EARNINGS CALL – Maersk Oil – slide 37
    page 38 which is continuously being put into use Example of network optimization and continuing slow steaming TA2 Transatlantic: From 5 to 6 vessels - Net saving USD 10m p.a. Create AC3/Safari pendulum service Close old…
  38. Q3 2014 EARNINGS CALL – Maersk Oil – slide 38
    page 39 Maersk Oil Founded 1962 4,100 employees Operated production/ entitlement production 557,000 boepd 235,000 boepd Number of platforms/FPSOs* 77/3 End 2013 numbers *Floating Production, Storage and…
  39. Q3 2014 EARNINGS CALL – Maersk Oil – slide 39
    page 40 Maersk Oils financial ambitions Financial ambitions Status Q3 2014 (communicated at Capital Markets Day 2014) Sustain ROIC at a double digit level ROIC was 17.5% in Q3 2014 through the growth cycle Value creating…
  40. Q3 2014 EARNINGS CALL – Maersk Oil – slide 40
    page 41 Maersk Oil from local to global player Expansion of geographical focus 2002 - 2014 The value chain Exploration Appraisal Development Primary production Mature field EOR* Abandonment Business Development Expansion…
  41. Q3 2014 EARNINGS CALL – Maersk Oil – slide 41
    page 42 Maersk Oil - Progress on all major projects Short-term perspectives Long-term perspectives Qatar: Angola: Al Shaheen FDP2012 development project progressing as Chissonga FDP submitted to authorities. Bids for the planned;…
  42. Q3 2014 EARNINGS CALL – Maersk Oil – slide 42
    page 43 Maersk Oils portfolio (Q3 2014) Exploration Resources Project Maturation Process Reserves Production Prospects in Initiate & the pipeline Discoveries Assess Select Define Execute Assets Jack II Jack I Farsund Denmark…
  43. Q3 2014 EARNINGS CALL – Maersk Oil – slide 43
    page 44 Maersk Oils Key Projects Sanctioned development projects Project First Working Net Capex Plateau Production Production Interest (USD Billion) (Entitlement, boepd) Al Shaheen FDP2012 (Qatar) 2013 100% 1.5 100,0001 Golden…
  44. Q3 2014 EARNINGS CALL – Maersk Oil – slide 44
    page 45 Maersk Oils share of Production and Exploration Costs Maersk Oils share of production (000 boepd) 500 424 429 387 377 400 333 321 300 257 235 240 200 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014e DK UK…
  45. Q3 2014 EARNINGS CALL – Maersk Oil – slide 45
    page 46 APM Terminals Diversified pipeline of expansions & new constructions Gothenburg GPI integration Poti Expansion Acquisition Brownfield Maasvlakte II To be completed in 2018 Integration of GPI and To be completed in 2014…
  46. Q3 2014 EARNINGS CALL – Maersk Oil – slide 46
    page 47 Growing the portfolio Volume growth and underlying ROIC development ROIC Throughput growth 14% 10% 6% 2% -2% 2009 2010 2011 2012 2013 H1 2014 -6% No. of terminals 50 50 55 62 65 66 Track record for…
  47. Q3 2014 EARNINGS CALL – Maersk Oil – slide 47
    page 48 APM Terminals strategy execution Strategic aspiration by 2017 (communicated at CMD 2012)' Status today Best port operator in the world ROIC remains 12% despite high investment level Recognized for operational…
  48. Q3 2014 EARNINGS CALL – Maersk Oil – slide 48
    page 49 APM Terminals - Port projects underway New terminal developments Existing terminal expansion Americas Region Americas Region Lzaro Crdenas, Mexico (TEC2) Buenos Aires, Argentina (Terminal 4) Moin, Costa Rica (Moin…
  49. Q3 2014 EARNINGS CALL – Maersk Oil – slide 49
    page 50 APM Terminals Portfolio APM Terminals has seven new terminal projects: Maasvlakte II, Netherlands, end-2014 Lazaro Cardenas, Mexico, 2015 Ningbo, China, 2015 Izmir, Turkey, 2016 Moin, Costa Rica, 2017 Vado, Italy,…
  50. Q3 2014 EARNINGS CALL – Maersk Oil – slide 50
    page 51 APM Terminals financials including pro-rata share of joint ventures and associates (USD million) Revenue EBITDA EBITDA margin NOPAT (Subsidiaries) Net result, JVs & ass. NOPAT Average Gross Investment…
  51. Q3 2014 EARNINGS CALL – Maersk Oil – slide 51
    page 52 Maersk Drilling Appendix Q3 2014
  52. Q3 2014 EARNINGS CALL – Maersk Oil – slide 52
    page 53 Maersk Drilling Present in the most important oil and gas markets North West Europe 7 ultra harsh jack-up rigs US Gulf of Mexico 4 premium jack-up rigs 3 ultra deepwater floaters Caspian Sea 1 midwater floater…
  53. Q3 2014 EARNINGS CALL – Maersk Oil – slide 53
    page page page54 54 54 Maersk Drillings Strategy Deliver on the financial ambition of Net Operating Profit After Tax (NOPAT) of USD 1bn in 2018 (ROIC 10%) Conduct incident free operation Become a sizeable player in the…
  54. Q3 2014 EARNINGS CALL – Maersk Oil – slide 54
    page 55 Maersk Drillings execution on strategy Strategic aspiration Status September 2014 (communicated at CMD 2012) Top quartile performer Achieved by end-2013 Become a sizeable player in the market Taken delivery of two…
  55. Q3 2014 EARNINGS CALL – Maersk Oil – slide 55
    page 56 Maersk Drilling has one of the most modern fleets in the competitive landscape Deepwater fleet average age, years 35 30 25 20 15 10 5 0 Rowan Maersk Seadrill Ensco Transocean Noble Atwood Diamond Drilling…
  56. Q3 2014 EARNINGS CALL – Maersk Oil – slide 56
    page 57 Maersk Interceptor Managing the newbuild Customer: Det norske Oljeselskap programme Country: Norway Contract value: USD 700m Duration: Five years Expected delivery schedule Maersk Intrepid Delivered Maersk…
  57. Q3 2014 EARNINGS CALL – Maersk Oil – slide 57
    page 58 Full utilisation and continued strong operational uptime for Maersk Drillings rigs in 2014 Q3 Contracted days (left) and coverage % (right) Operational uptime* 1,800 100% 100% 96% 96% 97% 97% 97% 97% 94% 93% 1,500 95%…
  58. Q3 2014 EARNINGS CALL – Maersk Oil – slide 58
    page page page 59 59 59 Forward contract coverage reflecting reduced demand for high end assets Maersk Drilling forward contract coverage 100% 90% 80% 76% 60% 51% 40% 30% 20% 0% 2014 RoY 2015 2016 2017…
  59. Q3 2014 EARNINGS CALL – Maersk Oil – slide 59
    page 60 APM Shipping Services Combined revenue of approx. USD 6bn and 20,000 employees operating all over the world MAERSK TANKERS MAERSK SUPPLY SVITZER DAMCO SERVICE One of the largest The leading high-end The leading…
  60. Q3 2014 EARNINGS CALL – Maersk Oil – slide 60
    page 61 Significant part of Maersk Group a need to improve profitability 2013 REVENUE 2013 INVESTED CAPITAL 2013 NOPAT1 3% 12% 8% 13% 7% 4% 12% 34% 40% 13% 9% 53% 11% 18% 16% 12% 13% 22% Maersk Line Maersk Oil…
  61. Q3 2014 EARNINGS CALL – Maersk Oil – slide 61
    page 62 The 5 main challenges 2016 NOPAT Damco Successfully Making MT a Svitzer of USD 500m restructuring executing top performer Australia MSS growth profitability Current underlying Fundamental Ambitious growth Returns to…
  62. Q3 2014 EARNINGS CALL – Maersk Oil – slide 62
    page 63 Strategies for Value Creation are in place to reach 2016 target MAERSK TANKERS MAERSK SUPPLY SVITZER DAMCO SERVICE New strategy focused on Strategic focus on high-end Strategic focus on Harbour Execute restructuring…
  63. Q3 2014 EARNINGS CALL – Maersk Oil – slide 63
    Henrik Lund Johan Mortensen Stephanie Fell Head of Investor Relations Senior Investor Relations Officer Investor Relations Officer henrik.lundmaersk.com johan.mortensenmaersk.com stephanie.fellmaersk.com Tel: +45 3363 3106 Tel: +45 3363…

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