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1Q20 Trading Update
7 April 2020
1
1Q20 Trading Update 2
Strong PB Performance Despite Market Headwinds
BHSI/BSI Performance PB Core TCE Outperformance PB Covered Rate
Actual
TCEForward
CoverActual
TCE
Forward
Cover
Handysize Core Fleet TCE Supramax Core Fleet TCE
US$/day
(net)US$/day
(net)2019 2020 2019 2020
Cover as at 3 April 2020
Starting from 2020:
We present separately the TCEs generated by our “core business” and the margins generated by our “operating activity”.
This chart sets out our actual TCEs and forward cover in relation to our core business
We compare our Handysize TCE performance against the new 38,000 dwt Baltic Handysize Index, tonnage-adjusted to the
average vessel size of our core Handysize fleet
5,730 5,440
3,3502,580
$9,360 $9,000
0
2,000
4,000
6,000
8,000
10,000
12,000
1Q19 2Q-4Q19 1Q20 2Q-4Q20
36%
of
days
$9,080$8,020
32%
of
days
Actual
TCEForward
CoverActual
TCE
Forward
Cover
7,540 6,230
2,860 5,080
0
2,000
4,000
6,000
8,000
10,000
12,000
1Q19 2Q-4Q19 1Q20 2Q-4Q20
58%
of
days
58%
of
days
$10,400
$11,310
$10,690$11,180
1Q20 Trading Update 3
Our New Commercial KPIs
Core Business Last quarter Last 12 months
Handysize outperformance vs index per day $2,580 $2,660
Supramax outperformance vs index per day $5,080 $2,790
Operating Activity Last quarter Last 12 months
Operating Margin per day $960 $970
Strong outperformance particularly in Supramax due to significant scrubber benefit early in the quarter
1Q20 Trading Update 4
Pacific Basin Continues to Outperform on Every Level
Handysize Performance vs Market Supramax Performance vs Market
* Peer Group consists of all companies active in our Handysize and Supramax segments with sufficient publicly available information
to make a relevant comparison. Comparable finance costs per day are estimated using specific company lending rates but generic
vessel values and leverage levels
US$1,970/day average premium
in last 5 years
US$1,490/day average premium
in last 5 years
PB Performance
BHSI
PB Performance
BSI
Supramax Outperformance vs Peer Group (2019) *Handysize Outperformance vs Peer Group (2019) *
TCE Opex G&A Finance
CostTotal TCE Opex G&A Finance
Cost
Total
US$/dayUS$/day
0
500
1,000
1,500
2,000
2,500
0
500
1,000
1,500
2,000
2,500$2,200 $2,400
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2015 2016 2017 2018 2019 1Q20
US$/day
$9,630
$8,020
$5,440
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2015 2016 2017 2018 2019 1Q20
US$/day
$11,720 $11,310
$6,230
1Q20 Trading Update 5
Growing Owned Fleet with Lower Breakeven Levels
We took delivery of one Handysize and two Supramax ships during the quarter, while one sold Handysize is
scheduled to exit our fleet in April
Our owned fleet has grown significantly from 34 ships in 2012 to 117 ships in April 2020
We continue to reduce the number of ships we have on expensive long-term charter
We had an average of 205 Handysize and Supramax ships on the water in the first quarter
Handysize Core Fleet Supramax Core Fleet
Owned LT Chartered-in
Gradually trading up to larger Handysize ships Steadily growing our owned Supramax fleet
0
20
40
60
80
100
No. of Vessels
81
13
94
0
20
40
60
80
100
Bought 2 2 1
Sold - 3 1
Bought 3 6 2
Sold - - -
2015 2016 2017 2018 2019 April 2020 2015 2016 2017 2018 2019 April 2020
No. of Vessels
35
5
40
1Q20 Trading Update 6
Market Recovered After a Weak Start But is Now Facing
Global COVID-19 Headwinds
1,2 excludes 5% commission
Source: Baltic Exchange, data as at 3 April 2020
2016 2017 2018 2019 2020
The dry bulk freight market in 2020 started poorly, undermined by strained global trade tensions, and the typical seasonal Chinese
New Year dip was compounded by reduced demand and disrupted logistics caused by measures taken in China to contain the
COVID-19 coronavirus outbreak
Rates bottomed out in late Feb and strengthened for a four-week period as Chinese activity gradually returned. However, COVID-19
is now causing an increasingly widespread lockdown of economic activity around the world, and rates have weakened since the end
of March
We do expect to see a rebound in economic activity and dry bulk trade flows in due course, once the global outbreak recedes,
containment measures are eased and significant stimulus is implemented
Baltic Handysize Index (BHSI) 1
Market Spot Rates in 2016-2020
Baltic Supramax Index (BSI) 2
Market Spot Rates in 2016-2020
2 BSI 58,000 dwt1 BHSI 28,000 dwt for all years for consistency
0
2,000
4,000
6,000
8,000
10,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
US$/day net*
2017
2019
2018
3 Apr 2020
$3,940
2016
0
3,000
6,000
9,000
12,000
15,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
US$/day net*
2017
2019
2018
3 Apr 2020
$5,170
2016
1Q20 Trading Update 7
COVID-19 Impact on Pacific Basin
Measures to contain COVID-19, initially in China and now globally, have resulted in disrupted logistics
and weaker dry bulk demand
Ports remain largely open and operational so far, although lockdowns and 14-day quarantine rules for
ships pose an increasing challenge in several ports and countries around the world
Widespread restrictions are making crew changes very difficult, but authorities are allowing longer
work periods and some countries including China have started to relax such restrictions
We salute and thank our many seafarers across our fleet for their understanding, commitment and
patience during these difficult times
Some of our offices are working from home or splitting teams, but our business remains fully
operational and our customers can depend on us to provide our usual world-class service
There will be further negative impact from the shut-downs around the world but, eventually, we expect
to see stimulus activity driving a rebound once the global outbreak is contained
With our strong balance sheet and liquidity position, large and fully in-house managed fleet, Pacific
Basin is a safe and reliable partner for our customers in these turbulent times
Pacific Basin is well positioned to ride out the storm – We’re with you for the long haul!
1Q20 Trading Update 8
COVID-19 Expected Impact on Dry Bulk Demand
So far:
Our 1Q20 performance held up well despite Chinese New Year weakness, which was
compounded by COVID-19 impacts in China
Global shipments of agricultural products, construction material and other minor bulks
were resilient in 1Q20
Going forward:
We expect that the effects of containment measures and today’s weak spot rates will
negatively impact our second quarter earnings
Agricultural products will be the least affected (maybe not at all)
Construction material shipments will be impacted by GDP reduction (steel, cement, logs,
bauxite, nickel, copper)
Coal will suffer from lower energy consumption and competition from cheap oil & gas
Geographically:
It is good to have China, the world’s most important country for dry bulk, back in action
European volumes will be affected by lockdowns but ports remain largely open so far
North American impact comes next
1Q20 Trading Update
0.7%3.2%4.6%
Current Orderbook:
9
Overall Dry Bulk Supply Development
Global dry bulk supply growth continues to be too high, but the recent weak freight rates and uncertain
outlook will slow net fleet growth in the longer term
Better fundamentals for smaller ships – orderbook is the lowest since late 1990s
Scrapping in the year to date is well above the same period last year and is forecast to increase further
Virus-related slowdown is also affecting shipyard output with delays expected to scheduled deliveries
There were already many reasons not to order newbuildings, and the virus-related downturn has added
one more reason
Supply Growth is Still High But Expected to Slow
Handysize / Supramax Supply Development
Source: Clarksons Research, as at 1 April 2020
0.4%2.0%3.0%
Current Orderbook:
Scheduled OrderbookScrapping
Shortfall
New Deliveries
Net Fleet ForecastScrapping Forecast
-30
-20
-10
0
10
20
30
40
50
60
2019E 2020F 2021F 2022+F
Mil Dwt
3.9%
2.7%
1.8%
-5
0
5
10
15
2019E 2020F 2021F 2022+F
Mil Dwt
3.1%
1.8%
0.6%
1Q20 Trading Update 10
Fuel Prices and Speed
Average Bunker Prices in
Singapore and Rotterdam for
3.5% HSFO and 0.5% VLSFO
Handysize and Supramax
Global Average Operating Speeds
IMO 2020 caused average vessel speeds to slow, offsetting net fleet growth
However, fuel prices and spread have reduced with the fall in crude price
Vessel speeds are no longer slowing due to cheaper fuel
We benefited from the early large spread on our scrubber-fitted Supramaxes, and we have also hedged a
portion of this fuel price spread
Crude prices are extremely volatile, but the forward curve shows higher prices ahead (strong contango)
Handysize Supramax
0.5%
VLSFO
3.5%
HSFO
300
100125
135
Source: Pacific Basin, AXS
10.7
10.8
10.9
11.0
11.1
11.2
11.3
Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20
Knot
0
100
200
300
400
500
600
700
Jan-20 Now
(3 April 2020)
2021 2022
US$/mt
1Q20 Trading Update 11
Handysize Costs Compared to Cover Levels
Note: Costs are before G&A
Finance Cost
DepreciationOpex
2020
Owned
Actual Cost
2019
Long TermChartered
Weighted
Blended Cost
Actual TCE
1Q20
32% Cover TCE2Q-4Q20
Core Costs Core Cover Levels
No. of Ships
in April 202081 13 94
-
2,000
4,000
6,000
8,000
10,000
12,000
US$/day
(net)
10,310
8,020 8,020
9,000
4,100
2,860
690
7,650
1Q20 Trading Update 12
Supramax Costs Compared to Cover Levels
Core Costs Core Cover Levels
Finance Cost
DepreciationOpex
Note: Costs are before G&A
2020
Long TermChartered
Weighted
Blended Cost
Actual TCE
1Q20
58% Cover TCE2Q-4Q20
Owned
Actual Cost
2019
US$/day
(net)
No. of Ships
in April 202035 5 40
-
2,000
4,000
6,000
8,000
10,000
12,000
9,010
11,310 11,180
4,010
3,580
990
8,580
11,990
1Q20 Trading Update 13
Our Two Main Activities
Core Business Operating Activity
Contract and spot cargoes Spot cargoes
Owned and long term chartered in ships
Short term ships carrying contract cargoesShort term ships carrying spot cargoes
Costs largely fixed and disclosed Costs fluctuate with freight market
Key KPI = TCE/day Key KPI = Margin/day
Significant leverage and profits in strong market Contribution both in weak and strong markets
Asset heavy – our own crews / quality / safety Asset light – harder to control quality
Enables reliability, cargo contracts, brand name Enhances and expands the service to our customers
Currently about 85% of total vessel days Currently about 15% of total vessel days
1Q20 Trading Update 14
How to Model Pacific Basin
Sensitivity:
+/- US$1,000 daily TCE = US$35-40 million per year
Adjusted for ca. 20-25% typical long-term forward cargo cover at any point in time
1 Note that core TCE includes the margin (positive or negative) from short term ships carrying contract cargoes2 Long-Term Chartered in ships3 Revenue days + offhire days = cost days
Handysize contribution Core TCE1 x owned & LTC 2 revenue days +
Blended cost x owned & LTC cost days 3 -
= X
Supramax contribution +
-
= X
Operating Activity Operating margin x operating days X
Post Panamax contribution X
Total G&A - X
Underlying Result = X
Core TCE1 x owned & LTC revenue days
Blended cost x owned & LTC cost days 3
1Q20 Trading Update 15
Strong Balance Sheet & Cash Positions
Two new revolving credit facilities and a new convertible bond secured last year. Major investments in
scrubbers, BWTS and dry dockings are behind us
US$383 million of available liquidity as at 31 December 2019
Regular expected cash outgoings during FY 2020:
~US$50 million capital expenditure (mainly scheduled dry dockings and BWTS)
~US$155 million amortization and interest
Non-regular cash commitments during FY 2020:
~US$55 million for acquired vessels delivered in 1Q20 and final scrubber payments
US$50 million repayment of unsecured revolver in November
US$12.8 million dividend in May
We expected all 2020 cash commitments to be comfortably met by operating cash inflow (US$174 million
in FY 2019, inclusive of all charter hire payments) and existing liquidity - in addition we have 6
unmortgaged ships (with estimated market value of US$100 million)
Our outperforming business model, strong liquidity position and large in-house managed fleet
makes Pacific Basin a safe and reliable partner for customers, suppliers, other counterparties
and financial institutions in these turbulent times
We are well positioned to take advantage of opportunities created by this market dislocation
1Q20 Trading Update
Disclaimer
This presentation contains certain forward looking statements with respect to the financial condition,
results of operations and business of Pacific Basin and certain plans and objectives of the management of
Pacific Basin.
Such forward looking statements involve known and unknown risks, uncertainties and other factors which
may cause the actual results or performance of Pacific Basin to be materially different from any future
results or performance expressed or implied by such forward looking statements. Such forward looking
statements are based on numerous assumptions regarding Pacific Basin's present and future business
strategies and the political and economic environment in which Pacific Basin will operate in the future.
Our Communication Channels:
Financial Reporting Annual (PDF & Online) & Interim Reports
Quarterly trading updates
Press releases on business activities
Shareholder Meetings and Hotlines Analysts Day & IR Perception Study
Sell-side conferences
Investor/analyst calls and enquiries
Contact IR – Emily Lau
E-mail: [email protected]
Tel : +852 2233 7000
Company Website - www.pacificbasin.com Corporate Information
CG, Risk Management and CSR
Fleet Profile and Download
Investor Relations:
financial reports, news & announcements, excel
download, awards, media interviews, stock quotes,
dividend history, corporate calendar and glossary
Social Media Communications Follow us on Facebook, Twitter, Linkedin,
YouTube and WeChat!
16
1Q20 Trading Update 17
Appendix:
Vessel Days Breakdown
Handysize Supramax
Days 1Q19 1Q20 1Q19 1Q20
Core Revenue Days 9,000 8,660 3,050 3,430
- Owned Revenue Days 7,300 7,290 2,420 2,940
- LT Chartered Days 1,700 1,370 630 490
ST Core Days 1,450 880 3,100 2,500
Operating Days 1,540 1,430 1,410 1,490
Owned Off Hire Days 130 110 80 150
Total Vessel Days 12,120 11,080 7,640 7,570
1Q20 Trading Update 18
Appendix:
New TCE Reporting Methodology
Our “core business” is to optimally combine our owned and long-term chartered ships with spot cargoes and multi-
shipment contract cargos to achieve the highest daily time-charter equivalent (“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
We now also disclose the margin per day generated by our “operating activity” which is separate and
complementary to our core business. Through our operating activity, we provide a service to our customers even if
our core ships are unavailable by opportunistically matching our customers’ spot cargoes with short-term chartered-
in ships, making a margin and contributing to our group results regardless of whether the market is weak or strong
For our core business, daily TCE revenue is the important KPI, as costs per day are substantially fixed and
disclosed. For our operating activity, short-term charter costs fluctuate with the freight market and it is therefore the
margin per day (the net daily difference between TCE revenue and charter costs) that is the important KPI, not the
TCE level itself
Owned + Long-Term TCE Revenue +
Short Term (excluding Operating) Margin
Owned + Long Term Revenue Days
Operating Margin
Operating Days
Core Business TCE per Day Operating Activity Margin per Day
