george moundreas & co. sa dry cargo segment 2013 is it over? forward prospects… cash flow...

George Moundreas & CO. SA

Dry Cargo Segment 2013

Is it over? Forward prospects…

Cash Flow Break Even Point

George Logothetis February 2014

G.M. & CO. SA LAST YEAR - How It Started…

G.M. & CO. SA What Happened Since Then…

DECEMBER 05, 2013

INDEX AVG. T/C 5 yrs Vessel Price

BDI 2.145

BCI ( CAPESIZE ) 3.843 $28.899 $38.000.000

BPI ( PANAMAX ) 1.867 $14.338 $23.000.000

BSI ( SUPRAMAX ) 1.531 $15.917 $22.500.000

BHSI ( HANDYSIZE ) 780 $11.141 $18.500.000

LAST YEAR SAME TIME NOVEMBER 30, 2012

INDEX AVG. T/C 5 yrs Vessel Price

BDI 1.086

BCI ( CAPESIZE ) 2.199 $15.869 $32.000.000

BPI ( PANAMAX ) 980 $7.815 $19.000.000

BSI ( SUPRAMAX ) 766 $8.005 $20.000.000

BHSI ( HANDYSIZE ) 448 $6.605 $16.000.000

% Δ - NOVEMBER 30, 2012- DECEMBER 06, 2012

INDEX AVG. T/C 5 yrs Vessel PriceBDI 97,51%

BCI ( CAPESIZE ) 74,76% 82,11% 19%

BPI ( PANAMAX ) 90,51% 83,47% 21%

BSI ( SUPRAMAX ) 99,87% 98,84% 13%

BHSI ( HANDYSIZE ) 74,11% 68,68% 16%

G.M. & CO. SA What Happened in 2013

Baltic Dry Index (BDI)

Disappointing first half of 2013, with rates at or below OPEX, improvement in the 3rd quarter and further improvement the 4th quarter.

The 4th quarter would be the best one since 2011 and the BDI would reach the maximum level of the last 2 years.

Supply

In the first 10 months, 630 bulkers of about 51.7 million DWT were delivered which is 40% less than the same period last year. Total deliveries would not exceed 60 million DWT compared with 100 million DWT each year for 2011 and 2012.

Fleet growth about 4.7% compared to double digit growth since 2010 and the lowest since 2008.

New Building Orders

The first 10 months, about 811 bulkers were ordered of about 55 million DWT, an increase of 145% y-o-y. Greek Ship owners have placed orders in excess of 100 vessels ($ 2.8 billion) representing 22% of total orders in DWT.

G.M. & CO. SA What Happened in 2013

Second Hand Activity

Strong S&P activity world wide with about 500 bulkers sold in the first ten months in excess of $ 6.2 billion. Strong Greek presence with the acquisition of more than 210 vessels in excess of $ 3 billion.

Recycling

Diminished recycling activity compared to 2012. It is estimated that the year will close with about 25 million DWT, 30% down from the total of 36 million DWT last year.

Finance

Limited finance with the exception of Top Tier clients. Alternative methods?

G.M. & CO. SA What to expect ? Supply growth to be reduced in the next couple of years. For 2014 and 2015 fleet

supply about 4% each year.

Supply might be reduced further due to environmental regulations which will increase demolition activity thus we expect more than the 25 million DWT of 2013.

Demand growth in terms of tonne miles for 2014 and 2015 around 6%, surpassing the fleet growth.

Asset prices for New Building and Second hand vessels on an upward trend.

Finance, better than 2013 but still very selective. Alternative methods would be the Capital Markets and the P.E but traditional debt will be the primary source.

Conference Board estimates World annual growth rate for 2014 at 3.1% with upward trend for 2015 and OECD at 3.6%, in contrast with the low 2.8% of 2013.

As per CPB, World Trade (Trade Volumes) to increase 4.8% in 2014 vs. 3% in 2013. The WTO estimates an increase 4.5% in 2014 vs. 2.5% in 2013. The upward trend is there however.

Caution for possible correction of the market towards the end of 2015 and in 2016 due to increased orders placed this year and maybe next year.

G.M. & CO. SA Cyclicality

When reviewing the BDI from 1985, and using written

reports on the shipping industry as far back as the early

1970′s, we believe we have uncovered a regular 13 year

cycle.

It appears every 13 years shipping rates make a cyclical

low: 1973 -1986 -1999 -2012. After the low is in place

rates generally:

rise for the next 9 years,

then decline 4 years into the next cyclical low.

During the 9 year bull market, rates

rise for 5 years

decline for 1 year and

then rise for another 3 years into the cyclical

peak.

Provided that we are in the 9 years recovery period,

based on the above historical data, the next correction

which will last for about a year, will take place around

2016 due to the increased orders of 2013 and 2014.

G.M. & CO. SA Cash Flow Break Even PointCash Flow Break Even Point, is the daily earnings required in order for the vessel to be

able to cover only the daily OPEX and the daily Loan requirements (Capital + Interest) without taking under consideration any kind of returns.

Loan Assumptions

Equity: 40%

Loan: 60%

Interest Rate (Libor + Spread): 4%

Tenor: 10 years

Balloon: 20%

G.M. & CO. SA Cash Flow Break Even PointCAPE NEW BUILDING

PRICE: $ 53.500.000

EQUITY (40%): $ 21.400.000

LOAN (60%): $ 32.100.000

BALLOON (20%): $ 6.420.000

OPEX per day: $ 7.758

AVG. B.E.P: $ 19.630 / day

AVG B.E.P excl. Balloon: $ 17.822 / day

CAPE 5 Years

PRICE: $ 38.000.000

EQUITY (40%): $ 15.200.000

LOAN (60%): $ 22.800.000

BALLOON (20%): $ 4.560.000


AVG. B.E.P: $ 16.361 / day


G.M. & CO. SA Cash Flow Break Even PointPANAMAX NEW BUILDING

PRICE: $ 29.00.000

EQUITY (40%): $ 11.600.000

LOAN (60%): $ 17.400.000

BALLOON (20%): $ 3.480.000


AVG. B.E.P: $ 13.217 / day


PANAMAX 5 Years

PRICE: $ 23.000.000

EQUITY (40%): $ 9.200.000

LOAN (60%): $ 13.800.000

BALLOON (20%): $ 2.760.000


AVG. B.E.P: $ 11.951 / day


G.M. & CO. SA Cash Flow Break Even PointULTRAMAX NEW BUILDING

PRICE: $ 29.00.000

EQUITY (40%): $ 11.600.000

LOAN (60%): $ 17.400.000

BALLOON (20%): $ 3.480.000


AVG. B.E.P: $ 13.000 / day


ULTRAMAX 5 Years (estimation)

PRICE: $ 23.000.000

EQUITY (40%): $ 9.200.000

LOAN (60%): $ 13.800.000

BALLOON (20%): $ 2.760.000


AVG. B.E.P: $ 11.736 / day


G.M. & CO. SA Cash Flow Break Even PointSUPRAMAX NEW BUILDING SUPRAMAX 5 Years

PRICE: $ 22.500.000

EQUITY (40%): $ 9.000.000

LOAN (60%): $ 13.500.000

BALLOON (20%): $ 2.700.000


AVG. B.E.P: $ 11.415 / day


G.M. & CO. SA Cash Flow Break Even PointHANDYSIZE NEW BUILDING

PRICE: $ 23.00.000

EQUITY (40%): $ 9.200.000

LOAN (60%): $ 13.800.000

BALLOON (20%): $ 2.760.000


AVG. B.E.P: $ 10.596 / day


HANDYSIZE 5 Years

PRICE: $ 18.500.000

EQUITY (40%): $ 7.400.000

LOAN (60%): $ 11.100.000

BALLOON (20%): $ 2.220.000


AVG. B.E.P: $ 9.646 / day


G.M. & CO. SA LAST YEAR

Opportunities ?SWOT ANALYSIS

Strengths:

Weaknesses:

Opportunities:

Threats:

Determined by the current Financial position of each company.

High Demolition prices (Minimization of Losses – Cash Injection).

Fleet expansion - Low Second Hand & New Building Prices with favourable payment terms, back-end loaded.

Reduction in average age fleet.

Diversification in size.

Market Leader in new ECO type vessels and tonnage.

Eurozone Crisis.

Regardless of the outcome on Fiscal Cliff in USA, possible slow down.

Chinese growth stabilized at current levels.

Geopolitical issues – China & Japan - Arab Spring

Rising of Protectionism

G.M. & CO. SA LAST YEAR

Opportunities ?SWOT ANALYSIS

Strengths:

Weaknesses:

Opportunities:

Threats:

Determined by the current Financial position of each company.

High Demolition prices (Minimization of Losses – Cash Injection).

Fleet expansion - Low Second Hand & New Building Prices with favourable payment terms, back-end loaded.

Reduction in average age fleet.

Diversification in size.

Market Leader in new ECO type vessels and tonnage.

Eurozone Crisis.

Regardless of the outcome on Fiscal Cliff in USA, possible slow down.

Chinese growth stabilized at current levels.

Geopolitical issues – China & Japan - Arab Spring

Rising of Protectionism

BACK TO THE

BASICS

“CA$H IS KING”

George Moundreas & CO. SA

George Logothetis February 2014

george moundreas & co. sa dry cargo segment 2013 is it over? forward prospects… cash flow...

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