nol q2 2013 results presentation

1H & 2Q 2013 Performance Review7 August 2013

Forward Looking StatementsThe following presentation includes forward-looking statements, which involve known and unknown risks and uncertainties, that could cause actual results or performance to differ. Forward looking information is based on current views and assumptions of management, including, but not limited to, prevailing economic and market conditions. Such statements are not, and should not be interpreted as a forecast or projection of future performance.

1 1H & 2Q 2013 R lt Hi hli ht B N Y t Ch1. 1H & 2Q 2013 Results Highlights By Ng Yat ChungGroup President & CEO

1H2013 Results OverviewEfficiencies drive improved resultsEfficiencies drive improved results• Global slowdown lowers Group revenue• Operational & cost efficiencies improve operating results

Liner – Macro headwinds, improved cost base

Operational & cost efficiencies improve operating results• Building sale gain results in US$41m net profit

e ac o ead ds, p o ed cost base

• Soft global economy dampens volume• Industry oversupply severely weakens freight rates

Logistics – Growing across major markets

y pp y y g• Leaner operations cuts Core EBIT loss by 39%

g g j

• US & emerging markets drive revenue growth• Cost discipline improves profitability

| 7 August 2013 | 1H & 2Q 2013 Performance Review

Market conditions deteriorated in 1H & 2Q

1,500

2012

2Q13 vs 2Q121,225

-28%index drops

950

2013

950 Jan Feb Mar Apr May Jun

Shanghai Containerized Freight Index (SCFI)


Source: SCFI

Rates plunged in major trade lanes

1,741 1,800

US$/TEU

1,215 1,250

US$/TEUAsia-Europe Freight Rate Asia-US West Coast Freight Rate

1,030

781

1,200 1,000

781

600 750

-2Q 12 2Q 13

500 2Q 12 2Q 13


2Q 12 2Q 13

Source: SCFI

NOL’s cost & yield focus swings 1H Core EBIT +US$97mEBIT +US$97m

1H13 Revenue US$(276) Y Y

4,595 4,616 4,711 4,801 4,435

(28)5

100 5,000

US$m US$mUS$(276)m YoY

(28)

(120) (100)

0

2 500

(349)

(217)

(300)

(200)

2,500

1H13 Core EBIT +US$97m YoY

(349)

(400)

(300)

-1H11 2H11 1H12 2H12 1H13


Revenue (LHS) Core EBIT (RHS)

Efficiency drive nets US$240m* cost savings

1H13 cost savings highlights

• Bunker & Network:• Network optimisation• Trim optimisationTerminals,

Land Trim optimisation

• Vessel slow-steaming

• Terminal operations Bunker & Network-related

APLL

Land Operations, Equipment

25%

poptimisation

• Empty repositioning

60%

Others10%

APLL5%

• APL Logistics


*Excludes bunker price drop of 10% YoY

2 1H & 2Q 2013 Fi i l P f2. 1H & 2Q 2013 Financial Performance By Cedric FooGroup Deputy President & CFO

Group Financial HighlightsP iti C EBITDA

US$m

Revenue

Positive Core EBITDACore EBITDA

91

37 35 60

120 US$m

2 333

4,711 4,435 5,000 US$m

(60)

(120)

(60)

-2,333 2,064

-

2,500

(120)2Q12 2Q13 1H12 1H132Q12 2Q13 1H12 1H13

% ▲ Better/ (Worse) % ▲ Better/ (Worse)

(12) (6)


(59) n.m.

(US$m) 2Q12 2Q13 1H12 1H13Liner 79 24 (87) 3Logistics 12 13 27 32


Total 91 37 (60) 35

Group Financial Highlights1H13 Core EBIT improves 45% YoY Net results lifted1H13 Core EBIT improves 45% YoY, Net results lifted by NOL building sale

16100

US$m

81 150 US$m

EBIT2Core EBIT1

41100 US$m

Net Profit / (Loss)

16

(35)

(120)(100)

-

(96)(26)

(150)

-

(118)(35)

41

(200)

(100)

‐

(217)(300)

(200)

2Q12 2Q13 1H12 1H13

(328)(450)

(300)

2Q12 2Q13 1H12 1H13 (371)(400)

(300)

2Q12 2Q13 1H12 1H13

% ▲Better/

(Worse)

% ▲Better/

(Worse)

73 n.m.

% ▲Better/

(Worse)

% ▲Better/

(Worse)

n.m. 45

% ▲Better/

(Worse)

% ▲Better/

(Worse)

71 n.m.


1) Core EBIT excludes non-recurring items.2) EBIT includes non-recurring items. Includes NOL building sale gain of US$200m.

Financial Highlights by Business Segment

125 US$m

6,000 US$m

Revenue by Business Segments Core EBIT by Business Segments

7

9 22 (45)10 26

(25)

50 755 781

(239)

(146)

(175)

(100)361 354

3,000

(239)(250)

2Q12 2Q13 1H12 1H131,994 4,004 1,728 3,695

-

2Q12 2Q13 1H12 1H13

2Q12 2Q13 1H12 1H13

2Q12 2Q13 1H12 1H13Revenue 2,355 2,082 4,759 4,476Elimination (22) (18) (48) (41)Total 16 (3 ) (21 ) (120)


Total Revenue 2,333 2,064 4,711 4,435 Total 16 (35) (217) (120)

Group Balance Sheet Highlights

US$m 28 Jun’ 13 28 Dec’ 12

Total Assets 8,966 8,219(Restated)1

Total Liabilities 6,745 6,026Total Equity 2,221 2,193

Total Debt 4 636 3 976Total Debt 4,636 3,976

Total Cash 1,223 897

Net Debt 3,413 3,079

Gearing (Gross) 2.09x 1.81x

Gearing (Net) 1.54x 1.40x

NAV per share (US$) 0 84 0 83NAV per share (US$) 0.84 0.83

(S$) 1.06 1.01


1 2012’s results is restated for comparative purposes due to retrospective application of Amendments to FRS 19: Employee Benefit (Revised), which is effective from financial year 2013.

Group Cash Flow Highlights

US$m 1H13 1H12

Cash & Cash Equivalents – Beginning @ Q1 897 228

Cash Inflow / (Outflow)( )

Operating Activities (20) (302)

Investing/Capex Activities (369) (414)

Financing Activities 715 726

Cash & Cash Equivalents – Closing @ Q2 1,223 238


Group Capital Expenditure

US$m 1H13 1H12

1. Vessels 638 393

2. Equipment / Facilities 43 63

3. Drydock 31 16

4. IT 49 13

5 Others 3 45. Others 3 4

Total 764 489


3 Li B K th Gl3. Liner By Kenneth GlennPresident, APL

Liner 1H13 Results HighlightsChallenging macroeconomic & industry conditions• Revenue -8% or US$309m YoY, mainly from -11% Rev/FEU in 2Q13

Positive Core EBITDA +US$90m swing to US$3m

Improved efficiency & cost base

• Positive Core EBITDA, +US$90m swing to US$3m• Core EBIT loss narrowed 39% YoY to US$146m

p y• 19 of 34 new ships* replaced 13 older/smaller ships sold/scrapped

& 25 charter ships returnedB k ti d d b 16% Y Y (228k MT) hil fl t• Bunker consumption reduced by 16% YoY (228k MT) while fleet capacity expanded by 5% YoY

• Cost of sales/FEU reduced by 8% YoY

Maintain yield focus

• Yield focus, while balancing trade & cargo mix


• Headhaul utilisation >90% to maximise assets* From 1 Jan 2012 to 28 June 2013

Industry working through oversupply

2020

Global Fleet Capacity % Annual Capacity Growth % Global Throughput Growth

YoY % change

TEUMillions

Global financial crisis

US quantitative easing

Demand-supply gap

16

13.8 13.2

12 5

14.1

1516

financial crisis easing

5.5

9.1 7.9

6.0 6.6 7.1

10.9

12.5

5 7

8.3

5

10

12

5.7 4.7 4.3

5.4

0

8

( )

‐54


(8.4) ‐10-end 2006 end 2007 end 2008 end 2009 end 2010 end 2011 end 2012 end 2013F end 2014F

Source: Alphaliner, July 2013

Liner Results SummaryRevenue Core EBIT

7

4.0 100 US$m

4,004 3,695

5,000 US$m

Core EBIT Core EBIT margin (%)

(45)

(146) (4.0)

-

(100)1,994 1,728

2,500

0.4

(2.6)(6.0)

(4.0)

(239)(8.0)(300)

2Q12 2Q13 1H12 1H13-

2Q12 2Q13 1H12 1H13

% ▲Better/ (Worse) % ▲Better/ (Worse) Core EBIT % ▲Better/ (Worse)

Core EBIT % ▲Better/ (Worse)

1H13 Revenue decreased 8% or US$309m YoY, while 1H13 Core EBIT improved 39% or US$93m YoY due to continued yield focus & a lower cost base.

(13) (8)Better/ (Worse) Better/ (Worse)

n.m. 39

US$93m YoY due to continued yield focus & a lower cost base. Soft macro conditions, weak off peak season and industry oversupply dampened Average Revenue per FEU to US$2,347.Cost of sales per FEU was 8% lower YoY due to operational cost efficiencies and


lower bunker prices. Bunker prices averaged US$621/MT or 10% lower YoY.

Volume and Average Revenue/FEU Trend

2 6152,650 1,500

Volume('000 FEUs) US$/FEU

2,598

2 539 2 539

2,615 2,601

1,200

Rev/FEU reduced 11%

764 692 699

824 791

720 707 802 772

705

2,539 2,539

2,450

600

900

2,342

2,420 2,419

2,376

2 315

300

600

2,315

2,250 -1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Total Volume (LHS) Average Revenue/FEU (RHS)


( ) g ( )

Operational UpdateSoft global econom contin ed to affect ol me and freight ratesVolume (‘000 FEUs) 1H13 1H12 % ▲ 2Q13 2Q12 % ▲Transpacific 419 418 - 195 202 (3)

Soft global economy continued to affect volume and freight rates

Intra-Asia 660 668 (1) 320 319 -

Asia-Europe 210 242 (13) 101 110 (8)

Latin America 100 103 (3) 48 49 (2)

Transatlantic 88 80 10 41 40 3

Total 1,477 1,511 (2) 705 720 (2)

Average Revenue/FEU (US$) 1H13 1H12 % ▲ 2Q13 2Q12 % ▲Transpacific 3,465 3,741 (7) 3,458 3,651 (5)Intra-Asia 1,439 1,579 (9) 1,454 1,732 (16)Asia-Europe 2,284 2,422 (6) 2,144 2,750 (22)Latin America 3,522 3,497 1 3,448 3,596 (4)Transatlantic 2,650 2,894 (8) 2,675 2,815 (5)

| 7 August 2013 | 1H & 2Q 2013 Performance ReviewNote: Based on point of sailing and inclusive of headhaul and backhaul trade.

Total 2,347 2,513 (7) 2,315 2,615 (11)

Fleet renewal program on track, over 50% of vessels delivered

8,100 TEU 9,000 TEU 14,000 TEUTEUs

Total vessels

140,000

160,000

180,00014

80,000

100,000

120,00010

6 x 14,000 TEU

4 x 14 000 TEU

4 x delivered1

2

2

20 000

40,000

60,000

80,000

6 x 9,000 TEU

6 x 9,000 TEU

4 x 14,000 TEU

3 x delivered1

N t

0

20,000

2013 2014

2 x 8,100 TEU 2 x delivered1

As at end-1H13


Note: 1) The 19 delivered vessels as at end-1H13 includes 10 x 10,000 TEU vessels delivered in 20122) 5 out of the 10 x 14,000 TEU vessels for delivery between 2013 and 2014 will be chartered out to MOL

Liner business conditionsIndustry

• Rate increases in Transpacific and Asia-Europe going into peak season

• Intra-Asia trade relatively robust despite cascading of vessels

C t ti d t i t i t• Customers cautious due to macro-economic uncertainty

• Bunker prices steady around US$600/MT

APL• Maintain yield focus, efficiencies & cost discipline


4 L i ti4. Logistics By Jim McAdamPresident, APL Logistics

Logistics 1H13 Results Highlights

Growth across major markets• Revenue of US$781m +4% YoY

Revenue growth led by emerging markets

Revenue of US$781m, +4% YoY• Core EBIT of US$26m, +18% YoY

Revenue growth led by emerging markets• Emerging markets revenue +23% YoY, led by Asia/Middle East• International Services +15% YoY on improved Asian vendor

logistics• Contract Logistics -2% YoY, mainly due to unscheduled auto plant

shut-down in North America

Strict cost discipline improves profitability• Core EBIT margin improves from 2.9% to 3.4%


Core EBIT margin improves from 2.9% to 3.4%

Logistics Results HighlightsRevenue Core EBIT

755 781 750

1,000 US$m

3 4

Revenue Core EBITCore EBIT Core EBIT margin (%)

361 354 500

750

2.5 2.9 2.93.4

-

250

2Q12 2Q13 1H12 1H13

C EBIT % ▲ C EBIT % ▲

• Logistics achieved revenue of US$781 million in 1H13 growing 4% year-on-year (YoY)


(2) 4



11 18

• Logistics achieved revenue of US$781 million in 1H13, growing 4% year on year (YoY), led by emerging markets in Asia/Middle East.

Contract Logistics achieved revenue of US$498 million, a 2% YoY decreaseInternational Services achieved revenue of US$283 million, a 15% increase YoY


• Core EBIT of US$26 million for 1H13, an 18% increase YoY.

APL Logistics Revenue Trend by Region

28% (Asia/Middle East) 23% (Asia/Middle East)

Growth led by Asia/Middle East, up +23% YoY

28% (Asia/Middle East)

$215

23% (Asia/Middle East)

$175

63% (Americas)

$493$73

68% (Americas)

$511

$69$781 $755

9% (Europe) 9% (Europe)

1H13 Revenue Breakdown –by Region (US$m)

1H12 Revenue Breakdown – by Region (US$m)


Performance Breakdown

International Logistics Core EBIT surges +40% YoY

1H13 1H12% ▲

Better/ 2Q13 2Q12% ▲

Better/1H13 1H12 Better/ (Worse)

2Q13 2Q12 Better/ (Worse)

Revenue (US$m) 781 755 4 354 361 (2)Revenue (US$m) 781 755 4 354 361 (2)

• Contract Logistics 498 508 (2) 224 239 (6)

• International Services 283 247 15 130 122 7

Core EBIT (US$m) 26 22 18 10 9 11

• Contract Logistics 12 12 - 4 7 (43)

• International Services 14 10 40 6 2 200

Core EBIT Margin (%) 3.4 2.9 17 2.9 2.5 16

• Contract Logistics 2.4 2.4 - 1.8 2.9 (38)


• International Services 5.1 4.0 27 4.9 1.6 206

Revenue and Core EBIT Margin Trend

15 0%35Weekly Revenue (US$m) (LHS) Core EBIT Margin (%) (RHS)

Weekly Revenue(US$m)

Core EBITMargin (%)

15.0%

30

35

5 7% 6.0%

10.0%25

5.7%

3.8%4.8% 5.1%

3.3%2.5%

5.2%

3.7%2.9%

5.0%

15

20

0.0%101Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13


Logistics business conditions

Industry• Inclement weather in developed markets slows down retail and consumer

sectors in 2Q13• Domestic consumption in emerging markets remains strong despite

modest demand growth in developed markets

APL Logistics

• Greater adoption of multi-channel retailing provides new supply chain management opportunities in emerging markets

APL Logistics• International Logistics volumes and operating margins improve YoY

(+15% and +40% respectively), driven by consumer & retail sectors in i k temerging markets

• Within Contract Logistics: Land Transportation and Warehousing/ Distribution grew +19% and +13% YoY respectively, driven by Asia and Latin America partly offsetting automotive sector weakness


Latin America, partly offsetting automotive sector weakness• Continue to improve efficiencies and cost discipline

5 G O tl k5. Group Outlook

Group Outlook

General market conditions and freight rates continued to deteriorate in thesecond quarter of 2013, with few signs of a quick recovery. Along with poormarket demand, the container shipping industry remains burdened with over-

it d k f i ht t NOL’ t b ill ti t icapacity and weak freight rates. NOL’s cost base will continue to improvethrough operating efficiencies, aided by lower vessel slot costs with the deliveryof its larger and more fuel-efficient ships. Barring unforeseen circumstances, theGroup remains on track to deliver a better performance than in 2012.p p


A diAppendix

Group Financial Highlights

US$m 1H13 1H12% ▲

Better/ 2Q13 2Q12% ▲Better/US$m 1H13 1H12 Better/

(Worse)2Q13 2Q12 Better/

(Worse)

Revenue 4,435 4,711 (6) 2,064 2,333 (12)

Core EBITDA 35 (60) n.m. 37 91 (59)( ) ( )

Core EBIT (before non-recurring items)

(120) (217) 45 (35) 16 n.m.

Non-recurring items 201 (111) n.m. 9 (112) n.m.

EBIT 81 (328) n.m. (26) (96) 73

Net profit/(loss) to owners of the company

41 (371) n.m. (35) (118) 71


Financial Highlights by Business Segment

Revenue (US$m) 1H13 1H12% ▲

Better/ (Worse)

2Q13 2Q12% ▲

Better/ (Worse)

Liner 3 695 4 004 (8) 1 728 1 994 (13)Liner 3,695 4,004 (8) 1,728 1,994 (13)

Logistics 781 755 4 354 361 (2)

Elimination (41) (48) 15 (18) (22) 18

Total Revenue 4,435 4,711 (6) 2,064 2,333 (12)

C EBIT (US$ ) 1H12 1H11% ▲

/ 2Q13 2Q12% ▲

/Core EBIT (US$m) 1H12 1H11 Better/ (Worse)

2Q13 2Q12 Better/ (Worse)

Liner (146) (239) 39 (45) 7 n.m.

Logistics 26 22 18 10 9 11Logistics 26 22 18 10 9 11

Total Core EBIT (120) (217) 45 (35) 16 n.m.


Liner Results Summary

US$m 1H13 1H12% ▲Better/

(Worse)2Q13 2Q12

% ▲Better/

(Worse)

Revenue 3 695 4 004 (8) 1 728 1 994 (13)Revenue 3,695 4,004 (8) 1,728 1,994 (13)

Core EBITDA 3 (87) n.m. 24 79 (70)

Core EBIT (146) (239) 39 (45) 7 n.m.

EBIT 26 (349) n.m. (37) (105) 65

Core EBIT margin (%) (4.0) (6.0) 33 (2.6) 0.4 n.m.


Logistics Results Highlights

US$m 1H13 1H12% ▲

Better/ (Worse)

2Q13 2Q12% ▲Better/

(Worse)

Revenue 781 755 4 354 361 (2)

Core EBITDA 32 27 19 13 12 8

Core EBIT 26 22 18 10 9 11Core EBIT 26 22 18 10 9 11

EBIT 55 21 162 11 9 22

Core EBIT margin (%) 3.4 2.9 17 2.9 2.5 16


Fleet Capacity Change

APL Fleet APL FleetAPL FleetStart FY2013

129 vessels

APL FleetEnd 2Q13

129 vessels

Charters expiring

2H13 to 2014Net capacity

587,000 TEUsOwned:41%

Chartered: 59%

665,000 TEUsOwned: 48%

Chartered: 52%

2H13 to 2014

23 vessels*135,000 TEUs

change

+78,000 TEU

Average size4,550 TEU

Average size5,160 TEU

1 Jan 2013 28 June 2013Current Future1 Jan 2013 28 June 2013


* Linehaul vessel charters only

Note: APL fleet capacity as at end-Q12 was 630,000 TEU

Group Fuel and Currency Exposures

Bunker

• The Group continues to recover part of its fuel price increases from customers through bunker adjustment factors.j

• The Group also maintains a policy of hedging its bunker exposures.

Foreign exchange

• Major foreign currency exposures are in Euro, Singapore Dollar, Canadian Dollar, Japanese Yen and Chinese Renminbi.

• The Group maintains a policy of hedging its foreign exchange exposures.


Neptune Orient Lines Ltd456 Alexandra Road, NOL BuildingEnd of Presentation

Thank You

NOL BuildingSingapore 119962Tel: (65) 6278 9000Fax: (65) 6278 4900Company registration number : 196800632Dnumber : 196800632DWebsite: www.nol.com.sg