Neptune Orient Lines Q1 2013 results presentation

1Q 2013 Performance Review14 May 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 1Q 2013 R lt Hi hli ht1. 1Q 2013 Results Highlights

Group improves YoY operating performance• Soft global economy in off peak season dampens

global trade and freight rates• Profit, efficiency & cost mitigation focus narrows

1Q13 Core EBIT loss to US$85m vs US$233m in 1Q12• US$200m gain on NOL building sale results in

US$76m net profit

Liner improves performance•1Q13 Core EBIT loss narrows to US$101m vs. US$246m in 1Q12•More efficient fleet reduces bunker consumption by 14% YoY (113k MT) with slightly smaller fleet (-2% YoY capacity)

•Cost of sales per FEU reduced by 7% YoY

Logistics continues revenue & profit growth •Broad-based growth across all major markets, 1Q13 revenue +8% YoY•Cost discipline improves Core EBIT +27% YoY to US$16m in 1Q13

Page 4 | 14 May 2013 | 1Q 2013 Performance Review

Cost discipline improves Core EBIT 27% YoY to US$16m in 1Q13

Group 1Q13 Core EBIT improves US$148m YoY

600 3000

US$m US$mCore EBIT

1Q13: US$(85)m1Q12: US$(233)m

400

2000

2500

0

200

1500

(200)500

1000

(400)0

Revenue (LHS) Net profit (RHS) Core EBIT (RHS)


2 1Q 2013 Fi i l P f2. 1Q 2013 Financial Performance

Group Financial Highlights

US$m 1Q13 1Q12 % ▲

1Q13 net profit of US$76 million

US$m 1Q13 1Q12 % ▲

Revenue 2,371 2,378 -

Core EBITDA (2) (151) (99)

Core EBIT (before non-recurring items) (85) (233) (64)

Non recurring items 192 1 19 100Non-recurring items 192 1 19,100

EBIT 107 (232) n.m.

Net profit/(loss) to owners of the 76 (254) n.m.company


Financial Highlights by Business Segmentf & ff

Revenue (US$m) 1Q13 1Q12 % ▲

Improved Liner performance due to cost & efficiency focus, Logistics continues revenue & profit growthRevenue (US$m) 1Q13 1Q12 % ▲

Liner 1,967 2,010 (2)

Logistics 427 394 8

Elimination (23) (26) (11)

Total Revenue 2,371 2,378 -

Core EBIT (US$m) 1Q13 1Q12 % ▲

Liner (101) (246) (59)

Logistics 16 13 27

Total Core EBIT (85) (233) (64)


Group Balance Sheet Highlights

US$m 5 Apr’ 13 28 Dec’ 12

Total Assets 8,893 8,219(Restated)1

Total Liabilities 6,629 6,026Total Equity 2,264 2,193

Total Debt 4 420 3 976Total Debt 4,420 3,976

Total Cash 1,310 897

Net Debt 3,110 3,079

Gearing (Gross) 1.95x 1.81x

Gearing (Net) 1.37x 1.40x

NAV per share (US$) 0 85 0 83NAV per share (US$) 0.85 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 1Q13 1Q12

Cash & Cash Equivalents – Beginning @ Q1 897 228

Cash Inflow / (Outflow)

Operating Activities 15 (132)Operating Activities 15 (132)

Investing/Capex Activities (48) (36)

Financing Activities 446 189g

Cash & Cash Equivalents – Closing @ Q1 1,310 249


Group Capital Expenditure

US$m 1Q13 1Q12

1. Vessels 336 52

2. Equipment / Facilities 6 36

3. Drydock 17 9

4. IT 23 6

5 Others 3 15. Others 3 1

Total 385 104


3 Li3. Liner

Liner 1Q13 Results Highlights• Weak global economy, industry oversupply & off

peak season dampens rates and volume Effi i t di i li & fit f• Efficiency, cost discipline & profit focus narrows Core EBIT loss to US$101m vs US$246m in 1Q12

Better efficiency & cost base•Previous delivery of 10 x 10,000 TEU ships all operational •Received 1x 14,000 TEU ships and 1x 9,000 TEU ships•More efficient fleet reduces bunker consumption by 14% YoY or (113k MT) in 1Q13 with slightly smaller fleet (-2% YoY capacity)

Profit prioritization•Yield focus, while balancing trade & cargo mix •Strict capacity management to match demand•Headhaul and backhaul utilization above 90% to maximize assets


•Headhaul and backhaul utilization above 90% to maximize assets

Soft global economy & industry oversupply weaken spot rates post-Chinese New Yearspot rates post Chinese New Year

1600

SCFI Index, Monthly Average

1400

1200

1000

800Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13


Liner Results Summary

US$m 1Q13 1Q12 % ▲

Revenue 1,967 2,010 (2)

Core EBITDA (21) (166) (87)

Core EBIT (101) (246) (59)

EBIT 63 (244) n.m.EBIT 63 (244) n.m.

Core EBIT margin (%) (5.1) (12.2)

• 1Q13 Core EBIT improved over 1Q12 due to a better cost base and profit focus. p pSoft macro conditions, weak off peak season and industry oversupply dampen Average Revenue per FEU to US$2,376.In the Transpacific trade, increased backhaul volumes at lower rates reduce Average Revenue per FEU by 9% to US$3 471Average Revenue per FEU by 9% to US$3,471.Cost of sales per FEU was 7% lower due to operational cost efficiencies and lower bunker prices. Bunker prices averaged US$624/MT or 9% lower YoY.

• EBIT of US$63m mainly due to US$172m NRI from sale of NOL Building


EBIT of US$63m mainly due to US$172m NRI from sale of NOL Building.

Volume and Average Revenue/FEU Trend

1Q12 Average Revenue/FEU

US$2,420

1Q13 Average Revenue/FEU

US$2,37660

70

3,300

Period Average Weekly Volume (RHS) Average Revenue per FEU (LHS)'000 FEU/

weekUS$/FEU

50

60 3,300

30

40 2,900

10

20 2,500

-2,100

P1

P2

P3

P4

P5

P6

P7

P8

P9

P10

P11

P12 P

1

P2

P3

P4

P5

P6

P7

P8

P9

P10

P11

P12 P

1

P2

P3

P4

P5

P6

P7

P8

P9

P10

P11

P12 P

1

P2

P3

Page 16 | 14 May 2013 | 1Q 2013 Performance ReviewNote: Average Period volumes are normalised based on number of weeks in the period

2010 2011 2012 2013

Period

Operational UpdateVolume (‘000 FEUs) 1Q13 1Q12 % ▲Transpacific 224 216 4

Intra-Asia 340 349 (3)

Asia-Europe 109 132 (17)

Latin America 52 54 (4)

Transatlantic 47 40 18

Total 772 791 (2)

Average Revenue/FEU (US$) 1Q13 1Q12 % ▲Transpacific 3,471 3,825 (9)Intra-Asia 1,425 1,439 (1)Asia-Europe 2,413 2,149 12Latin America 3,591 3,405 5Transatlantic 2,628 2,974 (12)Total 2,376 2,420 (2)


Note: Based on point of sailing and inclusive of headhaul and backhaul trade.

Maintained >90% utilization

100%

Headhaul utilization Backhaul utilization

92%

94%

92%

94% 94%

92%

95%

93%95%

100%

92%91%

92%93%

92%

91%

87%

91% 91%

89%88%

90%

87%86%

85%

80%

85%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2011 2012 2013


Note: Backhaul % based on deadweight utilization

Fleet renewal program to lower slot costs

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

20 000

40,000

60,000

80,000

6 x 9,000 TEU

6 x 9,000 TEU

4 x 14,000 TEU

0

20,000

2013 2014

2 x 8,100 TEU


Note: 5 out of the 10 x 14,000 TEU vessels for delivery between 2013 and 2014 will be chartered out to MOL

Fleet RenewalImpro ing slot costs ith more efficient ne b ild shipsImproving slot costs with more efficient newbuild ships

APL FleetStart FY2013

APL FleetEnd 1Q13 Charters

i iNet capacity129 vessels

587,000 TEUsOwned:41%

125 vessels

605,000 TEUsOwned: 42%

expiring2Q13 to 2014

24 vessels*

Net capacity change

+18,000 TEU

+3 vesselsChartered: 59%

Average size4,550 TEU

Chartered: 58%

Average size4,840 TEU

139,000 TEUs+3 vessels-7 vessels

, ,

Current Future1 Jan 2013 5 Apr 2013


* Linehaul vessel charters only

Note: APL fleet capacity as at end-1Q12 was 615,000 TEU

Liner business conditionsIndustry:• FY2013 industry oversupply, freight rate volatility

• Transpacific rate increases moderated by fragile global economy

• Intra-Asia trade relatively robust, faces cascading risk

• Asia-Europe rate gains shortened by weak demand

• Bunker prices trending lower

APL:• Profit focus, efficiencies & cost discipline remain key

• Stricter capacity management, as necessary


p y g , y

4 L i ti4. Logistics

Logistics 1Q13 Results Highlights

• Revenue of US$427m, up 8% YoY• Core EBIT of US$16m, up 27% YoY

Broad-based growth

, p

g•Led by +21% YoY growth in emerging markets of Asia/Middle East• International Services and Contract Logistics up +22% and +2% YoYrespectively

Cost management•Strict discipline contains operating costsCore EBIT margin improves from 3 3% to 3 7%•Core EBIT margin improves from 3.3% to 3.7%


Logistics Results Highlights

US$m 1Q13 1Q12 % ▲

Revenue 427 394 8

Core EBITDA 19 15 27

Core EBIT 16 13 27

EBIT 44 12 267EBIT 44 12 267

Core EBIT margin (%) 3.7 3.3

• Logistics achieved revenue of US$427 million in 1Q13, growing 8% year-on-year (YoY) g $ , g g y y ( )from broad-based growth, led by emerging markets in Asia/Middle East.

Contract Logistics achieved revenue of US$274 million, a 2% YoY increaseInternational Services achieved revenue of US$153 million, a 22% increase YoY

• Core EBIT of US$16 million for 1Q13, a 27% increase YoY due to business growth and strict cost discipline

• EBIT of US$44m mainly due to US$28m NRI from sale of NOL Building


Logistics continues growing profitably in 1Q13

• Broad-based growth from growing customer pool

• Business growth & cost discipline improves Core EBITg p p

• Continued focus on emerging market growth opportunities

13

16 15

20 US$m

394

427 450 US$m 1Q Logistics Revenue 1Q Logistics Core EBIT

5

10 350

8%8% +27%+27%

-1Q12 1Q13

250 1Q12 1Q13

+8%+8% +27%+27%


APL Logistics Revenue Trend by Region

27% (Asia/Middle East)

24% (Asia/Middle East)

Growth led by Asia/Middle East, up +21% YoY

East)

$117

East)

$97

64% (Americas)

$271$39

67% (Americas)

$263$34

9% (Europe) 9% (Europe)

1Q13 Revenue Breakdown –by Region (US$m)

1Q12 Revenue Breakdown – by Region (US$m)


Performance Breakdown

US$m 1Q13 1Q12 % ▲

Growth across both business segments

Revenue 427 394 8

• Contract Logistics 274 269 2Co ac og s cs 69

• International Services 153 125 22

Core EBIT 16 13 27

• Contract Logistics 8 5 60

• International Services 8 8 -

Core EBIT Margin (%) 3.7 3.3Core EBIT Margin (%) 3.7 3.3

• Contract Logistics 2.9 1.9

• International Services 5.2 6.4


Revenue and Core EBIT Margin Trend

Weekly Revenue Core EBIT

15.0%

30

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

Weekly Revenue(US$m)

Core EBITMargin (%)

5.7%

3.8%4.8% 5.1%

3 3%

5.2%6.0%

3.7% 5.0%

10.0%

20

25

3.3%2.5%

0.0%10

15

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13


Logistics business conditionsIndustry:• Auto industry seasonal slowdown in 1Q13 but expected

to improve due to robust auto sales forecasts

• US economic recovery may spur higher consumption

• Emerging markets growth continue to increase demand for logistics services

APL Logistics:• US & China acquisitions integrating well & positive

earnings contributionearnings contribution

• Continue to look for growth opportunities


5 G O tl k5. Group Outlook

Group Outlook

The Group’s cost base will continue to improve as it takes delivery of newer andmore efficient ships while extracting further operational efficiencies. However,the container shipping industry remains saddled with overcapacity. The Group

ill ti it f t ffi i i ld d it twill continue its focus on cost efficiency, yield and capacity management.Barring unforeseen circumstances and if freight rates do not deteriorate, theGroup remains on track to deliver a better performance than in 2012.


A diAppendix

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

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Neptune Orient Lines Q1 2013 results presentation

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