Good day, and welcome to the Stalt Nielsen Limited First Quarter twenty sixteen Results Presentation and Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Niels Stott Nielsen. Please go ahead, sir.
Thank you. Good morning, good afternoon. Thank you for joining our first quarter twenty sixteen earnings presentation. I will be referring to the presentation, which is on our website. If we then move on to Page three, today, together with me, as always, Jan Englertsen, CFO of Stolt Nielsen.
Then on Page four, the agenda. We will go through the highlights, then I will take you through each of the businesses. Jan will take you through the financials in detail, and we will open up for question and answers. On Page five of the presentation, first quarter twenty sixteen highlights. Stolt Tankers reported an operating profit of EUR 31,200,000.0, that's slightly down from EUR 35.4 reflecting the impact of fewer operating days in the first quarter and loss on bunker hedges.
The spot market remained healthy, and we also experienced lower bunker costs. Stolt Haven Terminals operating profit of 10,500,000 that's up from $2,600,000 in the previous quarter, when results were held down by write offs or write downs of certain assets, accelerated depreciation and settlements of some customer claims. Stolt Tank Tank Container operating profit of $11,800,000 that's down from 13,100,000.0 reflecting seasonally lower freight rates and utilization despite an increase in shipments. Full Sea Farm operating profit of $5,500,000 compared to a loss of $2,500,000 accounting for inventories at fair value had a positive impact of 3,400,000.0 compared to with a negative impact of 2,700,000.0 in the fourth quarter. Corporate and others reported an operating loss of 1,200,000.0 compared to an operating loss of $5,000,000 in the fourth quarter.
That gave us an operating profit of 57,800,000.0 and net profit of 30.4 and earnings per share of $0.55 per share. Moving on to the variance analysis that we do between the fourth quarter and the first quarter, net profit variance analysis. So you can see we had a $21,400,000 profit in the fourth quarter, slightly lower tanker operating profit of $4,200,000 improvement of $7,900,000 in the Terminal division, lower tank container operating profit of EUR 1,300,000.0, higher Stolt Sea Farm operating profit and also the revaluation of the biomass of EUR 6,100,000.0 positive and taxes, interest, corporate and others of negative EUR 1,400,000.0, bringing us to EUR 30,400,000.0. I will, as always, go through in detail each of the businesses. Moving on to Page seven, Stolt Tankers.
Initial comment is, I will say market conditions remains the same from fourth quarter to the first quarter. Deep Sea revenue decreased by 5.9% from previous quarter, mainly due to fewer operating days and higher bunker surcharge rebates. In other words, in our bunker clause, if the bunker price is low, we give more money back to the customer. Operating days decreased due to recycling of two ships and also some unscheduled off hire of two other ships. Utilization dropped by 4.2% compared to the previous quarter, mainly caused by a drop in the transportation of assets.
I wouldn't read too much into it. It was just scheduling wise. The average COA rates invoiced remained flat. Stock rates increased by 9.4% compared with the previous quarter. COA renewals annual rate during the quarter were on average up by 2.4%.
If we move on to Page eight, fourth quarter operating profit versus first quarter operating profit. The previous quarter, we had an operating profit of $35.4 fewer operating days, the impact of the two ships that were recycled, but also the two ships that were taken off of fire, 3,600,000. Then we have accelerated depreciation as you have to accelerate the depreciation on the ships that you are scheduled to recycle for the year. And as the steel prices are falling, you have to do accelerated depreciation of those assets. That impact was 2,800,000,000.0 Then we had barging and sublets.
As a result of the two ships that had to go on off hire, we had to find solutions of transporting the cargo schedule for those ships. So we had to sublet those cargoes both by barging and taking in outside tonnage. Lower bunker costs of $9,900,000 positive, but then lower bunker surcharge revenue as a result of negative $5,300,000 And then we had a loss on our hedges, and I will show you in detail those hedges, of $2,000,000 for the quarter. Lower ship owning cost as a positive contribution of $2,000,000 and emission credits and gain and loss on ship sale of ships of $2,900,000 and others of 1,300,000.0 bringing us to 31.2 Stolt Tanker bunker cost on Page nine. The net bunker cost decreased by 4,600,000,000.0 from the fourth quarter, excluding bunker hedges.
The average IFO consumed decreased to $196 per ton from $259 per ton. So the consumption during the quarter went from $196 down to $196 from $259 The average price of the bunkers that we purchased during the quarter decreased to $169 per ton, down from $240 from the fourth quarter. So you see here that the bunker prices that we purchased the bunkers that we purchased continues to fall. The COA bunker surcharge clauses covered on average approximately 67% of the total bunker price exposure in the first quarter. On the bottom left hand side, we have illustrated the bunker consumption that Stolt Tankers Joint Services, that's our deep sea fleet, have.
We consume approximately 488,000 tonnes per year. Out of that, 326,960 tonnes approximately is covered under the bunker clauses in our COAs. That means that we have 161,000 tonnes, which are not hedged. On top of that, we also have volume from our regional fleet. We have hedged out of the 161,000 spot consumption, we have hedged 92,000 tonnes at an average cost of $156 and that's for 2016.
And in 2017, we have hedged 72,000 tons at an average price of $2.10 I believe that, that position and that is approximately out of our total non hedged position or our spot position in bunkers. We have now hedged half of it. I don't think you will be able to hit rock bottom, but I think we're pretty close to the bottom, what I feel. So you can see today's spot rate is 116 the average price that we bought in the first quarter was $169 We locked in at $156 The bunker loss that we have realized, in other words, the bunker that we have consumed out of what we have hedged was 346,000 And the mark to market loss, in other words, the position that we have taken but we have not yet consumed, is a negative 1,700,000.0 So that's the $2,000,000 loss on the hedge that we mark to market each quarter. So hopefully, that will be a positive number next time around.
So moving on to Page 10. STJS or Stolt Tankers Joint Service Sales in Time Charter Index. Here, you can see I said the market was pretty similar from the fourth quarter of last year and the first quarter of this year. You can see there on the index that it leveled off. So no decrease, no increase.
Chemical markets supported by other segments, Page 11. The top graph shows you the red line shows the spot rates, the blue lines shows the bunker costs the bunker prices. And as you can see, there's been an uptick in the spot rates even though the bunker price continues to fall. So really, the earnings that we're seeing, the profits that we're seeing in Stall Tankers is really because the bunker prices have not fallen in line or sorry, the spot rates have not fallen in line with the bunker prices, which is good. There's theories to this.
A strong CPP market has helped the chemical markets. In other words, the swing tonnage that has operated in our segment has gone over to the CPP segment. And also The U. S. Chemical export remains strong due to the low feedstock prices in The U.
S. Gulf. So overall, positive. Chemical tanker fleet and order book. This is what we have shown you earlier.
The order book as it stands is at 28.5%. That is out of the 18 owners that we compare ourselves to. And out of that, I would say 23% is stainless steel. A lot of it is not scheduled to be delivered. The years are actually not here, but the line with the red, yellow, blue and green is twenty sixteen, that is this year.
And you can see that the order book is significant of new tonnage coming in this year and the next and 2017 and 2018. We'll talk a little later about the likelihood of all of it being delivered, but as it stands, significant for the book. Moving on to Page 13. We have our new buildings being named the Stolt Pride, the Stolt Sincerity, Stolt Integrity, Stolt Tenacity, Stolt Loyalty and Stolt Excellence. And the ones that have been following our company for a long time, these are old ship names that we are reusing.
The first ship is scheduled to be delivered in June. And the next will be then the fourth quarter. Two are scheduled to be in the fourth quarter. So three ships coming in. And these are the ships that are replacing the ships that are currently being recycled.
Outlook on Page 14, outlook for '16 and 2017. Significant order book due for delivery in the next two years, as I showed you on the previous slide. Though cancellation and delays are likely due to the financial conditions of both the yards and also maybe difficulty of obtaining financing for the ones that have taken on orders but have not yet financed those ships. So we believe there's going to be delays. And also maybe not all of these ships or the people who have placed the order will be able to obtain financing.
And also the viability of the yards or the financial strength of the yards is also questionable. Global GDP growth is estimated at 3.1% in 2015, is projected to increase to 3.4% in 2016 and three point six percent in 2017 as our business is very much driven by global GDP as we produce as we transport the feedstock for manufacturing manufacturing being driven by global GDP. This is the latest from IMF. But as you all read in the newspaper, these are these numbers were revised by the IMF in January. Let's hope that and they were revised downwards.
Let's hope that they are not further revised downwards. The World Trade Organization predicts that the trade growth in 2016 will increase by 3.9%, which is good. However, it's still below the average 5% that we have seen over the last twenty years. So it's recovering or they predict it's going to recover, but not back to the normal level. Again, this is falling import into China and other emerging markets, falling prices for oil and other primary commodities.
U. S. Export capacity, which benefits from the low feed cost, may drive the trade growth multiple back to the historic average of 1.3 times to 1.7 times global GDP. We're not there yet, but historically, trade growth or global trade has been the multiple has been 1.3 times and 1.7 times of GDP. We have seen good export growth of The U.
S. Gulf, and I will say that the strongest market, the biggest the strongest market we're seeing today is from The U. S. Gulf to the Far East. U.
S. Gulf to Europe is also healthy, but the other segments are struggling. And the area where we have the biggest competition is actually or biggest challenges for as an industry is to get the ships back. So U. S.
Gulf to the farm is healthy. Return is a dogfight. And I would say that the reason that we only were able to get 2.3% on average up on our COAs is that The U. S. Gulf to the Far East, we were able to get healthy renewals, but it's a big competition to get the ships or the contracts back.
And that's why, on average, we weren't able to get higher. We expect opportunities to acquire ships in the second end market, and we also expect opportunities for consolidation, mergers and acquisitions of in the I would say the chemical tanker segment, it is really ripe for consolidation, and we would like to participate. Stolthaven Terminals. Operating profit improved following an increase in revenue, in line with the expansion that we have put online. We also had lower M and R maintenance and repair and a reduction in A and G as a result of the stronger dollar.
The reduction in maintenance and repair is back to normal. So you would have seen that in the third and the fourth quarter, M and R was high, and that was catch up work and investment that we had to do primarily in Houston. So now that has come back, and we have been able to get more car or more business at our terminals, picking up the utilization from 87.5% in the first quarter versus 86.9%, ticking and moving along in the right direction. Underlying dynamics of the bulk liquid storage industry remains solid. So if we look on Page 16, the operating profit variance between the two quarters.
The reported operating profit for the fourth quarter was $2,600,000 Then we had, in the fourth quarter, one offs of impairment of goodwill and accelerated depreciation and settlement loss from customer claims that we had in the fourth quarter, which we didn't have in this quarter, positive improvement of $3,700,000 In the fourth quarter, we had the dilution in our investment in Nord Terminal of 700,000.0 We had higher storage and throughput at our terminals of positive of $1,100,000 lower M and R compared to previous quarter of 1,000,000 lower NG expense because of strong dollar and others of $800,000 bringing us to 10.5 Stolthaven Terminals, owned terminals main concern, and this is what we reported last time, that since 02/2008, we have doubled our capacity of our wholly owned terminals to $1,600,000 and we have invested $1,000,000,000 in this segment. The rapid growth in capacity has not produced the equal growth in the EBITDA due to the falling utilization, operational inefficiencies and cost creep. And this is what we said last quarter is that this is what we're scaling our full confidence or focus that the market is there, that we believe that we will be able to deliver that EBITDA that was originally in our investment case, but it's taken longer and cost a little more.
But as you can see on the graph on the right hand side, on the orange, you can see a positive pickup between the fourth quarter and the first quarter, both when it comes to capacity utilization and invested capital versus EBITDA margin, so it's ticking in the right direction. Moving on to Page 18, action and achievements. Houston being the one area where it's our biggest wholly owned terminal, that's where we have had the biggest challenges. There, we have changed management. We have invested in infrastructure improvements.
We have started and we will continue. Integrate field operation with back office. We have expanded already our jetty capacity by building a larger barge jetty, and we also have approval to build a totally new jetty. We have also had a customer contract review where we have gone thoroughly through and done a cost based analysis of each of our contracts to make certain that we fully understand the cost of operating each of our customers' contracts. And we have had more than 20 API inspections.
So we have obtained a permit to build a new jetty, and we are on schedule to engage the contractor to build this jetty. Improved jetty scheduling and BART jetty expansion has been completed. New Orleans, which was again hit by this famous storm, this flooding. As a result, we lost customers. We built a wall.
We are now gradually getting more of these tanks back online, and we've been able to successfully obtain new business and attract new customers to the terminal. So new contracts signed up and utilization is up to 78%. Actually, think it's as it stands now, slightly above 80%. Santos, there where we were fully dependent on the ethanol business, we have now expanded the product mix and reduced the reliability on ethanol. And we have begun, like we've tried to continuously do, cost cutting costs to counter the high inflation in the area.
So we have added caustic soda contracts, and utilization is now up at 99%. Singapore, pursuing new customers and new products. There is an area where there's been a dramatic slowdown in business, but we have been able to capture new business, and we have added some contracts, and now we have been able to get the utilization up to above 83%. Australasia, complete expansion at cost, improved profitability. There is the Newcastle terminal.
There we are in process of the third phase expansion and also the jet expansion, and it's moving along in the right direction. Lingang, where the explosion occurred, we lost our operating license. Everybody lost their operating license. That terminal has been closed. But as it says here, uncertainty on timing remains.
We are hopefully or believe that we will be getting the operating license back in the summer. But the challenge there, and this is for everyone, of course, when you the terminal is now empty, even if we get our operating license back, you need to build up a customer base. Stalled tank containers. On Page 19. Revenue down due to a combination of seasonality, that's the lunar or the Chinese New Year, lower demurrage and lower rebuildable freight related expenses.
Transportation margin per shipment was marginally down. While shipments increased, utilization was slightly down due to faster return of tanks after voyage end and increase in regional moves with shorter voyage duration. If we go to Page 19 and look at the variance between the fourth quarter and the first quarter in operating profit, we reported $13,100,000 in the fourth quarter, lower gross profit utilization demerge revenue of negative $4,200,000 Costs that we had in the previous quarter related to the recycling of some tanks that we didn't have in this quarter, so positive $1.5 Higher joint venture income and other bring us to $11,800,000 positive operating profit. Stolt Tank Container market situation, Page 21. We've said this before.
This has been one of our most profitable business, and it's still one of our most profitable business. But the margins are coming down, profits are coming down. But I don't think it's in a free fall. I think it's going to settle. But it is unrealistic to believe that we can continue to have the kind of margin and operating profit that we have had for such a long time.
There's more competition out there. That's totally clear. But the fundamentals, yes, there's a slowdown in trade like we are seeing in installed tankers, but there's still the fundamentals are still very good, where more products today are still being moved through drums than in tank containers. So there's still large growth opportunities in this segment. The market is growing steadily as we expand into new regions and continue to convert hardware from other modes.
Lower economic growth in China is negatively impacting global activity, as we are seeing in tankers. And increased competition is putting pressure on margins. So we are focusing on growing utilization and turns per tank while maintaining margins per move. We will continue to develop our depot network in order to improve turns per tank. So yes, it's more competition, but still fundamentally a strong business and a good contributor to our earnings.
Stolt Sea Farm. Well, it's nice to see that everything here is blue. Seasonally strong first quarter with Turbot. Of course, our first quarter includes December January and February, December being Christmas sales. So seasonally strong first quarter with Turbot sales up 24% and caviar sales up 42%.
Sole sales were down due to slower growth affecting production at our farm in Iceland. While prices for turbot and sole remained flat, caviar prices increased during the quarter due to the strong demand around Christmas season. The accounting for inventories at fair value had a positive impact of $3,400,000 compared to a negative impact of 2,700,000.0 in the previous quarter. So what you're actually seeing here, the biggest impact on the improved earnings comes from the fair value adjustment that we have to do. And that you do at the 10 last days of the quarter.
So even though we didn't benefit that much from increased prices in the first quarter, but since the prices started to pick up at the end of the first quarter, we had to write up the inventory of our biomass. So I would say going forward now, the inventory has been picked up. But then in the second quarter, we should see improvement and will continue to see solid earnings because we have higher prices. Hope you understand that. Okay.
On Page 23, fourth quarter to first quarter operating profit variance. Negative $2,500,000 operating profit in the fourth quarter, higher Flatfish gross profit of 1.3 Flatfish fair value evaluation adjustment of 5.6%, higher profit from the caviar business and also inventory adjustments for the caviar, bringing us up to a positive of 5.5% operating profit from Stolt Sea Farm. Now moving on to Stolt Nielsen Gas to show you the similar graph that we showed last time, but I just want to clarify to the market our intention within this segment. Today, Stolt Nielsen Gas consists of a 7.2% stake in Avast Gas, 100% ownership of Stolt Nielsen LNG Holding and then we have an intended Golar Stolt joint venture company. In addition, we have also invested directly in Golar LNG.
Stolt LNG, which was our first investment in LNG with the intention of delivering gas to the remote location in Canada. Since the mining industry and the mineral or the commodity prices have fallen, those customers are not there any longer. So we have put that investment on hold on spot of loose saving. We would like to keep it alive, but I would like to remind everyone that all the investment and all the costs associated with this product has expensed. So if we decide not to proceed with this project in Canada, we will not have an impact on our P and L.
We've already taken all of the costs. So we will see. The Sardinia project, the high gas, that's our first small scale shipping, storing and distribution. That is progressing. We are now working on offtake agreements, and we've been able to achieve three contracts or three LOIs so far.
And when we have full capacity or close to full capacity at our stores and for our ships, we will take an FID. And then you have the Golar Stolt joint venture. That's where we actually are looking at using the FSRUs from Golar and use that as a hub to further distribute small scale to stranded customers not connected to the pipeline grid. And that's the thinking about the work that we would like to do with Golar. And like all of these LNG projects, there's a lot of projects.
There's a lot of talk, and it's very extensive and takes a long time. So we need to be patient. LNG investment, build a global this is on Page 25, build a global business of small scale regional LNG distribution projects focusing on terminals and strategic location serviced by a flexible fleet of ships, which are underwritten by a committed baseload demand develop an integrated model to include sourcing of LNG, shipping of small scale terminal two small scale terminals, 10,000 to 30,000 cubic meter and distribute from the terminals via truck and isocontainers to the end user Explore potential projects in the Mediterranean, Caribbean, South America, Indonesia, Africa and Canada. There are more projects out there that we are presently with our staffing able to handle. This is coming, and we would like to be part of it.
The project aimed at serving stranded demand customer out of reach of the conventional pipeline gas, offtake agreements are currently in the ten to fifteen year range with suitable counterparty credits. That brings us to Page 26, the financial, where Jan will take you through financials.
Thank you very much, Nils. Good afternoon, and good morning to those on the phone. If we go to Page 27, and just before I do, I'll go and provide a little bit more details into the financials, the figures that we have provided today. And let me also say that we have, in addition today, filed our three month interim financials, which ends on February 2936, with the Oslo Stock Exchange. And the press release, the interim financials as well as our annual report as well as this presentation is on our website, so you can find it there.
If we then go to Page 27, let's just look again at the net operating profit. And I'm not going to go through all the variances, but just to say here that if you take the what we define as sort of one off, call it, events or one off charges, put those aside and then you really look at the operating performance of the various businesses. So you can see for the first quarter, we ended up then at $63,500,000 compared to 56,200,000.0 in the fourth quarter, the last quarter last year. And so there has been an underlying improvement in the businesses. And as Niels mentioned, of course, we got help here from the fair value adjustment in Sea Farm.
And we also have a real improvement on the terminal side of roughly $300.3500000.0 at the operating level from terminals. And that sort of brings us up to the sort of the new normal. And as Nil said, will be sort of what we will seek continued small improvements every quarter as we go forward. In the before one offs, of course, tankers is down and tank containers is down. But still, the difference here is more than $7,000,000 improvement on the underlying.
One offs, Nitz already talked about the accelerated depreciation. And just to make that clear, we have six ships that are being either have been or will be recycled in 2016 because the steel prices have come significantly down. We have to increase the depreciation so that by the time the ships are recycled, the price we get from for the recycling, selling the steel is equal to whatever the book value is left. So you can see here that the actual amount for the first quarter is $6,900,000 It was only $4,100,000 in the previous quarter. Terminals, we had some accelerated depreciation in the fourth quarter.
We had gain on sale of assets. These were the emission credits that we sold, 3,300,000.0. We sold some assets with a loss of EUR 1,100,000.0. And then this is the EUR 2,500,000.0 is the net. So altogether, 57,800,000.0 is the operating profit versus €43,600,000 If you look at the non operating interest expense, very flat, no change.
We had a little bit less foreign exchange. We had a small gain actually, but we had more movement in the dollar in the fourth quarter. So that's why we had €1,100,000 in the fourth quarter. The income tax, 3,100,000.0. As we have said before, we're doing better on the terminal side.
We're doing better on the Sea Farm side. And we also so therefore, that will attract taxation. And of course, we also pay taxes back to the government on the sale of the emission credits. So net profit, 30,400,000.0 versus EUR 21.1 EBITDA, 115,100,000.0 versus 114,000,000 Let's go to the next slide, which is Slide 28. Balance sheet, the shareholder equity, 1,300,000,000.0 similar to what we had, slightly up, dollars 31,000,000 off from fourth quarter.
Debt, 1,700,000,000 and tangible net worth at $1,568,000 So that brings the debt to tangible net worth to 1.11 to one, and that is an improvement from the fourth quarter where we were at 1.14:one. We have a healthy EBITDA interest expense, 4.41:one, and that's also an improvement from the previous quarter. And in terms of cash, EUR63 million unused credit lines, EUR396 million. Total is million. And in addition, we have $82,000,000 of uncommitted lines.
When you look at the both the balance sheet, you look at the KPIs, you look at the liquidity, we have plenty of cash to be able to retire and repay without having to go to the market, the SEK 300,000,000 of bond issue, which is due on June 22. That's for some of you that follow it, is sni nul en. And we will out of reserves that we have, then be able to pay that back. In addition, we are working on a number of transactions to improve the loan to value of the loans we have where we have used our ships as collateral. A lot of our loans, we've had for a long time.
And as you know, we repay the loans or pay down on the loans quicker than we amortize the ships. So there's a, if you will, an underlying value in those ships. So we are working specifically, and I'll go through later and name each of the transactions we're doing. But by just using the same collateral, we are expecting to generate between 170,000,000 let's call it 170,000,000 $180,000,000 of additional capacity. And the target is actually to have this done before June 22.
And that's not necessarily a requirement, but that's the target. We are 35% fixed in terms of interest. And we had at the the average interest cost for us during the first quarter twenty sixteen is 4.95 percent, which to us looks very, very good. Interest expense expected to be about $28,000,000 for the next quarter. If I go to cash flow, Slide 29.
If you look at the net cash generated by operating activities, 76,000,000, a little bit down from the fourth quarter. Most of that is just a fact that we got less dividends from our investments in Golar and Avanz in the first quarter. But you can see that the in terms of the rest, the net income is an improvement. And overall, we're down just by 10,000,000 In terms of net cash used in investing activities, 59,000,000 went out. That is $50,000,000 of that is capital expenditures.
A lot of it is progress payments on our newbuildings in China, but it also includes payments towards new tank containers as well as some of the capacity expansion in the terminal section. And you can see here that it takes us down to $59,000,000 Previous quarter was $73,000,000 negative. And in terms of net cash that we used provided by financing activities is negative €31,000,000 And you can see from this slide that what we paid back to the banks, what we drew down on facilities more or less washes out. And then we left with the dividend payments that we made in December of $28,000,000 So altogether, that brings the cash and cash equivalent at the beginning of the period to $78 and at the end of the period to $63,000,000 Then going to Slide 30. This is the bar with the EBITDA figures by quarter.
Of course, we have taken out sale of assets and other onetime items or events. We already talked about tankers. It's down in terms of the EBITDA. But keep in mind what we said is that it's not the market. It's not the fundamental of the market.
As you saw, the sale in index is the same. We have fewer ship days, so we have fewer ships generating EBITDA. And we also had some other events affecting the amount. Terminals, you can see, is slightly up. Tank Containers, again, for the same reasons we talked about with utilization is down if you look compared to previous quarters.
If you go back a year and so on, we had much higher utilization, very close to 75%. But overall, the adjusted EBITDA for the quarter is $115,000,000 A and G, this is Slide 31. If you look at this, of course, impact of the dollar the strengthening of the dollar that we saw during the 2015 and that also continued into the beginning of the 2016 impacts all of our business favorably. Roughly 65%, 70% of all our A and G costs are actually non U. S.
Dollars. So with the strength of the U. S. Dollar, you could see that this is actually having a positive impact on our A and G side. Main difference why we are $9,000,000 down for the quarter is a couple of things.
Number one, profit sharing and long term incentive payments that we accrued in the fourth quarter are less so in the first quarter twenty sixteen. And also, we had restructuring. We moved the Norwalk office down to Houston. And the $1,700,000 we had in the fourth quarter was the last of those costs. So they are not adding we are not going to see anything related to that restructuring going forward only, whatever the benefits are.
When you then look at the quarterly updated guidance, it's slightly up EUR 51,200,000.0. And I don't need to go through the details there. Depreciation. We have the EUR 60,100,000.0 versus EUR 61.2 We're guiding at 61,000,000. Tankers, you can see, is up.
We talked about the additional depreciation that we took and the reasons why. But remember, we have also sold for recycling two ships, so taking those two ships out of service, again, which is reducing the depreciation. So net net, it's 38.1%, and that's the level that we expect for the next quarter to come. Terminals, 13.5% versus 16%. We had certain write offs that we have already gone through in the fourth quarter.
They're not there in the first quarter. Tanker, that is pretty much the same. Seafarer, much the same. So the picture going forward is not going to change very much. Then the next slide, Slide 33.
Here, again, we're pretty close, dollars 10,700,000.0, and that compares to $10,100,000 so slightly improvement. And of course, that also ties in with the improvement in the STJS, the underlying improvement that we saw for the JVs that we have that have ships into the STJS. The regional JVs that we had did slightly worse. So that's why it's not a material difference. Stolt oven terminals, the same.
Tank Containers, we had a little bit of improvements. And the other was €2,100,000,000 So 10,700,000,000.0 And we forecast 10,500,000,000.0 and guide 10.5% going forward. Taxes,
let's see.
Taxes, I think I already mentioned, dollars 3,100,000,000.0, which is compared to 1,800,000,000.0 negative in the previous quarter. The reason why the 1,800,000,000.0 is negative, you come to the end of the fiscal year, you've had four quarters. You go in and you true up all your books, and then you realize that we have been over accruing. In addition, we also finalized some cases that we had in some of our tax jurisdictions where we had provided too much tax. So overall, you can see there was a 1.8 credit or reduction in that quarter.
But you can see for the full year, it was $14,100,000 And that's sort of where we're going to end up in 2016 as well. Next, the capital expenditure program, the total program is SEK $892,000,000. That is up from what we presented at the end of the fourth quarter. And most of that increase actually relates to the fact that we had three ships, Japanese built ships under long term time charter. We had purchase options, and it made sense for us to exercise those options.
And those ships will be delivered to us during 2016. So that has increased the CapEx as we show on the tanker side. The rest really relates to the new building new buildings in China. So you can see here for tankers, it's $430,000,000. So it's almost half of our program is in the tanker business.
Out of the $430,000,000 more or less everything is financed either through the Chinese export import bank or through the fact that the ships I was talking about that we have exercised option to buy, we can just put those into our revolver and get automatic financing, I. E, increase. Since we have the capacity under the revolver, we can just increase what we can draw. So half of this program already financed for Stolthaven terminals. I would say that most probably, reflects Houston.
It reflects cleaning up Houston, including a jetty. It includes finishing up the expansion in Singapore and also in Australasia. And out of the $360,000,000 maybe as much as $150,000,000 is already secured for financing or will be refinanced. Tank Containers, you can see it's very small. Sea Farm is very small, bitumen, stope and others.
So altogether, $892,000,000. But when you look from the second half into the or the second quarter, third quarter and fourth quarter twenty sixteen, it's still $448,000,000 which is a significant chunk of capital that needs to be invested. Debt maturity. You've seen this slide so many times. The orange here, the bonds, that's the €300,000,000 that matures on June 22.
We have the cash. And then you can see that the overall amount of refinancing that we need to do will drop down significantly in 2017. So the next sort of bond that is maturing is in 2018. If we look at the projects that we are actually working on, and this should be seen in conjunction with what I said earlier about the transactions that we are working on. We are working on a second tank container, call it a sale leaseback transaction or you can call it an asset based financing.
You may recall, we did one and the structure is called a Japanese operating lease company. The Japanese are providing the equity, very reasonable. And then we go out and get bank financing to top it up, 70%. And then we lease the tank containers back. And the cost to us of the first transaction we did was less than 4%.
It was actually 4.6%. So very, very attractive. We're now in the market to do a second transaction with 7,000 containers that we have on the balance sheet. And
as
you see here, that will raise 120,000,000 The fact that we're using the tank containers as collateral for to raise financing is nothing new. We've done Texas limited partnerships. We've done KSs in Norway. In the past, we have done tax leases in The U. S.
And then we were and then we repaid at the end of the day. So we had no loans where we used tank containers, but now we have done these two or will have done the second transaction by May. So that's $120,000,000 We're doing $110,000,000 refinancing of a term loan, which is secured by two ships, and we're in the documentation stage of that. We are also in the midst of renewing the company's $600,000,000 facility. As a matter of fact, today, the max is 500,000,000 and we are going to go up to $600,000,000 by rearranging some of the collateral that we can put in.
And if we can do that, let's call it, within the if not by the let's say, by the end of the third quarter, then we are basically renewing this one year ahead of when it is actually maturing. But this is a very significant part of
our
liquidity. And we're also taking some of our older ships, and we are putting them into a sale and leaseback situation where we aim to raise additional $100,000,000 So that will really take them out, let's call it, to the end of its life. And then there's a scrap value. We will take them back, and then the ships will be scrapped. So just before I hand over to Nils, I think overall, as has been commented by the media, the first quarter is relatively strong, 30,400,000.0 and EBITDA of €115,000,000 Solid performance in Tankers, steady tank container results in a very competitive market, and the fundamentals in the terminals remain solid.
If you look at the first quarter annualized earnings per share, just take the 55 times four, you come up to $2.21 PE ratio, five, just above five, which is extremely low. And the price to net asset value, we're selling at less than 50% of net the book value. Dividend, if we continue on the assumption we continue to pay dollar, it's 9%. And as we've said now many times, the liquidity situation, $459,000,000, which is available through our credit lines and CapEx. So I hope that we, by now, have been able to take away all the concerns that have been out there among both analysts as well as investors and people looking to invest into our share about our ability to repay the $300,000,000 bond.
So with that, next, back to you.
Since the passing of my father and at the end of last year, the passing of our Chairman, Kristo Ochsen, we have made some additions to our Board. Roel Fabenjanssen, who is the CEO of Hapag Lloyd, joined the Board just before Christmas. And then we have also nominated Thoruld Torem, who has accepted the position, and he will be voted in at the AGM on the twenty first. Also at the AGM, we are proposing Sam Koopman to become the new Chairman of Solvnitsyn. As long as I'm the CEO, we don't feel corporate governance wise is right to keep both positions.
So Sam, by far, the most experienced shipping man on our Board, deep knowledge in parts of trade, will then be elected in as Chairman. So now six people six new people on the Board sorry, six people on the board, two new ones. Key takeaways. Group performance and cash flow continue to be strong on the back of the reasonably strong tanker market, which is supported by the low bunker price. It's important that and there's been a lot of questions about it.
As Jan emphasized, we have enough cash today without any further financing, even though we have projects on our way, but we have enough cash to repay the bond coming due this summer. A turnaround at Stolthaven has begun, and we expect to see small and gradual improvements each quarter And ongoing actions to increase utilization, enhance profitability and performance are not expected we are not expecting to see the full impact. We will see gradual improvement by the quarter in 2016, but the full impact, I don't think we will see until 2017. We are working to improve the utilization in tank containers to come through the margin squeeze. And our entry into the LNG sector will be based on confirmed long term contracts and customers and offtake agreements, and this will take time.
That completes the presentation. And before I open up for the phone calls, we will take the questions here in Oslo first. Are there any questions that we can further answer? Yes. Yes.
So the two questions was, do we expect any further delays in the Chinese newbuilding originally supposed to be delivered in December or 2015 and it now looks at June 16? And the second question, can we quantify The U. S. Exports U. S.
Gulf Of Far East? Talk about the new buildings. Hudong, I would say, was one of the better state owned yards in China. They took on a job for Stolt Nielsen, which where we come with our specifications and our requirements. We have a strong management site team.
There has been delays. We feel the mid June numbers is based on what our site team is saying, not what the Chinese are saying. So we feel confident that they will be delivered at that time. And then we will see the next ones coming out, two more in 2016. There are some issues, of course not issues, but there are, of course, clauses in the contract saying liquidated damage, etcetera.
That's too early to say what the outcome will be. We will say one thing that is the quality of the ship that we're seeing being built is we are very satisfied with. We have 30 people on the ground watching. I mean, I will say that we are confident that the ships will be top standard when they are delivered. U.
S. Gulf to the Far East, that's where the strongest market that we have seen. I think it's a combination of well, it's positive that you're seeing that the feedstock that our main customers, the oil companies are investing in production capacity and that we are we're seeing as a result of the feedstock being cheap that The U. S. Market is competitive, and we're seeing increased volume coming out of The U.
Growth. The big story is, of course, what will happen to all the methanol capacity and where will it go and how will that impact our segment. I think it's over exaggerated. I don't think that it will be moving much to China as we expect. We know that The United States, they import presently a lot of methanol.
So I think a lot of the production will be consumed domestically. So I'm not holding my breath that the methanol will have a big impact. It's a positive, but if it's enough to be able to absorb all the tonnage that's coming in, it's a big question. And remember, the ships, if you don't make a proper round voyage, if you have to balance back, the economics are not good. So even though there's an additional products going out of The U.
S. Gulf Of The Far East, you still need to have it's going to be a dogfight to get it shipped back with cargo. So and that's what we are seeing today, that we are able to get increases to the Gulf U. Out of Asia, but we're seeing fierce competition coming back. And another reason, I think that we are not alone in going long on contracts.
I think we are seeing competition. People are expecting 2017 and 2018 because of the new addition coming this new supply coming, people are taking trying to lock in contracts. I don't want to go further and try to predict how much of The U. S. But it's positive that we're seeing a pickup that Asia is buying product from The U.
S. Gulf. It's a good indication. Another indication, there are so many things that you can try to speculate on. But when we when you have a weak when we see a slowdown in the markets, we usually see a pickup in the verge on the tank container side.
In other words, the tank container, which is full, comes to the customer's factory, and they're not ready to consume the product yet. So they sit in their factory and pay us demurrage. So usually, when there's a movement and change in the market conditions, we're seeing high demurrage rates. Now we're actually seeing lower demurrage. So the tanks are turning around quicker.
Maybe a good sign.
Yes? The trend on the tank container side, you've been talking about increased competition Is it now a level
We have an organization in place that have been focusing on chasing the highest margin business and focusing on the high margin business. Now there's more competition. I think that we should be able to it's too early to say so, but maybe we should lower our margin and do more utilization, more shipments. So it is to we need to maybe be a little more aggressive on our pricing, be aggressive on capturing more business, which we know is out there and which we have an organization in place to do. So I would say, I don't expect the earnings from tank containers to fall further or a lot further.
I think that we need to adjust our sales strategy a little bit and maybe get lower margin per shipment, but get the utilization up and get more turns.
You have SEK900 million of remaining CapEx. And potentially, on top of that, you have LNG investments, which you can buy the bond later this year. You have as you say, have liquidity to repay the bonds that's going to be taken from available credit lines. So are you comfortable with the leverage you're having right now and the leverage you're getting?
I'm comfortable with the leverage, but I'm not comfortable with the it's of course, we cannot continue to have the same kind of capital expenditure until we start getting a return from the investments that we have made. So we will make certain that the $1,000,000,000 that we have invested in terminals will start that I feel comfortable that those that earnings, that revenue, that EBITDA coming from those investments will come. We will always continue to monitor the tanker market. I think that 2016 will be a reasonable year. And depending on how we are ending up our contract negotiation, I think that 2017 also can be it's going to be more competition.
Maybe the spot market will be more under pressure, but we are locking in quite a bit of big contracts. So we need to be we have a strong balance sheet, but we need to watch our cash flow, our net cash flow to make certain that we get the return on the investments that we have made before we proceed further with the
And to make them further, I mean, you mentioned that you could expect to see more opportunities to grow further in the tanker side. What kinds of can you say anything about the internal requirements you have on such an investment versus, for instance, up in Finland, which could also be I mean, you have a very conservative payout ratio at least where you're going?
Yes. I called through by saying that I see some strategic opportunities that will only come once in a lifetime. If they if those opportunities come along in tankers, we will pursue it. There's ways of doing it, not necessarily over cash, but there could be a consolidation in other ways. But if strategic opportunities come our way, we will go after it.
So the target is a 15% return. That's always that's been our target.
By giving these CapEx for total finance. And I hope you and the Board will consider
just skip it and wait for two years.
This is, as mentioned, it's expensive to go in there. The loans is in long lead times, and returns are very low. We're showing on the start with a low return bus. A lot of people, of course, chasing these projects. And for that decade, if you exclude first movers, the second, third, fourth team movers have achieved 3.5% returns,
Well, then I think it's important that you hear and that why I clearly state to you our ambitions within that segment. So we would like to use the confidence. We need to continue to grow our business, and that's our intention to use the confidence that we have within Stolt Nielsen, within shipping, storing and distribution and pursue opportunities within LNG.
We are in a specific track record within shipping and containers and terminals. We sit in those areas and wait
Well, you've heard what I said, and I've heard what you said. Today, there's not very much to separate out. So but at the right time, if there's a way of as I've always said, we are willing to look at separating out a lot of the businesses, not just to get the share price up, but to be able to generate a company that can or create a company that can make more money, we're willing to look at that. But just separating out or separating just to get our share price up, we're not interested in doing. But it is to be able to do within logistics that we have expertise in to be able to apply that know how into other segments.
The chemical tanker segment that we operate in is a low growth business. Just be realistic. It's at best 2%, 3%. The terminal business, there are opportunities, tank container opportunities. And of course, we will allocate our investment capacity based on where we believe we will get the highest return.
But we would like, like we did in bitumen, try to pursue opportunities using the know how within our organization to develop new business where we believe we have something to contribute. And that is we are usually very conservative in the way in our approach, and we will not jeopardize the existing businesses, but we will pursue new opportunities within the organization. Any other questions here and also before I open up for the phone call? Operator, any questions from the telephone?
Thank
you. Okay. I don't think there's any questions. So thank you very much for attending. Thank you, operator.
Thank you. That does conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now