Earnings Call: Q4 2020

Feb 17, 2021

Okay. Good morning and welcome to the quarterly presentation and year end results for the Wilbur and Emerson Group for the year 2020. This time last year, we have just started seeing the signs of COVID in Asia with port restrictions and port closures. And it did not take long before we really started feeling the impact of the pandemic hitting the world back in March and onwards. And of course, this has really set the stage for the year and the challenges that they've had. I will start off talking more about say what's been going on throughout 2020 and hand over to Christian Berg later who will focus more on the fourth quarter and the year end results as such. But as we can see from the slide behind me, there's been quite a lot of volatility during the year. We've as I said, COVID started we started to feel it at the early start of the year, but the real effect of it came after March. And looking at the volatility on the Wilvenhausen holding share price, we've been on a bit of a roller coaster ride. But at the end of the year, we can sit back and we can show a return to our shareholders of 3.6% for the A shares and around 3% for the holders of the B share, which I would characterize as being acceptable given the challenges that we have been through during the year. Then moving into a little bit say of the summary for what's been going on. There's no doubt we've had significant impact especially operationally during the year, but also our customers have been feeling the impact, our employees have been feeling the impact. And financially, it's been a challenging year, but we've had a strong recovery second half. Looking at ValeniusWilliamsson, they've been through more or less the same. It's been a real rollercoaster ride with the share price hitting rock bottom below 8. We've had a second quarter in Malenisjudamsen where revenue were 40% down year on year. It's a large balance sheet in this company. But again, the recovery second half has been tremendous. And I think we are now into much more safer territory and the volumes are returning back into this business. Williston Ship Services has been it's been say a general impact in lower activity volumes. But this specific area where we have seen it the clearest is within the segment of cruise, which is an important customer segment for this company. But also here, it's really been the operational challenges that we've had to face with during the year. But it's been okay. And I must say for all our businesses, it's pretty impressive to see how we've been able to say tackle these challenges throughout the world. Hyundai Glovis, again significant roller coaster or a lot of volatility in the share price movement. I think we started the year at around NOK138 per share. It hit bottom of around NOK81000 per share and then rebounded to around NOK184 or something like that at the tail end of the year. And of course, the appreciation of the Hunda global share price has been a significant contributor to the results for the group for this year. We sold one percentage point of the company during the last quarter, which gave us around $63,000,000 in net proceeds, which of course has been say a welcome contribution. We believe it's a exciting company. They have a lot of interesting prospects in areas that we also like to pursue as a group, Hydrogen being one of the examples. Nordsee Group has delivered a very stable performance during the year. We've I must say to a certain extent, this is probably where we've been the most surprised in terms of looking at the oil and gas industry back in March, April, May, it looked pretty challenging. But the year has turned out to be say more or less on par of 2019. And a lot of this is of course, of the incentive packages and the other stimulus initiatives that's been taken towards the oil and gas industry. But good performance really all around. As I said, we sold some Hoegh Daglo shares. We did an acquisition buying 25% of Edda Vin, I'll come back to that a little bit later. We believe that's a very exciting company and an exciting investment. We also finalized the acquisition of 50% of Iron Kiln Steamship Company, which I've also come back to in later slide. But I want to stop a little bit There's been a tremendous ESG drive throughout 2020 and is continuing into the future. We believe there is definitely an energy transition taking place. And we've had quite a lot of press during the year of some of the initiatives that we are involved in. And I must say, I believe we are no laggard in this. We are say continuing towards shaping the maritime industry being the vision of the company. And we have a lot of interesting prospects, maybe it's early phases, but still we have a lot of interesting prospects within what I would call the new energy field. And it's also to an extent that we will have to look at how we organize this into the future. But there's nothing said and done in that respect. So we'll come back to that when we say have finalized how tackle this going forward. But we believe there will be a continuous drive within this direction. And as I said, we have a lot of interesting opportunities be it within offshore wind, be it within hydrogen, etcetera. So we'll come back to that at a later stage and hopefully we'll be able to take some of these projects to fruition. Arne Kiel Steamship Company, we presented this briefly at the end of the second quarter. We bought 50% of this company becoming joint venture partners with MPC. This is a fantastic platform for our Ship Management business to enter into both the container segments, but also the German market, Two areas where we have not been strong previously. We've had an ambition of increasing the overall number of ships under technical management for our Ship Management business. Main reason being that we have to have a certain size in order to say maintain relevant and have the necessary scale. We now have around 180 ships on full management. And then in addition to the fleet of Arkeel, we will be plus minus two fifty vessels under full technical management. The integration is going as or according to plans. I spoke to our partner last week, they are happy with the way the integration is going, so are we. We hope that we can, say, utilize some of the competence and capacity that we also have within the digital space to bring that into this platform and also into the container segment. So around 85 people land based within Arakiel and around 1,300 people of seafarers. So it is a sizable business. So we are looking forward to take this hopefully to a new level. Then Edavind, as I mentioned, we have acquired 25% of this company. We have an option to acquire an additional 25%. And I would say it's likely that we are to declare that option. It's an option that ends second half of this year. This company has two vessels on the water, two four vessels under construction and further two options for another two vessels. So it's, call it, six vessels in the fleet with an additional potential for two ships as it is today. Out of the six firm vessels, four is on contract. The offshore wind industry is growing tremendously and have a fantastic path going forward. But of course, there will be a lot of players who want to enter this field. But partnering with Astranschur, who is the owner of 75% of this company, they are very, say, well versed into this industry. They are highly reputable player. And we believe this is an interesting platform for the Williamson Group together with Dostensure to take a major role within offshore wind support. So we are looking forward to follow this company. And with that, I thought I would talk a little bit about how we see it into the remainder part of the year. For Maritime Services, we do see a general increase in the activity level, but we are somewhat cautious in terms of how we see the increases. The cruise segment, as I mentioned earlier, is important for us. And It's a little bit uncertain as to when cruise activity is really ramping up. For Supply Services, this time of the year is normally not the best. We have certain seasonality, which will also come into play this year. Looking then further at holding an investment for the car and RORO segment, volumes have started to come back as we saw at the second half of last year. Hopefully that will continue. And with the continued increase in volumes, there will also be much better supply demand situation on the fleet. Financial markets today are extremely strong. And as a result of that, we're also expecting a certain element of volatility within the financial markets going forward into the year of 2021. So with that, I think I would conclude a wrap up for the year of 2020 and hand over to Christian Berg, who will then talk a little bit more about the specific numbers for the quarter. So thank you very much. Christel? Thank you, Thomas. Just jumping into the fourth quarter, Thomas sort of gave the big word on the financial assets and that's sort of the big number in this quarter. But revenue top line side being give or take on the same level as third quarter, but as you can see close to 10% down from the fourth quarter in 2019. EBITDA, a little bit on the weak side in total, come back to some of the explanations. Associates coming a bit up from the third quarter, Valenius Williamson being the by far biggest contributor. Supply Service also with US5 million dollars of contribution. The changes in fair value for the quarter being US215 million dollars of which Hyundai Global contributes with $05,000,000 So big contribution in the value uplift from the Hyundai Global shares on Viad Treasure. So giving us a solid $4.45 EPS for the quarter. Going further on sort of the full year 2020, we can see top line there down 5%. So 5% in total for the year, which has been kind of a strange year. It's not too bad. We have lost in some areas. We will come back to that as well. Full year EBITDA of 138,000,000 give or take at the same level as last year, but down from in the margin, but down from last year from NOK149 million. Of the NOK138 million, NOK89 million is contribution from Maritime Services and Supply Services with a contribution of US57 million dollars In the associates line, there is a minus of US50 million dollars of which actually Valenius Williamson contributes with even more, it's minus $63,000,000 and supply services contributes with profit of 11 For the full year, the fair value positive from Hyundai Glauwis has been two zero two million dollars giving us a full year EPS of $2.63 Digging a bit into Maritime Services for the quarter, total quarter of million dollars which is down 9% year over year. Of the US137 million US120 million is coming from Marine Services Airship Services and US16 million dollars from Ship Management. And as Thomas alluded to, Agency a bit sort of on stronger side coming from the low side and then recovering into the quarter, while cruise activities still on the low side of what we can expect in a more normal year. Ship management, positive, mainly from the wind segment offshore wind segment in the area. EBITDA for the quarter, US18 million dollars It's down 19% year over year and with a margin of 13% for the quarter. We have done some inventory adjustments for the quarter, which is negative. There are some other non recurring elements as well. And there is a bad debt settlement for the quarter, which sort of gives us if not a one off, but at least something hitting the quarter a bit more than we would like to see on a normal level. And as Thomas also alluded to, the acquisition of R and K 50% is completed. The group is rebranded to Willemsen R and K Ship Management. And in total, the R and K Group manages a fleet of 72 containerships. On the supply service side, we are in a period now of seasonality, fourth and first quarter typically. But still on the strong side, even though US64 million dollars revenue is down year over year 10%, it's still on the high side also compared to the corresponding quarter because of more part less pass through revenue than before. That's some of the main explanation for us having a EBITDA of $13,000,000 and a margin of 20%. Also in in the Supply Service side, there is an increase in the bad debt accruals, not much, but some, which also sort of shows a bit on the at least it shows a bit strength in the underlying that we can sort of absorb that and still have a positive EBITDA margin development from last year. In the quarter, we realized our share of profit from associates from the sale gain in Seseberg, which is an associate owned by North Sea by 50% of sale of Augotnes Marikspark to the Port of Bergen. And as alluded to a couple of times, in the holding and investment area, positive development. And as the graph shows, and as Thomas also said, a very positive development from the lower side of this year, close to a double in the market values from the underlying marketable shares. For the quarter, million profit from associates, basically all from Valerius Williamson coming up from the weak second quarter and not so weak third quarter, but better than the second. So hopefully, we will see more and more sort of positive signals from our deliveries from Valenius Filipsing going forward. The fair value of Hyundai Globus as explained earlier, US205 million dollars out of the US215 the quarter. So and also on the financial income side, the investment portfolio made a NOK9 million gain in the quarter. And we did complete the transaction of the 2025% of Edna Wind in October. And as Thomas also said, the option to potentially increase to 50% is an option that has a tenor to the first half year of this year. Coming into the cash flow, and as the header says, pretty steady cash flow from the operating activities and might be worth to notice on a very positive note that the operating Maritime Services is contributing with $131,000,000 of which close to $5,000,000 is positive working capital gain. So in a period of challenges, we have been able to find cash all over the system. Even though coming from a cash rich side, we have been able to preserve cash and find cash in the system through the year. Supply Services also contributing with NOK43 million. And on the investing activities, Thomas alluded to the fact that we have sold Hyundai Global shares through Trasher, giving $63,000,000 of the net contribution. We also sold some Cube shares. And on the negative cash flow side, but on the positive industrial side, we have invested in Aerenkiel and we have invested in Edda Wind, but still positive contribution cash wise from the investing activities. So with a normal net and auto financing negative, The full year is giving us a very positive contribution when it comes to the cash flow in the group. With sort of that background, it's natural to see also and we are happy to see that equity is stabilizing. And as you can see on the left side picture, the solid balance sheet has crossed the $2,000,000,000 mark. The total equity is up by 9% through the year, and the total assets is up 6% through the year. So solid balance sheet and you can see some steady growth through from the lowest point last year. On the debt maturity side, still sound maturity profile. We do see some debt coming towards us in a couple of years. And it's natural for us to still sort of start working towards seeing for refinancing of some of those coming towards us. But we are confident that we are sort of happy to see and we are confident to see that kind of a positive challenge. We have lots of interesting discussions with several banks and other markets to see how to and when to refinance the debt in the WMS system. And as reported last night, the Board of the Williamson Group proposes a first dividend of NOK5 per share. That is including a NOK3 NOK2 extraordinary dividend to paid as a 2019, but paid in 2020 extra. In 2020 for 2019, the Board decided to pay a dividend of NOK2 in total. And when taking into consideration this was being decided in the early phase of COVID, we have seen that we have been able to deliver better than we fared. And we think it's prudent for us to suggest that we actually pay a second dividend towards the 2020 numbers. So a NOK 2 for 2020 and 2019 extra and NOK 3 for 2020 and a potential second dividend for 2020 of NOK3 per share. So we are happy to see that we are able to deliver to our shareholders in the area of what we are expecting as compared to our policy when it comes to dividends. So with those words, I leave it to the guys on the bench, if there are any questions so far. Might come some questions or Thomas might have a comment or No, I think we wrapped it up. At least we tried to the best of our ability to talk about the year in total and also the say the happenings of the quarter. All in all, as been mentioned many times, given the challenges that we've seen throughout the year as a result of COVID, we feel that we can look back at a year which is acceptable under the circumstances with a strong recovery second half. So if there still Nothing from the webinar. Then I think we should say thank you very much for everyone who's been listening in, and we're looking forward to what we hope is an exciting 2021. Thank you.