Earnings Call: Q2 2019

Aug 23, 2019

Okay. Good to go. I'll leave this here. Good morning. Welcome to the second quarter results for Will Williamson Holding. A quarter with some positive undertones, which we are pleased to see, Starting with the net result of $89,000,000 for the group, but the more important part of it is probably the underlying positive development in most of the operating entities that we do have. The quarter is very much colored by a strong increase in the value of the Hyundai and Globus shares. We've had a write down of our Servitech investment, which is quite substantial. I'll come back to that a little bit later. And we have a small gain within Maritime Services related to sale of a property in Asia. All in all then resulting in the US89 million dollars net profit for the quarter. Looking into the P and L, a relatively flat quarter in terms of top line, 5% up, landing at $2.00 $8,000,000 resulting in an EBITDA of 42,000,000 which is then also somewhat inflated by the gain of property sale, which is $6,000,000 And for those who are comparing numbers with last year, the IFRS element is approximately $9,000,000 positive. Share of profits from associates is relatively small, landing at $3,000,000 but then the net financial gain is really contributing positively with a net of $92,000,000 when you combine the 99,000,000 and the minus seven And of course, that is very much covered again by Hundag Lovitz and the write down in Sivarte. Landing at million for the quarter and an earnings per share of US1.92 dollars Moving over to Maritime Services, flat top line, landing at $146,000,000 and EBITDA of $9,000,000 also then including the gain on property. Positive the positive things here is improved results in Ship Management, improved contribution from agency, then giving us a improved EBITDA quarter on quarter of 13%. So then I will talk a little bit about The write down of Servitech is $27,000,000 So I think it warrants a little bit of a backdrop of the history. In 2015, we had an internal review related to the service safety service segment of Maritime Services. It was an area which we found interesting, an area where we have been involved for many, many years, but we have struggled with the underlying performance. So we were in many ways, our conclusion was that we were left with three options, either to close down the overall service infrastructure that we have, which would be quite costly, try to sell what we have or invest quite heavily to get the necessary scale and also spread in the portfolio of offerings to the market. As you know, we then ended up in a situation where we sold the business to Survitech. We got a consideration in shares and in cash. It was a transaction which we were very pleased with for several reasons. One, because the cash consideration was acceptable and we got the 20% shareholding in the company, which ended up with a portfolio of offerings, which we felt were extremely strong given the segments we were operating in. Unfortunately, the financial side of it or the leveraging side of the business was relatively high. And the company is now in a difficult situation leading us to write down our shareholding to nil. So what we have now is more of the 20% ownership. This of course is unfortunate, but when we look at the totality for us, the decision, that we made for the strategic change in 2015 resulting in the in the sale of the business has overall been acceptable, but we would have, of course, hoped that it would have been better with a stronger representation and value of the 20% shareholding. And we do wish that the company can get back on its feet and represent value for us in the future. Then a quick trip to supply services. A summer season. It's a good season for especially for Nordsee Group. So we see an increase in top line. We see an underlying quite strong increase quarter on quarter when it comes to the EBITA margin. It's a business which is quite difficult to dissect if you only want to look at the underlying operating performance because there are always a lot of projects and also call it sales transactions related to properties. So but all in all, the way we look at it, it's been a good quarter and a good development. Predominantly, when it comes to the Norwegian operation, the operation in Denmark and The UK is still struggling as we have spoken about earlier. Malinus Willoughsen, an important part of our portfolio, They had a presentation yesterday and some of you in the audience were here. So I will not say steal the thunder or it's not my job to present in details what's happening there. But the quarter had an improvement in EBITDA landing at $211,000,000 improved performance in Ocean due to several factors with increased net freight and better on bunker, etcetera. The efficiency program is trickling in. Volume quarter on quarter is down 8%, which of course is a significant percentage. Part of this is related to the market in general being softer, but approximately half of it is related to call it voluntary reduction in terms of focusing on the customers and the volumes which are positively contributing to the business rather than just lifting volume for the sake of lifting it. Land based business is moving on and delivering on a pretty stable pace, which is good to see. Of course, both ocean and land based are influenced by the general churn in the markets and the market in terms of volume is a little bit softer now than previously. The performance improvement program, which has created a lot of focus, has delivered NOK65 million so far, which is good out of a target for reaching NOK100 million in due time. So all in all, we feel that there's a lot of positive, say positive initiatives and focus on efficient operation within Valenius Willemsen, but the results are still to come in order to be satisfactory. This slide can be a little bit, call it misleading or difficult to read, but what we have tried to do is to consolidate the financial assets of holding and investments. So if I can draw your attention to the right hand bar chart, we've had an increase of million from previous quarter. If you look at the top two gray parts, that's related to our Glovis investments. But the absolute top of NOK167 million is related to the outstanding or the outside shareholders in Treasures. So it's not really our relative percentage of the ownership in the global stats, SEK $462,000,000. But all in all, we've had a significant value increase also represented by the three bottom parts of the bar chart here, which is the result of predominantly cash up streaming and increase in value. So this is a positive development that we have seen. All in all, the results have contributed to a 1% increase in the overall equity ratio for the group. So we are standing pretty strong with a conservative financial platform, especially considering that we are operating with bit of some holding with no or we have a positive net debt situation and no cross collaterals. So a strong basis to work from. And if you're looking at the maturity profile, we believe this is very sound. We don't have any significant maturities coming in the next short term period. We have strong liquidity and we have good relationships with lending banks that we are using throughout the portfolio. On the slide when it came to the financial assets, I referred to increase in upstream. And I believe it's very pleasing to see here that we are now having several sources for cash upstream for the group. If we go way back in the past, the vast majority of cash upstream came from the car and RORO business over Wilhelms and Alser as you can see from 2015 in this slide. And then it was, say, greatly reliant on maritime services and some part of investments and now we are trickling in both from supply services, but also dividend distribution coming from Vale and New Zealand. And that's a trend that we would like to see continuing. Dividend of 2.5 was paid in May and we have or the Board have a mandate from the General Assembly for another dividend up to 2.5 towards the end of the year. So then talking about prospects, we still or the Board still believe that there will be stable underlying developments for the operating entities, but we are of course very much reliant on and exposed to global trade, which is introducing certain uncertainties for us as a group. So that's in very brief the second quarter. Thank you very much for coming and of course for listening in. And we might have some questions. We might have some questions here. Okay. Thank you.