Slide 1: Investor Presentation H1 2017 Results
Investor Presentation H1 2017 Results Hamburg, 29 August 2017
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation contains forward-looking statements that involve a number of risks and uncertainties. Such statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, as well as uncertainti
Slide 3: Opening remarks
Opening remarks We continued to progress on our initiatives (UASC Integration, THE Alliance & 01 Deliverables continuous cost control) Substantially improved positive operating result of USD 97 m in H1 2017 Sector fundamentals continue to improve 02 Sector Update Historic low level of new or
Slide 4: We achieved major progress on our initiatives
1 Deliverables Strategic highlights: We achieved major progress on our initiatives… UASC Integration THE Alliance Financial Position The merger with UASC was successfully The Alliance deploys a fleet of more than After the consolidation of the UASC completed on 24 May 2017 and will 240 modern ships
Slide 5: …and delivered a positive operating result in H1 2017
1 Deliverables Financial highlights: …and delivered a positive operating result in H1 2017 Transport volume Freight rate Transport expenses per TEU +14.0% +1.3% -1.0% HL organic growth of +7.3% HL organic growth +2.5% HL stand-alone +1.0% EBIT EBITDA Group profit / loss USD 97 m USD 393 m USD -49 m
Slide 6: Demand: Strong GDP and volume growth leads to gradually increasing freight rates
2 Sector Update Demand: Strong GDP and volume growth leads to gradually increasing freight rates but substantially higher bunker price Global Container Trade Growth [%] CCFI vs. Bunker +1.3ppt +0.2ppt 1,300 5.1% 5.3% CCFI Comprehensive Index Rotterdam HSFO [USD/mt] 1,200 3.8% 1,100 1,000 +30% 900 84
Slide 7: Supply: Capacity growth slowing – Market recovery reflected in historically low order book
2 Sector Update Supply: Capacity growth slowing – Market recovery reflected in historically low order book Orderbook-to-fleet Net capacity growth 2017E [TEU m, %] 8 7.7% 61% 7 6.5 50% -1.8% 6.0 2.7% 6 38% -3.3% 5.0 27% 28% 5 21% 21% Scheduled Postponements Scrapping Net capacity growth 4.3 18% 19% 1
Slide 8: Consolidation: Capacity share of Top 5 players strongly increasing
2 Sector Update Consolidation: As a result of consolidation capacity share of Top 5 players in the industry is strongly increasing Current consolidation wave leads to higher concentration Carrier capacity [TEU m] and global capacity share [%] Global capacity share [%] 14% 13% 8% Top 5 2.5 Ranking en
Slide 9: Alliances reshuffled – THE Alliance is competitive on all trades
2 Sector Update As of 1 April, Alliances have been reshuffled – THE Alliance is competitive on all trades Competitive on all trades Atlantic Transpacific Far East Others 9% 2M1) 43% Others 12% 2M1) 22% Others 1% 2M1) 39% 2 2 3 THE Alliance THE Alliance THE Alliance 33% Ocean 15% 27% Ocean 39% 25% Oc
Slide 10: EBITDA of USD 393 m in H1 2017 – Operating result clearly above previous year
3 Reported Financials EBITDA of USD 393 m in H1 2017 – Operating result clearly above previous year’s level Operational KPIs Q1 2017 Q2 2017 H1 2017 H1 2016 YoY Transport volume Transport volume [TTEU] [TTEU] 1,934 2,287 4,221 3,703 14% Freight rate [USD/TEU] 1,047 1,047 1,064 1,056 1,042 1% Bunker
Slide 11: H1 result incl. one-off effects related to UASC
3 Reported Financials H1 result incl. one-off effects related to first-time consolidation and integration of UASC / Total one-off costs estimated at USD 130 m Transaction & integration related Total transaction & integration related one-off costs [USD m] H1 2017 one-off costs [USD m] ~1302) 73 73 ~4
Slide 12: Strong increase in transport volume of 14% in H1 2017
3 Reported Financials Strong increase in transport volume of 14% in H1 2017 – UASC adds additional 248 TTEU since the initial consolidation Transport volume per trade [TTEU] 2016 2017 Comments: Transport volume 3,703 4,221 Organic increase of [TTEU] 14.0% 270 TTEU (7.3%) Growth and additional 248
Slide 13: Freight rates slightly up 1.3% YoY
3 Reported Financials Freight rates slightly up 1.3% YoY - Hapag-Lloyd profits from optimized bunker consumption Freight rate [USD/TEU] vs. Bunker price [USD/mt] Bunker consumption & expenses 2016 2017 1,600 0.42 1,500 Bunker cons. per TEU 0.41 1,400 1,042 1,056 1,300 1.3% 1,200 139 1,100 1,000 900
Slide 14: Transport expenses per TEU came down 1% YoY
3 Reported Financials As a result of continuous cost cutting transport expenses per TEU came down 1% YoY – despite higher bunker prices Transport expenses per TEU [USD/TEU] -6 (-1%) 53 962 956 -1 -52 -60 -6 -1 (-6%)1) H1 2016 Expenses for raw Port, canal and Chartering, leases Container transport co
Slide 15: Substantial free cash flow in H1 2017
3 Reported Financials Substantial free cash flow in H1 2017 – Clearly improved EBITDA major driver for free cash flow generation Cash flow H1 2017 [USD m] Operating Investing Financing cash flow cash flow cash flow 332 239 -314 984 -1,128 1,320 460 -61 407 -141 802 -29 393 -202 200 34 860 602 Free c
Slide 16: Equity at USD 6.8 bn and liquidity reserve at USD 1.3 bn
3 Reported Financials Equity at USD 6.8 bn and liquidity reserve at USD 1.3 bn – Structure of balance sheet reflects first time consolidation of UASC Equity base [USD m] Net debt [USD m] Financial Debt 4,415 8,339 6,763 Cash 602 860 5,342 1) 7,408 3,793 1) Net Debt 31.12.2016 30.06.2017 31.12.2016 3
Slide 17: Hapag-Lloyd / UASC merger successfully completed on 24 May 2017
4 UASC Integration Hapag-Lloyd / UASC merger successfully completed on 24 May 2017 – First optimization measures already implemented At a glance Deal rationale Combined Combined Entity1) Entity3) Strengthened market position Well-balanced Corporate trades Hamburg Dubai Hamburg Hamburg HQ G6 Ocean 3
Slide 18: Fleet optimization – Efficient and young fleet
4 UASC Integration Fleet optimization – Efficient and young fleet with a low level of investment needed Young and fuel-efficient fleet Vessel fleet (as of 30 June) Owned Chartered Current fleet Average fleet age1) Hapag-Lloyd 7.1 Vessel CMA CGM 7.5 >14,000 TEU COSCO 7.6 TEU 254,157 - 254,157 Vessels
Slide 19: Trade portfolio optimization – Enhanced presence in Middle East trade
4 UASC Integration Trade portfolio optimization – Enhanced market presence in attractive Middle East trade and solid position in all other trades Transport volume by trade, H1 2017 (indicative) Hapag-Lloyd UASC1) Combined Entity1) 19% 20% 11% 12% 3% 32% 17% 15% 18% 6% 32% 14% 29% 6% 8% 3% 2% 16% 21%
Slide 20: Network optimization – Network of services offers a highly efficient global product
4 UASC Integration Network optimization – Network of 129 services offers a highly efficient global product Europe – North America (incl. IRT North Middle East Europe) 10 Services 18 Services Asia IRT (incl. Far East- Asia / Oceania – ME/Indian Ocean; North America Far East- Oceania) Europe – Asia /
Slide 21: Major integration projects well on track
4 UASC Integration Major integration projects well on track – Commercial integration to be completed by end of Q3 Alliance Commercial cut-over cut-over Q1 2017 Q2 2017 Q3 2017 Q4 2017 Own HL services / non-alliance VSAs G6 Alliance THE Alliance THE Alliance UASC services Non-THEA UASC 21
Slide 22: Synergies of USD 435 m p.a. expected from 2019 onwards
4 UASC Integration Synergies of USD 435 m p.a. expected from 2019 onwards – Focus on fast-track integration and realization of synergies Synergy potential, full run-rate [USD m] Strong consolidation USD 435 m track record 2005 Realized net synergies of EUR 218 m in 2008 Network Overhead Other Expe
Slide 23: Solid underlying volume growth and moderate rate improvement on pro forma basis
4 UASC Integration Solid underlying volume growth and moderate rate improvement on pro forma basis for the first six months of 2017 Pro forma transport volume per trade Pro forma freight rate Transport volume [TTEU] 1,100 1,087 Combined Entity Hapag-Lloyd UASC 1,047 1,000 1,011 954 900 5,631 3,973 1
Slide 24: Hapag-Lloyd with clearly defined financial policy
5 Way forward Hapag-Lloyd with clearly defined financial policy Profitability going forward supported by improved fleet ownership structure Profitability and synergy realization Investments No planned new vessel investments in next years – Maximize free cash flow Deleveraging Clear target to signifi
Slide 25: Hapag-Lloyd Guidance including UASC
5 Way forward Hapag-Lloyd Guidance including UASC Guidance for 2017 FY 2016 Guidance for 2017 (HL stand-alone) (Combined Entity) Transport volume 7.6 TEU m Increasing clearly Average bunker consumption price 210 USD/mt Increasing clearly Freight rate 1,036 USD/TEU Unchanged EBITDA USD 671 m Increasi
Slide 26: Our commitment: A seamless and quick integration
5 Way forward Our commitment: A seamless and quick integration Indicative timeline for the transition Hapag-Lloyd Booking channels and UASC open for first joint joined forces sailings Departure of first joint Transfer of services sailings under Hapag-Lloyd concluded Joint Bill of Lading only custome
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Slide 28: Convincing equity story resulted in higher share price
Backup Convincing equity story resulted in higher share price… Share trading 220 Frankfurt Stock Exchange / Stock Exchange Hamburg Stock Exchange 200 180 Market segment / Regulated market (Prime Standard) / 160 Index SDAX 140 120 ISIN / WKN / Ticker Symbol DE000HLAG475 / HLAG47 100 80 Ticker Symbol
Slide 29: …and lower bond yields
Backup …and lower bond yields Bonds trading 110 106.8 105 102.6 101.4 100 100.6 95 HL EUR 7.75% 2018 HL EUR 7.50% 2019 HL EUR 6.75% 2022 HL EUR 5.125% 2024 EUR Bond 2024 EUR Bond 2022 EUR Bond 2019 EUR Bond 2018 Listing Open market of the Luxembourg Stock Exchange (Euro MTF) Volume EUR 450 m2) EUR 4
Slide 30: Partner: New core shareholders with strategic interest
Backup Partner: New core shareholders with strategic interest in the Combined Entity Transaction overview QIA1) PIF2) Other CSAV HGV Kühne TUI Free UASC shares contributed to Hapag-Lloyd in exchange for newly Minorities3) Float issued Hapag-Lloyd shares 51.3% 36.1% 12.6% 31.4% 20.6% 20.2% 12.3% 15
Slide 31: Hapag-Lloyd optimized its maturity profile via debt capital markets
Backup Hapag-Lloyd optimized its maturity profile via debt capital markets at more attractive pricing levels Bond coupon and maturity profile 9.75% 7.75% 7.50% 6.75% 5.125% On 18 Jan 2017 Hapag-Lloyd successfully EUR 450 m EUR 450 m priced a new bond of EUR 250 m due 2022 – Yield to maturity on 7
Slide 32: Supply: Scrapping and postponements help to keep net capacity growth low
Backup Supply: Scrapping and postponements help to keep net capacity growth low Scrapping Idle fleet [TTEU] [TTEU] Share of world fleet 2.7% Returning 27 28 28 24 23 23 23 21 1,480 1,359 1,324 capacity 19 well +239% absorbed by demand 809 779 654 595 536 351 444 381 356 332 319 131 193 228 75 2009 2
Slide 33: Freight rates with continued slow recovery
Backup Freight rates with continued slow recovery – Steady trend since historic low in Q2 2016 Comprehensive Index (SCFI) Shanghai – Europe (SCFI) 1,500 Comprehensive Index SCFI 2,500 NEurope (USD/TEU) Mediter. (USD/TEU) HL Far East* 2,000 1,000 1,500 821 1,000 923 500 822 500 0 0 Jan Apr Jul Oct Ja
Slide 34: H1 2017: Hapag-Lloyd with positive EBITDA of USD 393 m
Backup H1 2017: Hapag-Lloyd with positive EBITDA of USD 393 m Income statement [USD m] Transport expenses [USD m] H1 2017 H1 2016 % change H1 2017 H1 2016 % change Expenses for raw materials & supplies 587.2 319.0 84% Revenue 4,899.7 4,212.2 16% Cost of purchased services 3,448.3 3,242.3 6% Other op
Slide 35: H1 2017: Hapag-Lloyd with equity ratio of 37.5%
Backup H1 2017: Hapag-Lloyd with equity ratio of 37.5% - reflecting the capital increase as well as the initial inclusion of UASC Balance sheet [USD m] Financial position [USD m] 30.06.2017 31.12.2016 30.06.2016 30.06.2017 31.12.2016 30.06.2016 Assets Cash and cash equivalents 859.6 602.1 527.2 Non-
Slide 36: Hapag-Lloyd Investor Relations
Hapag-Lloyd Investor Relations Tel +49 40 3001-2896 Fax +49 40 3001-72896 ir@hlag.com https://www.hapag-lloyd.com/en/ir.html 36