Dfds A/s · OMXCOP:DFDS
Dfds A/s — Non-Deal Roadshow (October 2017)
51 slides from Dfds A/s's roadshow presentation, October 2017
Slide 1: Ferry Shipping and Logistics – DFDS Group Overview
FERRY SHIPPING AND LOGISTICS DFDS Group Overview October 2017
Slide 2: Disclaimer
Disclaimer The statements about the future in this announcement contain risks and uncertainties. This entails that actual developments may diverge significantly from statements about the future. 2 2
Slide 3: Content overview
Content overview What we do How we run DFDS How we perform Introduction Strategy Financial performance overview 5 27 41 Shipping Continuous improvement ROIC Drive 8 29 42 Route capacity dynamic Digitisation Profit drivers 17 31 44 Ferry tonnage market M&A Cash flow, CAPEX & distribution 19 38 46 Log
Slide 4: What we do
WHAT WE DO . 4 4
Slide 5: DFDS structure, ownership and earnings split
DFDS structure, ownership and earnings split DFDS Group DKK bn Revenue LTM Q2 2017 per division 16 People & Ships Finance 14 12 5.0 10 Shipping Division Logistics Division Logistics Division 8 Shipping Division • Ferry services for freight • Door-door transport 6 Eliminations and other and passenger
Slide 6: Freight, logistics and passengers – focus northern Europe
Freight, logistics and passengers – focus northern Europe Freight routes Logistics solutions Passenger routes Trailers, unaccompanied Door-door full & Overnight Key & accompanied part loads services Day Industry solutions Contract logistics Transport/holiday Port terminals Cruise f
Slide 7: DFDS route network
DFDS ROUTE NETWORK - part of Europe’s infrastructure 7 7
Slide 8: Shipping
SHIPPING LTM Q2 2017: Shipping Division Business units & ROIC LTM Q2 2017 Revenue North Sea Baltic Sea Channel North Baltic Channel Passenger France EBIT Passenger Sea Sea & Med France & Med 13% 29% 17% 40% 31% 0% 20% 40% 60% 80% 100% . 8 8
Slide 9: Roll on, roll off
Roll on, roll off • Ro-ro/ro-pax shipping: roll on, roll off of freight units and passenger cars • Routes carry both unaccompanied and accompanied trailers • Other types of cargo, e.g. heavy industrial goods and containers, are placed on carrying equipment (mafis) and tugged on to the ship 9 9
Slide 10: Ferry types
FERRY TYPES Day ferry (ro-pax). Channel, e.g. Dover-Dunkirk Freight only (ro-ro) . North Sea, e.g. Gothenburg-Immingham Passengers with freight (cruise ferry). Passenger, Combined freight and passengers (ro-pax). Baltic Sea, e.g. Copenhagen-Oslo e.g. Kiel-Klaipeda
Slide 11: North Sea
North Sea • Only ro-ro routes (freight-only) • High share of industrial customers out of Sweden • Forwarders main customer group UK-Continent North Sea Invested DKK m Revenue EBIT capital ROIC, % LTM Q2 2017 3,546 576 4,222 13.4 2016 3,365 515 4,168 12.1 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY L
Slide 12: Baltic Sea
Baltic Sea • Ro-pax and ro-ro routes • Forwarders main freight customer group • Russia ‘closed for business’ by sanctions Baltic Sea Invested DKK m Revenue EBIT capital ROIC, % LTM Q2 2017 1,432 371 1,275 29.0 2016 1,349 363 1,203 30.0 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q2 2017 4,400 8.
Slide 13: Channel
Channel • Ro-pax routes • Forwarders main freight customer group • Seasonal passenger market, Q3 high season Channel Invested DKK m Revenue EBIT capital ROIC, % LTM Q2 2017 2,294 349 2,092 16.6 2016 2,288 394 1,937 20.3 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q2 2017 19,665 -3.2% 3,461 0.0%
Slide 14: Passenger
Passenger • Cruise ferry routes, overnight crossings • Seasonal passenger market, Q3 high season • Increasing share of overseas passengers Passenger Invested DKK m Revenue EBIT capital ROIC, % LTM Q2 2017 1,694 246 610 39.5 2016 1,713 253 577 43.1 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q2 2
Slide 15: France & Mediterranean
France & Mediterranean • Ro-pax and ro-ro routes • Forwarders main freight customer group • Newhaven-Dieppe concession route France & Med Invested DKK m Revenue EBIT capital ROIC, % LTM Q2 2017 479 7 22 30.6 2016 481 11 -29 n.a. Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q2 2017 986 -1.7% 346 -
Slide 16: It's all about the route
IT’S ALL ABOUT THE ROUTE . 16 16
Slide 17: Ferry route capacity dynamics
FERRY ROUTE CAPACITY DYNAMICS - stepwise addition of ferries leverages capacity significantly Minimum required No. of ships Capacity impact Route no. of ships for on route today of entry* entry Dover-Calais 8 3 38% Gothenburg-Immingham 3 2 67% Fredericia- Copenhagen- 1 1 100% Klaipeda ddddd * Assumi
Slide 18: Key Northern European ferry companies
KEY NORTHERN EUROPEAN FERRY COMPANIES • Logistics office/warehouse ― Container/sideport route 18 18
Slide 19: Freight ferry capacity (ro-ro) – total down, large ships growing
Freight ferry capacity (ro-ro) – total down, large ships growing Global freight ferry (ro-ro) capacity per ship size, lane metres • Freight ferry (ro-ro) capacity expected to LM '000 decrease 2% in 2017 driven by smaller 1,000 CAGR: -2.4% ships 800 600 2501-4000+ • CAGR of -2.4% in global LM capacit
Slide 20: Ferry capacity (ro-pax) – stable, large ships growing
Ferry capacity (ro-pax) – stable, large ships growing Global ro-pax capacity per ship size, lane metres • Ferry (ro-pax) capacity expected to LM '000 remain flat in 2017 as increase in 600 CAGR: -0.2% capacity of large ships is balanced by 500 CAGR: +4.6% decrease for smaller ships 400 2501-4000+ 30
Slide 21: Orders for own routes set to maintain stable ferry market
Orders for own routes set to maintain stable ferry market • Trend towards larger ships set to Shipping Division: Fleet overview 2016 continue as ferry operators order ships Average age of for own route networks Ro-pax Passenger Ownership owned Total ships Ro-ro ships ships ships share, % ships, yrs
Slide 22: Logistics
LOGISTICS LTM Q2 2017 Logistics Division Business units & ROIC LTM Q2 2017 Revenue Nordic Continent Nordic Continent UK & Ireland EBIT UK & Ireland 16% 11% 12% 0% 50% 100% . 22 22
Slide 23: Logistics Division: growing share of contract logistics
Logistics Division: growing share of contract logistics Activity Nordic Continent UK & Ireland Door-door full & part • Scandinavia- • Continent-Scandinavia/ • Northern Ireland-UK loads (trailers, containers UK/Baltics/Continent UK/Ireland • Ireland/UK-Spain & rail) • UK domestic Contract logistics •
Slide 24: Logistics Division is a key customer of the route network
Logistics Division is a key customer of the route network • Top 3 customer of Shipping Division NORDIC • 8% of total shipping volumes UK & • 10-20% volume IRELAND target on individual routes CONTINENT Logistics Division Invested DKK m Revenue EBIT capital ROIC, % Nordic LTM Q2 2017 1,699 51 325 15.7
Slide 25: DFDS' freight business model integrates routes and logistics
DFDS’ freight business model integrates routes and logistics • DFDS’ logistics activities Manufacturers have a narrow scope of full/part load solutions Heavy Other Consumer industrial goods industrial goods goods • Own logistics provides access to market intelligence and ability to DFDS Freight forw
Slide 26: How we run DFDS
HOW WE RUN DFDS . 26 26
Slide 27: Core strategy supports path of value creation
Core strategy supports path of value creation Core strategy 1. The DFDS Way: Customer focus and continuous improvement 2. Network strength: Expand network to leverage operating model Value creation 3. Integrated shipping and logistics operations: Working together to optimise capacity utilisation Tra
Slide 28: 3 key strategic demands and supporting initiatives
3 key strategic demands and supporting initiatives 1. Top line focus 2. Increase 3. Acquisitions efficiency and and investments reduce cost base for future growth Continuous improvement projects M&A IT systems development Fleet strategy Digital DFDS WAY 2.0 28
Slide 29: Continuous improvement projects
Continuous improvement projects • Toplight – simplified rate structure and preparing for digital customer solutions and efficiency gains in freight shipping • Carpe Momentum – improve on board sales and spend per passenger on Channel routes • Haulage Drive – improve efficiency of subcontracted haula
Slide 30: 3 key strategic demands
3 key strategic demands 1. Top line focus 2. Increase 3. Acquisitions efficiency and and investments reduce cost base for future growth Continuous improvement projects M&A IT systems development Fleet strategy Digital DFDS WAY 2.0 30
Slide 31: The IT & Digital transformation journey
THE IT & DIGITAL transformation journey We create the foundation for the future success of DFDS - A well functioning organisation delivering fast, reliable, efficient and innovative solutions TODAY TOMORROW Operational Growing top line efficiency 31
Slide 32: Our digital vision
OUR DIGITAL VISION A best-in-industry digital customer experience generating tangible business benefits for customers and DFDS Support businesses gain deep insights into customers’ needs to catalyse business change for sustained relevance 32
Slide 33: The ambidextrous DFDS
The ambidextrous DFDS Are you Right-handed, Left- handed, or ambidextrous 74 33
Slide 34: What do we focus on improving?
What do we focus on improving? Time-to- Customer Scalability market experience Limited by Lack of Not prioritised, resources and alignment and expectations technical competences are rising architecture Governance Innovation Unclear; set-up Not resourced does not and held back support clear by the st
Slide 35: New governance model – Business Value
New governance model – improve Digital capabilities, development and scalability Time-to-market Business Value Customer experience Competences Resources Innovation Architecture Business Digital Development Capabilities Scalability Digital IT Governance Model 35
Slide 36: Smart data
SMART DATA ENHANCE CUSTOMER EXPERIENCE PREDICT USAGE 36
Slide 37: 3 key strategic demands
3 key strategic demands 1. Top line focus 2. Increase 3. Acquisitions efficiency and and investments reduce cost base for future growth Continuous improvement projects M&A IT systems development Fleet strategy Digital DFDS WAY 2.0 37
Slide 38: Creating value from operational and strategic synergies
Creating value from operational and strategic synergies • Focus on both transformational and Revenue 2016, Routes Regions Major activity bolt-on acquisitions DKK bn Across Northern Europe, Mediterranean DFDS 13.8 22 8 (incl. sideport/container) • Shipping: Stena Line 9.7 23 6 Across Northern Europe,
Slide 39: Value creation supported by DFDS' incentive structures
Value creation supported by DFDS’ incentive structures • PIP – annual performance incentive programme • Around 300 managers included with individual goals • Bonus also linked to Group and Division goals • Share option programme • Extended to 25 managers in 2011 • Around 30 managers included today Fr
Slide 40: How we perform
HOW WE PERFORM . 35 40
Slide 41: EBITDA increased to DKK 2.6bn – ROIC now at 18%
EBITDA increased to DKK 2.6bn – ROIC now at 18% DKK bn Revenue Inv cap, DKK bn Invested capital & ROIC before special items ROIC, % 15 10 20 9 18 12 8 16 7 14 9 6 12 5 10 6 4 8 3 6 3 2 4 0 1 2 2013 2014 2015 2016 LTM Q2 2017 0 0 2013 2014 2015 2016 LTM Q2 2017 Shipping Division Logistics Division EB
Slide 42: ROIC Drive – activity by activity performance benchmark
ROIC Drive – activity by activity performance benchmark • Around 90 profit-generating activities covered by programme • Simple ROIC scorecard makes programme accessible for activity Activities performing managers above 10% • 3-year high-level rolling business plans, review meetings with top manageme
Slide 43: Steady ROIC improvement
Steady ROIC improvement • Major challenges resolved: DFDS Group: Return on invested capital (LTM) • Gothenburg-Immingham: 20 entry/exit competitor, Jan 2012 – Mar 2013 17.8 18 18.1 • Russian market sanctions from 17.4 17.6 Jan 2014 16 16.4 • Channel turnaround from 2012 15.3 • Closure of 3 routes en
Slide 44: Overview of key profit drivers for DFDS
Overview of key profit drivers for DFDS Ferry volumes Ferry pricing Logistics Projects CAPEX M&A • Freight/pax revenue • Freight: annual price • Over half of activities • Toplight • Ongoing fleet renewal • Bolt-on ferry routes split 70/30 within negotiations either in UK or connect Shipping Division
Slide 45: Operational agility
Operational agility • Faster adaptation of capacity to changes in volumes • Capacity increased on routes in Baltic Sea, North Sea South and Channel to accomodate higher volumes • Capacity decreased between UK and Sweden • Adjustment options for freight routes to reduce fixed costs: • Changed frequen
Slide 46: Cash generation and CAPEX
Cash generation and CAPEX • Cash conversion around 100% Cash flow and investments DKK bn • Cash flow boosted by Light Capital project 3.0 started in 2013 to reduce working capital 2.5 • Limited tax payments due to European 2.0 tonnage tax regime 1.5 • Investments expected to stay below operating 1.0
Slide 47: Current distribution yield of 8%
Current distribution yield of 8% Capital distribution overview • Planned August dividend raised to DKK 7.00 DKK m 2015 2016 2017 from DKK 5.00 per share Actual Actual Current plan Dividend per share, DKK 5.40 6.00 10.00 • New share buyback of DKK 300m launched for Dividend, Mar 218 175 168 completio
Slide 48: Strategic priorities 2017
Strategic priorities 2017 • Customer focus – growing the topline • Continuous improvement: achieve benefits from programmes • Fleet renewal: deployment of two freight ship (ro-ro) new buildings and further decisions on fleet strategy • Digital: significant spending boost in digital and IT capabiliti
Slide 49: Appendices
APPENDICES . 44 49
Slide 50: DFDS fleet overview and key figures 2016
DFDS fleet overview and key figures 2016 Container Average and age of Ro-pax Passenger sideport Ownership owned Total ships Ro-ro ships ships ships ships share, % ships, yrs DFDS Group 57 23 18 4 12 - 16 Shipping Division 41 23 14 4 - - - North Sea 19 19 - - - 68 12 Baltic Sea1 9 2 7 - - 67 15 Chann
Slide 51: Diverse customer base: forwarders, manufacturers & passengers
Diverse customer base: forwarders, manufacturers & passengers Passengers 21% Forwarders 36% Port terminal customers 3% PAX SOLUTIONS External charterers 3% Manufacturers (shipping) 5% TRAILER SHIPPING Manufacturers (transport & logistics) 32% Percent of total revenue per customer segment 51 51