Eimskipafelag Islands Hf. · OMXICE:EIM

Eimskipafelag Islands Hf — Q3 2018 Earnings Presentation

34 slides from Eimskipafelag Islands Hf's earnings presentation, Nov 21, 2018

  1. Slide 1: EBITDA in the third quarter decreased by 8.6%

    EBITDA IN THE THIRD QUARTER DECREASED BY 8.6% Financial Results – Q3 2018 21 November 2018

  2. Slide 2: Key highlights for Q3 2018

    KEY HIGHLIGHTS FOR Q3 2018 Highest quarter in terms of revenue since 2009 | Q3 affected by Norway results and trade tension in freight forwarding The positive signs are: Revenue  Liner export from Iceland EBITDA  Domestic operation EUR 182.2 m EUR 17.6 m  Increased volume on up EUR 8.3 m down by

  3. Slide 3: Transported volume in Q3 2014 to Q3 2018

    TRANSPORTED VOLUME IN Q3 2014 TO Q3 2018 Container Liner volume up 6.2% | Growth in forwarding volume driven by dry cargo LINER SERVICES FORWARDING SERVICES 10% 150 60% 250 9% 145 50% 8% 200 7% 140 40% 6% 150 135 30% 5% 130 20% 4% 100 3% 125 10% 2% 22.7% 4.7% 50.8% 5.5% 50 120 0% 1% -1.2% 7.4% 2.8%

  4. Slide 4: Transported volume in 9M 2018

    TRANSPORTED VOLUME IN 9M 2018 Container Liner volume up 6.0% | Growth in forwarding volume driven by dry cargo LINER SERVICES FORWARDING SERVICES 10% 145 45% 250 9% 40% 140 8% 35% 200 7% 135 30% 6% 25% 150 130 5% 20% 125 4% 15% 100 3% 120 10% 2% 5% 50 115 15.6% 5.1% 4.8% 41.2% 8.6% 1% 0% 7.9% 4.2% 5

  5. Slide 5: Liner services volume

    LINER SERVICES VOLUME Increase in container liner services and Trans-Atlantic | Decrease in volume in Norway 6% 5% 11% 15% 12% 9M 2018 12% 9M 2017 71% 68% Iceland Faroe Islands Norway Trans-Atlantic Iceland Faroe Islands Norway Trans-Atlantic 5

  6. Slide 6: Forwarding services volume

    FORWARDING SERVICES VOLUME Continued growth in dry cargo 23% 31% 9M 2018 9M 2017 69% 77% Reefer Dry Reefer Dry 6

  7. Slide 7: Financial results

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  8. Slide 8: Key highlights for Q3 2018

    KEY HIGHLIGHTS FOR Q3 2018 Highest quarter in terms of revenue since 2009 | Q3 affected by Norway results and trade tension in freight forwarding Affecting revenue Liner revenue + Container liner volume EUR 116.5 m + Dry cargo forwarding Revenue up 3.9% + Growth in TA EUR 182.2 m Forwarding revenue

  9. Slide 9: Income statement 9M 2018

    INCOME STATEMENT 9M 2018 Nine months 2018 results affected by increased capacity, Norway results and trade tension in freight forwarding Revenue Expenses EBITDA EUR 510.3 m EUR 470.5 m EUR 39.8 m up 4.6% up 6.3% down 12.1% Depreciation and Net earnings Net finance expense amortization EUR 9.3 m EUR

  10. Slide 10: EBITDA bridge

    EBITDA BRIDGE 9M 2018 VS. 3Q 2018 Q3 9M 55 45 2.3 (5.0) (3.3) (2.7) 3.2 35 25 47.6 45.3 39.8 15 5 -5 10

  11. Slide 11: Revenue and EBITDA 2014 to 2018 by quarter

    REVENUE AND EBITDA 2014 TO 2018 BY QUARTER Continued top line growth | EBITDA contribution needs to improve REVENUE EBITDA EUR million EUR million 180 20 160 18 140 16 14 120 12 100 * * 10 80 8 60 6 40 4 20 2 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 *Add-back of

  12. Slide 12: China Forwarders Freight Index

    CHINA FORWARDERS FREIGHT INDEX Average price decreased by 9% between Q3 2017 and Q3 2018 1000 -9% 800 600 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 400 11 Source: www.shippingchina.com

  13. Slide 13: Bunker price development

    BUNKER PRICE DEVELOPMENT Average bunker price 37% higher in 9M 2018 compared to 9M 2017 | Puts pressure on freight rates 600 49% 42% 500 21% 400 300 200 Bunker is largely hedged by BAF and hedge agreements 100 Q1 Q2 Q3 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 2018 2

  14. Slide 14: Revenue and expenses by currency

    REVENUE AND EXPENSES BY CURRENCY Strengthening of the USD against the EUR is positive going forward for the operation EUR/USD Development Revenue and expenses by currency 1.30 15% 8% -1% 3%6% 9% 1.25 4% 5% 3% 1.20 39% 36% 22% Expenses 1.15 Revenue 1.10 27% 1.05 26% 20% 1.00 Q1 Q2 Q3 0.95 EUR & DKK U

  15. Slide 15: Geographical split of revenue

    GEOGRAPHICAL SPLIT OF REVENUE Minor changes in geographical split of revenue | Norway and Europe decreasing 5% 4% 7% 7% 24% 25% 48% 49% 9M 2018 9M 2017 7% 8% 8% 8% Iceland Faroe Islands Iceland Faroe Islands Norway Europe Norway Europe Asia Other Asia Other 15

  16. Slide 16: Revenue and EBITDA by business segment

    REVENUE AND EBITDA BY BUSINESS SEGMENT Similar split between business segments between periods REVENUE EBITDA 30% 32% 35% 34% 9M 2018 9M 2017 9M 2018 9M 2017 65% 66% 68% 70% Liner services Forwarding services Liner services Forwarding services 16

  17. Slide 17: Financial ratios 2014 to Q3 2018

    FINANCIAL RATIOS 2014 TO Q2 2018 Increased leverage but strong financial position | Equity ratio 49.7% at the end of September NET DEBT / LTM-EBITDA NET DEBT AND EQUITY RATIO EUR million 2.6 140 100% 2.4 130 Net debt Equity ratio 90% 2.2 120 2.0 110 80% 1.8 100 70% 1.6 90 60% 1.4 80 70 50% 1.2 60 1.

  18. Slide 18: Cash flow bridge

    CASH FLOW BRIDGE Investments have led to increase in borrowings 50 40 (10.7) 20.7 30 (11.0) 20 (27.5) 0.6 24.1 23.2 10 19.3 0 19

  19. Slide 19: Capex 2014 to 2018

    CAPEX 2014 TO 2018 Included in 2018 budget is payment of vessel and new port crane in Sundahöfn EUR million 70 60 50 40 30 20 10 0 2014 2015 2016 2017 2018 2017 9M 2018 9M Budget Operation Vessel dockings Investments 20

  20. Slide 20: Development of the sailing system and ongoing projects

    DEVELOPMENT OF THE SAILING SYSTEM AND ONGOING PROJECTS 21

  21. Slide 21: Eimskip's weekly sailing system

    EIMSKIP’S WEEKLY SAILING SYSTEM Six sailing routes in the North Atlantic 14

  22. Slide 22: Changes in the sailing system, effective as of week 46

    CHANGES IN THE SAILING SYSTEM | EFFECTIVE AS OF WEEK 46 Express delivery time of fresh and frozen fish to markets in Europe and onwards  Thursday departure from Reykjavik arriving in Rotterdam on Sundays  Connections to key markets in Europe  Monday arrival in Aarhus  Connection from East of Ice

  23. Slide 23: Scheduled changes in the sailing system and vessel fleet in 2019

    SCHEDULED CHANGES IN THE SAILING SYSTEM AND VESSEL FLEET IN 2019 New vessels to be delivered during 2H 2019 | Red line connected to Greenland | Subject to Icelandic Competition Authority 23

  24. Slide 24: Green route, increased frequency

    GREEN ROUTE | INCREASED FREQUENCY Volume growth in Trans-Atlantic in the first nine months 2018 +40% INCREASE IN FREQUENCY  13 voyages 2010 (one vessel) INCREASE IN VOLUME  26 voyages 2011 (two vessels)  Volume growth 2016 to 2017: +28%  31 voyages 2014 (three vessels)  Volume growth first nine

  25. Slide 25: Eimskip's own offices in North America

    EIMSKIP‘S OWN OFFICES IN NORTH AMERICA Four offices in USA and four offices in Canada St. Anthony Canada Argentia Harbour Grace Canada Canada St. John’s Boston Canada United States Portland United States New York United States Norfolk United States 25

  26. Slide 26: Ongoing projects

    ONGOING PROJECTS New buildings in China and port developments on schedule New buildings in China Port developments  Vessels on schedule and launch of first vessel scheduled before  Nuuk in Greenland is up and running with two mobile cranes year end  Tórshavn in Faroe Islands will be ready in 2019

  27. Slide 27: Ongoing projects

    ONGOING PROJECTS Investment in 45’ pallet wide reefer containers | New gantry crane to replace 34 year old Jakinn 45‘ reefer containers New gantry crane in Sundahöfn  Eimskip has invested in 45‘ reefer containers to respond to  Eimskip has invested in a new ship to shore gantry crane from changes

  28. Slide 28: Ongoing projects

    ONGOING PROJECTS Construction of new coldstore in Tromsø on schedule | Flagging of Eimskip‘s vessels in Faroe Islands Tromsø Terminalen Flagging of Eimskip’s vessels  Tromsø is Norway's largest port for discharging of frozen  Eimskip has been working on registering its vessels in Tórshavn, whitefi

  29. Slide 29: Global shipping market

    GLOBAL SHIPPING MARKET Turbulence around mergers and consolidation with the deep-sea lines is getting back to normal The last three years M&A and bankruptcies in Global Shipping Alliances The 2M 486 Vessels 3.3 Million TEU July March 2016 January 2016 The Ocean Alliance December 2016 2014 350 Vessel

  30. Slide 30: Short-term initiatives

    SHORT-TERM INITIATIVES The company expects to realize gains from a number of initiatives to improve its operation and profitability  Off-hire of one vessel in Norway  | done  Restructuring of Norway business  | ongoing  Decrease in charter rates of vessels  | done  Reduction in salary cost 

  31. Slide 31: EBITDA guidance for 2018

    EBITDA GUIDANCE FOR 2018 EBITDA in the range of EUR 49-53 million  Liner services 57-63  Export to be strong for the remainder of the year  Trans-Atlantic and Short-Sea volume expected to grow 40% y-o-y  Volume in the Faroe Islands to be stable  Volume in Norway expected to decrease in comparis

  32. Slide 32: Questions

    QUESTIONS 30

  33. Slide 33: Disclaimer

    DISCLAIMER Information contained in this presentation is based on sources that Eimskipafélag Íslands hf. (“Eimskip“ or the ”Company“) considers reliable at each time. Its accuracy or completeness can however not be guaranteed. Copyright of information contained in this presentation is owned by Eimsk

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