Slide 1: Welcome
WELCOME 1
Slide 2: Strategy Update
STRATEGY UPDATE DFDS Group October 2018
Slide 3: We move freight and passengers on ferry routes in Europe and Turkey
We move freight and passengers on 23 ferry routes in Europe and Turkey 3
Slide 4: We also provide transport and logistics solutions
We also provide transport and logistics solutions to a wide range of businesses 4
Slide 5: Freight, logistics & pax – northern Europe & Med
Freight, logistics & pax – northern Europe & Med Freight routes Logistics solutions Passenger routes ▪ Trailers, ▪ Door-door full & ▪ Overnight Key unaccompanied & part loads services accompanied ▪ Day ▪ Contract logistics ▪ Industry solutions ▪ Transport/holiday ▪ Port terminals ▪ Cruise ferry Frei
Slide 6: DFDS key figures
DFDS key figures DKK bn Revenue Inv cap, DKK bn Invested capital & ROIC before special items ROIC, % 15 18 20 16 18 12 14 16 14 12 9 12 10 10 6 8 8 6 6 3 4 4 2 2 0 0 0 2014 2015 2016 2017 2018 Q2 LTM 2014 2015 2016 2017 2018 Q2 LTM Shipping Division Logistics Division DKK bn EBITDA & margin before s
Slide 7: Acquisitions fueled growth and earnings in Q2
Acquistions fueled growth and earnings in Q2 • UNRR consolidated from 7 June Q2 EBITDA before special items with revenue of DKK 141m and DKK m EBITDA of DKK 50m 2018 802 • DFDS Group revenue up 6% and EBITDA up 9% to DKK 802m 2017 739 • EBITDA outlook for full-year 2018 unchanged at DKK 3.0-3.2bn 20
Slide 8: Growth strategy shaping 2018 & beyond
Growth strategy shaping 2018 & beyond Growth from • Special Cargo: operator of flatbed trailers in Europe, acquisitions consolidated 3 January 2018 • U.N. Ro-Ro: freight ferry routes connecting Europe and Turkey, completed 7 June 2018 • Integration expected to be completed in 2018 • Financial flexib
Slide 9: Leverage route network & logistics through M&A
Leverage route network & logistics through M&A Acquisition type Description Examples Expand core route Expand ferry network in existing markets and and logistics expand to new European markets network Acquire forwarders synergetic with shipping Core in Europe (e.g. to secure cargo control for routes
Slide 10: Key logistics sectors for DFDS
Key logistics sectors for DFDS Forestry & metals Cold chain Automotive (also Turkey) High-value 10
Slide 11: Tech trends most relevant for DFDS
5 tech trends most relevant for DFDS Key tech focus areas Connect through information… (ranked by urgency) DFDS Customers Real time IoT tracking at every step of the Fully connected supply chain network with real logistics chain time coordination by all parties 1 IoT DFDS … for continuous learning a
Slide 12: Further investment in 3 key digital areas
Further investment in 3 key digital areas Key observations… Business critical 1. Digital go-to-market: Most customers are served through a manual and analogue process with several pain points Create flawless and efficient digital offering 2. Digitize the core: Many internal processes are manual with
Slide 13: Digital go-to-market: customer statistics
Digital go-to-market: 80% of business comes from 400 customers and 60% of small customers treated manually DFDS Shipping and Logistics customer statistics, 2017 Description Revenue split Analogue EDI Digital 216 3rd Party Logistics Freight Forwarders 27% 42% 31% provider and hauliers 4,354 187 Large
Slide 14: Digitizing the core: software, hardware & networks, analytics
Digitizing the core consists of three overall elements: Software, Hardware & networks and Analytics Focus next Hardware & Software Analytics networks • Composable architecture • Sensors/IoT on physical • Capturing data in large • Cloud assets (e.g., vessels, volumes • Datacenters terminals, port equ
Slide 15: Ambition to create a DFDS solution improving customer experience
Ambition to create a DFDS solution improving customer experience drives 5 significant value levers Instant Instant Online Online Self- Online Proactive Exceptions Quoting Onboarding sales service payment handling & new solutions proposals Requires fully automated Requires proper payment platform use
Slide 16: Example, autonomous trucks
Example, autonomous trucks: Research indicates 10-30% of all trucks will be autonomous by 2030 Adoption rate % 100 80-100% Trucks sold 80 Trucks on the road 60 40-60% 50-80% 40 20-40% 30-50% 20 10-30% 0% 0 2020 2030 2040 2050 Time 16 Note: trucks after 2030 matched with car adoption rate Source: Vic
Slide 17: Example, autonomous ships
Example, autonomous ships: Commercialization ongoing – however material impact not expected until after 2030 2020 2025 2030 2035 Remotely operated Remotely controlled Remotely controlled Autonomous local vessels ships commercialized unmanned ocean- unmanned (Costal / short-sea) going ships ocean-goi
Slide 18: Logistics: winning business model digital capabilities
Logistics: Winning business model will be either a start-up gaining scale or an incumbent successfully innovating No VFF handling Marketplaces/ Virtual Forwarders Forwarders RoRo today spot exchanges (start-ups) (incumbents) Marketplaces High The digital Booking platform directly battlefield linking
Slide 19: Real GDP growth 2019 (OECD)
Real GDP growth 2019 (OECD) UK +1.2% Euro area +1.9% Turkey +0.5% 19 Source: OECD, September 2018 outlook
Slide 20: Priorities going into 2019
Priorities going into 2019 • Integration of Mediterranean route network • Adapt to Brexit outcome • Realise our next steps in digital strategy • Improve performance of Passenger business unit • Deployment from March 2019 of two freight new buildings (ro-ro) • Pursue value-creating M&A 20
Slide 21: Strongly positioned to weather TRY depreciation – Mediterranean
STRONGLY POSITIONED TO WEATHER TRY DEPRECIATION MEDITERRANEAN 10 October 2018
Slide 22: Introduction and agenda
Introduction and agenda • Mediterranean business overview – strong value proposition to customers, market position and operational set-up • Market overview – growth, resilience and outlook • Integration – synergies and development opportunities • Going forward 22
Slide 23: Strong and experienced Mediterranean management team
Strong and experienced Mediterranean management team Fuat Pamukçu, VP Sales & Marketing ▪ Chief Marketing, Business Development and Strategy Officer since 2016 until DFDS takeover. Undertaken Sales operations in addition to Marketing, Business Development and Strategy ▪ Joined U.N. Ro-Ro in 2007 ▪ P
Slide 24: Business Overview
BUSINESS OVERVIEW . 24
Slide 25: Network capabilities delivering compelling customer value
Network capabilities delivering compelling customer value Secure access to infrastructure with 80% of volumes moving through controlled ports · 12 Vessels · 7 Train Lines · 10.8 Years Avg. Age · 62 Weekly Departures · 45,356 LM Total Capacity · 80 Weekly Departures DFDS by end of 2018 DFDS · 7 Ports
Slide 26: Ferry business model attractive for time sensitive freight
Ferry business model attractive for time sensitive freight Highly Efficient Mode of Transportation Between Turkey and Europe Target Market: Time Sensitive Cargo Land 4-6 days Borders Permits Quota Target Market: Time Sensitive Cargo Ro-Ro 4-6 days Air transport for drivers SS TT OO RR EE Trailer pic
Slide 27: Diversified cargo types
Diversified cargo types Mediterranean network offers valuable, fast and reliable services to cargo types ranging from trailers, containers and project cargo 1 2 3 Standard Rolling Cargo Containers Project / Other Rolling Cargo 86% of Total in 2017 (1) 6% of Total in 2017 (1) 8% of Total in 2017 (1)
Slide 28: Ownership of two key ports and access to five others
Ownership of two key ports and access to five others Pendik Port (Turkey) Port of Trieste (Italy) West East Istanbul Istanbul Ambarlı Pendik Main industrial zones DFDS port Other ports 60% ownership of Samer Seaports Other ports in route network Ambarlı (Turkey) Toulon (France) Mersin (Turkey) Bari
Slide 29: Modern freight ferry fleet
Modern freight ferry fleet UN Cemil Cüneyt UN UN UN UN UND UND UND Name UN Karadeniz Saffet Ulusoy Istanbul Bayülgen Solakoğlu Akdeniz Trieste Pendik Marmara Birlik Atılım Ege Year Built 2013 2010 2009 2008 2008 2006 2005 2005 2005 2002 2002 2001 Lane Meter Capacity (Current/Post- 4,094 3,735/4,605(
Slide 30: Why customers choose ferry solution vs road transport
Why customers choose ferry solution vs road transport Ro-Ro Land Key Customer Shifting from Land to Ro-Ro Value Add to Customers Lower Capital Intermodal model reduces investment requirement for trucking Expenses companies (allows for fewer trucks and more trailers in fleet) ✓ ✓ Asset base optimiz
Slide 31: Documented cost advantage of Ro-Ro vs Land
Documented cost advantage of Ro-Ro vs Land Operational Expense Reductions Capital Expenditure Reductions Overview of Cost Dynamics Land • Ro-Ro service is more cost efficient Cost of c. €125K for 1 truck • Increasing use of semi-trailers has made Ro-Ro even more cost x and 1 trailer set; €375K for c
Slide 32: Road to ferry conversion expected to continue to drive growth
Road to ferry conversion expected to continue to drive growth Key highlights Export freight from Turkey to Europe ▪ 304k freight units exported from Turkey to Europe 350 Ferry 6.7% CAGR 55.0% 54.0% in 2017 by road and ferry double of 2007 volume 300 53.0% 250 52.0% ▪ Ferry expected to continue to ga
Slide 33: Diversified & loyal customer base
Diversified & loyal customer base Revenue Split by Top Customers Customers optimising Compelling Customer their asset base and Value Proposition 28% reducing truck investments 39% 7% 9% Customers Adapt 18% Increasing Customer Business Model for Ro-Ro Loyalty to DFDS Top customers ranked by revenue:
Slide 34: Effective pricing mechanism
Effective pricing mechanism Pricing Mechanism Overview Adjustment based Discount on ticket 5% - 30% discount compare Port expenses Rebate based on customer’s on bunker cost based on size of bulk to land transportation cost choice of payment method depending on destination changes ticket allocation U
Slide 35: Strong communication with customers
Strong communication with customers Potential No. Visits (1) Segment Sales Force Responsible Sales Approach Standard Units (2017) Close contact Frequent visits 1 Key Account Manager, Market follow-up Platinum 3,000+ Sales Manager, Operational integration 53 Chief Sales Officer Service integration ER
Slide 36: Successful Ro-Ro customer adoption & expansion
Succesful Ro-Ro customer adoption & expansion Ford and Renault: Prior to using U.N. Ro-Ro Customer-Centric Differentiated Services ❑ A loyal customer of U.N. Ro-Ro was awarded both the Ford and Renault logistics business ❑ U.N. Ro-Ro worked closely with its client on an innovative solution: after U.
Slide 37: DFDS compares favorably to competitors
DFDS compares favorably to competitors ✓ Number of Vessels 12 6(1) 4 Average Age of Fleet ✓ 10.8 N/A(1) 17.3 Weekly Sailings ✓ 29(2) 13 6 Total LM Capacity ✓ 45,356 / 47,096(3) 21,772 13,708 Average LM ✓ 3,780 / 3,925(3) 3,629 3,427 Competition with Own ✓ Fully insourced, therefore viewed Fully neut
Slide 38: Key financials – revenue and earnings 2014-2017
Key financials – revenue and earnings 2014-2017 Strong Revenue Development High & Solid EBITDA Margin Revenue (€ MM) Adjusted EBITDA(1) (€ MM), Adjusted EBITDA(1) Margin (%) 225 199 193 185 93 83 80 71 55% 57% 54% 54% 36% 43% 43% 41% 2014 2015 2016 2017 2014 2015 2016 2017 Revenue Adjusted EBITDA (1
Slide 39: Key financials – cash flow 2014-2017
Key financials – cash flow 2014-2017 High Cash Generation Capacity Low Maintenance Capex Levels Adjusted EBITDA(1) – Maintenance Capex (€ MM), Cash Conversion (%) EUR MM 39 81 71 64 67 (2) (1) 27 16 (2) (1) (1 89% 85% 83% 87% 12 3 ) 8 7% 6% 5% 4% 14 12 2014 2015 2016 2017 2014 2015 2016 2017 Mainten
Slide 40: Turkey - inflation and exchange rate development of TRY
Turkey - inflation and exchange rate development of TRY • TRY-depreciation is linked to high inflation rates in Turkey: TRY/DKK • 2016: 8% 2.55 • 2017: 11% 2016 2017 2018 • 2018 ytd: >20% 2.35 2.15 • Turkey’s real GDP was up 7% in Q1 1.95 • OECD: real GDP growth forecast of 1.75 0.5% for 2019 1.55 -
Slide 41: Turkey – impact of TRY depreciation on finance items
Turkey – impact of TRY depreciation on finance items • Financial performance impacted by ‘one- TRY/DKK off’ currency loss on debtors recorded in 1.45 Finance items 1.40 1.35 • Mediterranean’s prices are set in EUR to protect revenue development 1.30 1.25 • Invoicing in TRY implies, however, 1.20 Jul
Slide 42: Market Overview
MARKET OVERVIEW . 42
Slide 43: EU is important and balanced trade partner with Turkey
EU is important and balanced trade partner with Turkey Turkey’s top trade partners (2017) Turkish trade market share 9.3% 40 5.0% 30 (US$bn) 20 0.6% 10 0 Iran Iraq Japan UAE France Spain Israel Belgium Switzerland Netherlands Poland Russia US Italy UK Germany China South Korea India Romania Source:
Slide 44: Attractive market profile
Attractive market profile Target Market real GDP growth Macroeconomic Overview Target Market (1) Macro Outlook Turkey Target Europe(1) GDP Growth % N5Y CAGR Economic output (2016): $863 billion $15,742 billion 13% Spain 2.0% Benelux Belgium 1.9% Population (2016): 80 million 468 million 5% 23% Germa
Slide 45: Attractive and resilient market fundamentals
Attractive and resilient market fundamentals Attractive Macro Outlook Fuelling Cargo Growth Resilient Turkey – Target Europe(3) Trade GDP Growth % N5Y CAGR (1) Truck Market Volumes(4) Real GDP (PPP US$ at 2005 prices) Export units (‘000) 2.0% 1.9% 1.7% 1.7% 1.6% 1.0% 298 308 269 283 263 % U.N. Ro-Ro
Slide 46: Mediterranean's geographical reach
Mediterranean’s geographical reach Mediterranean’s Target and Secondary Markets Finland Norway Sweden Latvia Denmark Ireland U.K. Germany Poland Netherlands Belgium Luxembourg Czech Republic Slovakia France Austria Switzerland Slovenia Trieste (1) Portugal Toulon Ambarlı Italy Spain Pendik (2) Bari
Slide 47: Strong growth in trade with European target markets
Strong growth in trade with European target markets Value of Turkish Trade with Target Market Net Weight(1) of Turkish Trade with Target Market USD, Bn MM Tonnes 90 30 29.2 CAGR (2000–2017) CAGR (2000–2017) 72.4 Imports: +6.5% Imports: +5.2% Exports: +8.8% Exports: +3.9% 25.0 60 20 58.7 13.1 30 24.8
Slide 48: Also strong growth in trade with secondary target markets
Also strong growth in trade with secondary target markets Value of Turkish Trade with Secondary Market Net Weight(1) of Turkish Trade with Secondary Market USD, Bn MM Tonnes 18 12 CAGR (2000–2017) 10.2 CAGR (2000–2017) Imports: +8.4% 12.7 Imports: +8.0% 12 Exports: +12.7% 8 Exports: +5.2% 8.4 6 4 3.
Slide 49: Import ro-ro volumes exceed export volumes
Import ro-ro volumes exceed export volumes EUR:TL vs. Export-Import Volume Specific to Ro-Ro 6,000,000 6.00 Similar to 2002 banking crisis, in the case that imports are negatively impacted, the current volume of imports still outweight exports, so in case there is continued export growth, trucked vo
Slide 50: Turkish trade volumes resilient in face of TRY depreciation
Turkish trade volumes resilient in face of TRY depreciation Turkey trading, indexed import/export ro-ro volumes, and exchange rate TRY/EUR 6.00 300 Crisis 4 Depreciation sparked by conflict with USA 265 5.17 5.00 240 250 Crisis 2 Crisis 1 Global financial crisis Banking led crisis starting in Nov 20
Slide 51: Cargo split in DFDS' Turkey-Europe routes
Cargo split in DFDS’ Turkey-Europe routes • High share of industrial cargo Turkey-Europe cargo split, Jan-May 2018 0% 5% 10% 15% 20% 25% 30% 35% • Auto industry supply chain volumes Parts above 20% Auto industry • Textile industry located in southern Turkey has 15% share of exports Textiles • Food a
Slide 52: TRY depreciation decreases imports & boosts export volumes
TRY depreciation decreases imports & boosts export volumes Growth in truck market (target market countries), same period last year* Growth in DFDS Mediterranean* imports and exports, same period last year 11% 20% 12% 9% 15.4% 10% 15% 1H18 7% 8% 1H18 10% +4,0% 5% 5% 7% 8% 7% +4.6% 4% 3% 6% 5% 3% 3% 3
Slide 53: Integration
INTEGRATION . 53
Slide 54: Integration organised in workstreams
Integration organised in 18 workstreams SteerCo Integration officers (overall responsible for the integration) Integration Management Office ++ Communication (IMO) Commercial workstreams Platform workstreams Support workstreams 0 Confidential 5 11 Organizational Setup IT Strategy Finance & Tax 1 6 1
Slide 55: Transition phase followed by four integration steps
Transition phase followed by four integration steps Integration Long-term Closing/(Day-1) First 100 days Integration completed January 1, 2019 -> 6/6 / (7/6) 6/9 31/12 Day-1* First 100 Days Integration execution Consolidation/growth • Customer roadshow • Begin execution of First 100-Days • Short-ter
Slide 56: Integration progressing and set for completion at year-end
Integration progressing and set for completion at year-end Timeline - updated Integration – First 100 days* Integration – Beyond 100 days** sep Oct nov Activity Week 36 37 38 39 40 41 42 43 44 45 Deliverables for approval Last update for 100-Day workplan ‘Day 100’ plan sep 4 Updated Updated Beyond 1
Slide 57: All workstreams on track to complete 'Day 100' plans
All workstreams on track to complete ‘Day 100’ plans Completed tasks XX Total number of tasks Treasury to finish Outstanding tasks outstanding tasks in Turkey next week Day 89 of 100 15 2 8 3 35 7 6 22 6 31 31 11 5 14 9 17 11 233 100% 14% 18% 18% 11% 20% 38% 40% 50% 64% Overall great effort has been
Slide 58: Final stage of signing off synergies, next step tracking impact
Final stage of signing off synergies, next step tracking impact Completed Completed Today Q4 2018 -> Synergy tracking Final synergy targets ▪ Complete initiatives ▪ Continuous progress Target development ▪ Agree initiative targets update ▪ Define initiative baseline ▪ Synergy capture Synergy aspirat
Slide 59: Going Forward
GOING FORWARD . 59
Slide 60: Investments planned to drive Mediterranean's growth
Investments planned to drive Mediterranean’s growth 2 vessel lengthenings in 2018 to increase capacity Scrubber investments to comply with 2020 IMO legislation Expansion of current terminals to accommodate growing volumes Fleet renewal to increase efficiency and capacity 60
Slide 61: Geographic network expansion with synergies
Geographic network expansion with synergies ▪ Land conversion and organic market growth Sales growth ▪ Additional capacity driving additional volumes and lower unit costs ▪ Intermodal solutions offering synergy opportunities to existing DFDS network Customer and ▪ Wider network and range of services
Slide 62: How will we navigate, what actions can be taken
How will we navigate, what actions can be taken… Short Term Customer Related Actions • Empty trailer/container rate and promotional campaign valid until 31 August, extended due to continued volatility until end of September • Ticket exchange possibilities to customers who have import tickets outstan
Slide 63: aes a
aes a ASSESS Gees < A. od
Slide 64: Brexit
BREXIT . 64
Slide 65: Some slowdown in UK-EU trade growth in 2018
Some slowdown in UK-EU trade growth in 2018 EU-UK trade of goods - volume development • Euro area growth 12% continues to mitigate uncertainty related to 10% Brexit 8% • Lift in UK export growth to 6% EU post Brexit vote leveling off but still above 4% Brexit vote pre-Brexit level 2% • Volume growth
Slide 66: DFDS is planning for two scenarios
DFDS is planning for two scenarios Hard Brexit Transition period Brexit March 29, 2019 December 31, 2020 • UK departs the EU at 11pm UK time • Transition period to allow UK to get most in place and allow businesses • UK gives up full access to the single and others to prepare for the new market and
Slide 67: Brexit – challenge and opportunity
Brexit – challenge and opportunity • Key risk is development of UK GDP Possible hard Brexit impacts growth that is driver of trading volumes • Time-consuming customs process • Congestion in ports • UK supply chains closely integrated with • Reduction in trade volumes Continental Europe • Increase in
Slide 68: Q&A DFDS Group
Q&A DFDS GROUP October 2018
Slide 69: U.N.RO-RO's journey from a Ro-Ro Shipping line to a Leading Intermodal Operator
U.N.RO-RO’s journey from a Ro-Ro Shipping line to a Leading Intermodal Operator 1994 1995 1998 2001 2002 2005 2006 2008 48 Turkish UND Ro-Ro Ro-La train, which UND Ege joins UND Atılım and Saffet Ulusoy, UN Trieste joins UN Akdeniz, international land started operations operates between the fleet UN