Slide 1: Investor Presentation Q1 2017 Results
Investor Presentation Q1 2017 Results Hamburg, 12 May 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 strategic initiatives (THE Alliance, UASC Merger) 01 Introduction and delivered a positive operating result in the first quarter of 2017 Improving industry fundamentals – 2017 dependent on continuous market discipline 02 Market Update Sector cons
Slide 4: We continued to progress on our initiatives
1 Deliverables Strategic highlights: We continued to progress on our initiatives … Bond issuance HL Fleet THE Alliance On 18 Jan 2017 Hapag-Lloyd Hapag-Lloyd received the last of the five THE Alliance as the most integrated successfully priced a new bond of EUR vessels of the newbuilding series with
Slide 5: … and delivered a positive operating result in Q1 2017
1 Deliverables Financial highlights: … and delivered a positive operating result in Q1 2017 Transport volume Freight rate Transport expenses per TEU +6.8% -1.9% +1.6% Q1 2017: 1.9 TEU m Q1 2017: 1,047 USD/TEU Q1 2017: 985 USD/TEU EBITDA EBIT Group profit / loss USD 140 m USD 4 m USD -66 m 6.2% EBITD
Slide 6: Q1 2017 showed solid volume growth with gradually increasing freight rates
2 Market Update Q1 2017 showed solid volume growth with gradually increasing freight rates but a substantially higher bunker price CCFI vs. Bunker Global Container Volume [TEUm] 1,300 50 CCFI Comprehensive Index Rotterdam HSFO [USD/mt] 1,200 +10% 45 1,100 39.6 40 1,000 36.1 900 +29% 35 800 819 30 70
Slide 7: Demand: Container shipping remains an industry with healthy growth
2 Market Update Demand: Container shipping remains an industry with healthy growth and balanced trade dynamics Container shipping volume and global GDP growth GDP 6 2000-2008 2010-2015 2016-2018E 2.1x 1.3x 1.2x multiplier +4.6% 300 +4.2% +4.7% +3.5% 250 +9.1% +3.6% +3.1% +3.5% 200 +3.5% Transport vo
Slide 8: Freight rates have clearly recovered from Q2 2016 lows
2 Market Update Freight rates have clearly recovered from Q2 2016 lows – But continuous market discipline needed during 2017 Comprehensive Index (SCFI) Shanghai – Europe (SCFI) 1,500 Comprehensive Index SCFI 2,500 NEurope (USD/TEU) Mediter. (USD/TEU) HL Far East* 2,000 1,000 894 1,500 996 500 1,000
Slide 9: Supply: Capacity growth is slowing
2 Market Update Supply: Capacity growth is slowing – very few deliveries post 2017 expected 8 Orderbook-to-fleet [TEU m, %] Orders placed by year [TEU m] 61% 3.2 7 15,300 TEU 50% 2.2 2.0 1.8 6 38% 1.2 1.1 28% 0.6 27% 0.4 5 0.2 0.1 0.0 21% 21% 18% 19% 16% 15% 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 10: Supply: Scrapping and postponements help to keep net capacity growth low
2 Market Update Supply: Scrapping and postponements help to keep net capacity growth low Highest scrapping level ever … … and idling remains high … [TTEU] [TTEU] Share of world fleet 3.0% Returning 27 28 28 24 23 23 23 20 1,480 1,359 capacity 19 1,324 well +239% absorbed by demand 809 779 654 595 60
Slide 11: On the back of consolidation, alliances have been re-shaped
2 Market Update On the back of consolidation, alliances have been re-shaped Alliances at a glance Partners [#] Services [#] Vessels [#] Port Coverage THE Ocean THE Ocean THE Ocean THE Ocean 2M 2M 2M 2M Alliance Alliance Alliance Alliance Alliance Alliance Alliance Alliance 3 2 4 32 25 40 241 223 323
Slide 12: THE Alliance offers fast, competitive services on the three major East-West trades
2 Market Update THE Alliance offers fast, competitive services on the three major East-West trades Competitive on all trades Atlantic Transpacific Far East Others 5% 2M1) 49% Others 9% 2M1) 20% Others 6% 2M1) 37% 2 2 3 THE Alliance THE Alliance THE Alliance 34% Ocean 12% 29% Ocean 42% 23% Ocean 34%
Slide 13: We achieved a clearly positive EBITDA in Q1 2017
3 HL Financials We achieved a clearly positive EBITDA in Q1 2017 Operational KPIs Q1 2017 Q1 2016 YoY ∆% Q4 2016 QoQ ∆% Transport volume [TTEU] 1,934 1,811 +7% 1,949 -1% Freight rate [USD/TEU] 1,047 1,067 -2% 1,033 +1% Bunker price (MFO) [USD/t] 300 178 +69% 257 +17% Exchange rate [EUR/USD] 1,07 1.1
Slide 14: The effects of our cost savings are clearly visible
3 HL Financials The effects of our cost savings are clearly visible when looking at our relative performance Carrier Revenue vs. EBIT-Margin FY 2016 Q1 2017 EBIT [USDm] EBIT-Margin [%] 0.4 Hapag-Lloyd ZIM 25 3.8% 0.2 Wan Hai Hapag-Lloyd 4 0.2% 0.0 ZIM NYK -0.2 CMA CGM NYK -11 (0.8)% OOCL Maersk Line
Slide 15: Transport volume increased by solid 6.8% to 1,934 TTEU in Q1 2017
3 HL Financials Transport volume increased by solid 6.8% to 1,934 TTEU in Q1 2017 2016 2017 Transport 7,599 1,934 volume +2.7% +6.8% [TTEU] The 6.8% volume increase was mainly Growth [YoY%] 2.1% -2.7% 4.6% 7.0% 6.8% Growth driven by a strong growth on Intra- YoY [%] Asia and Transpacific trades 1,
Slide 16: Bunker price increased by 69%, whereas average freight rate showed a slower recovery
3 HL Financials Bunker price increased by 69%, whereas average freight rate showed a slower recovery Freight rate1) [USD/TEU] vs. bunker price2) [USD/t] Freight rate 1,225 1,036 1,047 -15.4% 1,400 1,100 1,331 1,000 1,300 1,264 900 800 1,189 1,200 700 1,116 -2% 600 1,100 1,067 500 1,033 1,047 1,019 1
Slide 17: Bunker prices have increased significantly
3 HL Financials Bunker prices have increased significantly – However, Hapag-Lloyd benefits from a reduced consumption Bunker price [Rotterdam; USD/mt] Bunker consumption & expenses 1,000 922 Bunker cons. 3.42 MFO 800 per slot1) MDO 3.28 606 600 462 0.45 602 408 368 Bunker cons. 400 432 per TEU 0.42
Slide 18: Transport expenses ex bunker decreased due to further cost savings
3 HL Financials Transport expenses ex bunker decreased as compared to the prior year’s level due to further cost savings Transport expenses per TEU [USD/TEU] +16 (+2%) 59 970 985 -1 -38 -1 -3 - 43 (- 5%)1) Q1 2016 Expenses for raw Port, canal and Chartering, leases Container transport costs Maintena
Slide 19: Equity at USD 5.3 bn and liquidity reserve at USD 0.9 bn
3 HL Financials Equity at USD 5.3 bn and liquidity reserve at USD 0.9 bn – Capital increase of USD 400 m post Closing Strong equity base [USD m] Stable net debt [USD m] Financial Debt 4,415 4,434 5,342 5,277 Cash 602 555 1) 1) 3,793 3,833 Net Debt 31.12.2016 31.03.2017 31.12.16 31.3.17 Solid liquidi
Slide 20: We expect a clearly increasing EBITDA for 2017
3 HL Financials We expect a clearly increasing EBITDA for 2017 with the majority of revenue and operating profits in H2 2017 Hapag-Lloyd guidance for 2017 Hapag-Lloyd sensitivities (EBIT) for 2017 FY 2016 Guidance for 2017 Transport volume +/- 100 TTEU +/- USD <0.1 bn Transport volume 7.6 TEU m Incr
Slide 21: Hapag-Lloyd / UASC merger creates a top tier pure-play carrier
4 UASC Merger Hapag-Lloyd / UASC merger creates a top tier pure-play carrier – Final preparations on track for closing end of May At a glance Deal rationale Combined Entity1) Strengthened market position Strong partnerships Corporate Hamburg Dubai Hamburg HQ Alliance G6 Ocean 3 THE Alliance (until (
Slide 22: Network: The Combined Entity will have a very balanced trade portfolio
4 UASC Merger Network: The Combined Entity will have a very balanced trade portfolio – more than any TOP 5 carrier Breakdown of capacity by trade1) Hapag-Lloyd/UASC Maersk/HSDG MSC 3% 3% 5% 6% 7% 14% 12% 5% 17% 9% 13% 4% 2% 1% 11% 6% 27% 19% 21% 26% 20% 28% 23% 18% CMA CGM COSCO Evergreen 3% 1% 1% 1
Slide 23: Fleet: Access to young and fuel-efficient fleet
4 UASC Merger Fleet: Access to young and fuel-efficient fleet with large share of ULCVs with no planned need to invest in next years Young and fuel-efficient fleet Ship deliveries 2015-2017 2015 2016 2017 Average fleet age1) Combined 7.2 Vessel H1 H2 H1 H2 H1 H2 CMA CGM 7.4 -1.3 COSCO 7.6 yrs 19,500
Slide 24: Synergies: USD 435 m expected from 2019 onwards
4 UASC Merger Synergies: Synergies of USD 435 m expected from 2019 onwards – Focus on fast-track integration and realization of synergies Synergy potential, full run-rate [USD m] USD 435 million Network Overhead Other Expected synergies Synergies of USD 435 m per year from 2019 onwards One-off costs
Slide 25: Partner: New core shareholders with strategic interest in the Combined Entity
4 UASC Merger Partner: New core shareholders with strategic interest in the Combined Entity Transaction overview QH1) 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
Slide 26: Closing remarks
5 Way Forward Closing remarks We continued to progress on our strategic initiatives (THE Alliance, UASC Merger) 01 Introduction and delivered a positive operating result in the first quarter of 2017 Improving industry fundamentals – 2017 dependent on continuous market discipline 02 Market Update
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Slide 28: Strategic projects to enhance profitable growth
We delivered on our defined initiatives Tangible results and further upside CUATRO synergies: Initial target: USD 300 m Strategic projects to enhance profitable growth Compete Revised target: USD 400 m to Win Successful Improvement of implementation Close the revenue quality OCTAVE programs: Cos
Slide 29: Hapag-Lloyd with clearly defined financial policy
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 significantly delever
Slide 30: Positive free cash flow of USD 38 m in Q1 2017
Positive free cash flow of USD 38 m in Q1 2017 Cash flow Q1 2017 [USD m] Operating Investing Financing cash flow cash flow cash flow 158 -120 -85 675 -667 905 802 18 350 200 140 -122 2 -67 -26 602 Free cash flow = USD 38 m 555 Liquidity EBITDA Working capital Investments Disinvestments Debt intake D
Slide 31: Hapag-Lloyd shares with supportive tradings in recent months
Hapag-Lloyd shares with supportive tradings in recent months Share trading 160 Frankfurt Stock Exchange / Stock Exchange Hamburg Stock Exchange 140 Market segment / Regulated market (Prime Standard) / 120 Index SDAX 100 ISIN / WKN / Ticker Symbol DE000HLAG475 / HLAG47 80 Ticker Symbol HLAG 60 Nov. D
Slide 32: Hapag-Lloyd bonds continuously trade above par
Hapag-Lloyd bonds continuously trade above par Bonds trading 110 105.9 105 105.3 102.6 100 95 HL EUR 7.75% 2018 HL EUR 7.50% 2019 HL EUR 6.75% 2022 EUR Bond 2022 EUR Bond 2019 EUR Bond 2018 Listing Open market of the Luxembourg Stock Exchange (Euro MTF) Volume EUR 450 m EUR 250 m EUR 200 m1) ISIN /
Slide 33: Hapag-Lloyd optimized its maturity profile via debt capital markets
Hapag-Lloyd optimized its maturity profile via debt capital markets at more attractive pricing levels Bond coupon and maturity profile Coupon 9.75% 7.75% 7.50% 6.75% EUR 450 m On 18 Jan 2017 Hapag-Lloyd successfully priced a Yield to maturity new bond of EUR 250 m due 2022 – on 7 Feb 2017 EUR 400
Slide 34: Hapag-Lloyd with positive EBITDA of USD 139.8 m
Hapag-Lloyd with positive EBITDA of USD 139.8 m Income statement [USD m] Transport expenses [USD m] Q1 2017 Q1 2016 % change Q1 2017 Q1 2016 % change Expenses for raw materials & supplies 279.6 154.7 81% Revenue 2,270.9 2,124.0 7% Cost of purchased services 1,626.0 1,601.3 2% Other operating income
Slide 35: Hapag-Lloyd with equity ratio of 44.1%
Hapag-Lloyd with equity ratio of 44.1% Balance sheet [USD m] Financial position [USD m] 31.03.2017 31.12.2016 31.03.2016 31.03.2017 31.12.2016 31.03.2016 Assets Cash and cash equivalents 555.2 602.1 518.8 Non-current assets 10,289.2 10,267.4 10,371.2 Financial debt 4,433.6 4,414.9 4,207.0 of which f
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