Slide 1: Investor Presentation Q1 2018 Results
Investor Presentation Q1 2018 Results Hamburg, 14 May 2018
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 Synergy ramp-up from the UASC integration on track – up to 90% to be realized in 2018 01 Deliverables Solid start into the year with an EBIT of USD 66 m (USD 8 m in Q1 2017) despite difficult rate environment Sector fundamentals remain favourable in the midterm 02 Sector Update
Slide 4: Total synergies of USD 435 m p.a. from 2019 onwards confirmed
1 Deliverables Total synergies of USD 435 m p.a. from 2019 onwards confirmed – Up to 90% of full run rate expected to be realized in 2018 Synergy ramp-up USD 435 m 2017 2018 2019 Full run rate Approximately 60% of expected synergies realized until end of Q1 2018 Up to 90% of full run rate expect
Slide 5: Financial Highlights: Clearly improved operating result
1 Deliverables Financial Highlights: Clearly improved operating result Transport volume Transport expenses per TEU Freight rate +47.9% -5.9% -2.6% Q1 2018: 2.9 TEU m Q1 2018: 925 USD/TEU Q1 2018: 1,029 USD/TEU EBIT EBITDA Group profit / loss USD 66 m USD 270 m USD -42 m 2.1% EBIT margin 8.4% EBITDA
Slide 6: Bunker price significantly above previous year's level putting pressure on freight rates
2 Sector Update Bunker price significantly above previous year’s level putting pressure on freight rates CCFI vs. Bunker price development Global Container Volume [TEUm] 1,000 50 CCFI Comprehensive Index Rotterdam HSFO [USD/mt] +4.8% 950 Ø Q1 2017 Ø Q1 2018 45 825 USD / TEU 815 USD / TEU 40.6 900 -1
Slide 7: Demand: Container shipping growth remains on a healthy and constant level
2 Sector Update Demand: Container shipping growth remains on a healthy and constant level driven by a solid global economic growth Global Container Trade & Global GDP Growth [%] 2015-2017 2018E-2020E GDP multiplier 1.1x 1.3x 5.2% 125 Global Container Trade 5.3% 120 115 5.3% +3.8% 110 5.0% +3.9% 105
Slide 8: Supply: Orderbook remains relatively low with very low idle fleet
2 Sector Update Supply: Orderbook remains relatively low with new orders on a reasonable level and very low idle fleet Orderbook-to-fleet Orders placed YTD [TEU m, %] [TEU m] May Worldfleet 22 3.2 2018 61% 20 2.2 6.5 50% 2.0 1.8 18 6.0 1.2 1.1 38% 0.8 16 0.6 0.4 0.4 0.1 0.2 5.0 27% 28% 14 21% 21% 20
Slide 9: Short term supply pressure persists, mid-term supply/demand gap closing
2 Sector Update Even though, short term supply pressure will most likely persists, mid-term supply/demand gap is closing further YTD Net Capacity Growth Scheduled vessel deliveries May 2018 [in % of worldfleet] [TEU m] 1.7 1.6 1.5 1.5 1.4 1.3 1.2 1.3 1.2 1.2 2016 1.2% 1.0 0.9 0.5 2017 4.2% 2009 2010
Slide 10: LSF 2020: The whole industry will face major changes
2 Sector Update LSF 2020: The whole industry will face major changes – Hapag-Lloyd is exploring and evaluating all possible options New regulations as of 2020 Low sulphur regulation to be enforced worldwide beginning January 2020 IMO announced target to reduce CO2 emissions by 50% by 2050 3 opti
Slide 11: Clearly improved EBITDA of USD 270 m in Q1 2018
3 Financials Clearly improved EBITDA of USD 270 m in Q1 2018 Operational KPIs Q1 2018 Q1 2017 YoY Q4 2017 QoQ Transport volume [TTEU] 2,861 1,934 +48% 2,774 +3% Freight rate1) [USD/TEU] 1,029 1,056 -3% 1,038 -1% Bunker [USD/mt] 372 313 +19% 339 +10% Exchange rate [USD/EUR] 1.23 1.07 +15% 1.18 +4% Re
Slide 12: One-off costs related to the merger
3 Financials Q1 2018 generated one-off costs of USD 3 m related to the merger – Total one-off costs from the merger estimated at USD 115 m Transaction & integration related one-off costs [USD m] ~7 ~115 3 86 17 2016 2017 Q1 2018 Q2 2018 Total 12
Slide 13: Solid transport volume growth of ~48% YoY due to UASC merger
3 Financials Solid transport volume growth of ~48% YoY due to UASC merger – Pro-forma transport volume grew by 2.5%YoY Transport volume [TEU m] Reported Pro-forma1) +48% +2.5% 2,861 2,861 2,792 439 416 439 455 455 1,934 490 389 519 519 498 386 375 375 396 215 123 257 257 281 152 663 576 663 552 117
Slide 14: Persistent stiff competition and UASC integration led to lower rates
3 Financials Persistent stiff competition and UASC integration led to lower rates – On a Pro-Forma basis rates would have increased by 7.1% YoY Reported freight rate [USD/TEU] vs. Pro-forma freight [USD/TEU] 1,072 1,073 1,056 1,038 -2.6% 1,029 1,018 +7.1% 961 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
Slide 15: Optimized bunker consumption, but substantial increase in bunker price harms P&L
3 Financials Hapag-Lloyd benefits from optimized bunker consumption, but substantial increase in bunker price harms P&L Bunker consumption price [USD/mt] Bunker consumption & expenses 0.42 600 Bunker 550 consumption 0.38 per TEU 500 [mt/TEU] 150 450 142 400 350 Bunker 300 expenses per TEU 250 [USD]
Slide 16: Transport expenses per TEU down by ~6% YoY
3 Financials Despite higher bunker prices, transport expenses per TEU were down by ~6% YoY as a result of continuous cost management Transport expenses per TEU [USD/TEU] -58(-6%) 983 7 18 925 -39 -38 -6 -65(-8%) Q1 2017 Expenses for raw Port, canal and Chartering, leases Container Maintenance /repai
Slide 17: Substantial free cash flow of USD 240 m in Q1 2018
3 Financials Substantial free cash flow of USD 240 m in Q1 2018 driven by a solid operating result (EBITDA) and limited investment needs Cash flow Q1 2018 [USD m] Operating Investing Financing cash flow cash flow cash flow 312 -72 -228 1,270 1,232 189 545 42 -96 495 24 0 -350 270 -67 Free cash flow
Slide 18: Stable equity base, solid liquidity reserve and reduced financial debt
3 Financials Stable equity base of USD 7.2bn, solid liquidity reserve of USD 1.2 bn and further reduced financial debt in Q1 2018 Equity base [USDm] Net debt [USDm] Financial Debt 7,596 7,455 7,263 7,233 Cash 725 737 1) 1) 6,812 6,659 Net Debt 31.12.2017 31.03.2018 31.12.2017 31.03.2018 Liquidity re
Slide 19: Outlook for 2018 unchanged
4 Way Forward Outlook for 2018 unchanged 2018 FY 2017 Outlook for 2018 Sensitivities for 2018 Transport volume 9,803 TTEU Increasing clearly +/- 100 TTEU +/- USD <0.1 bn On previous year‘s Average freight rate 1,051 USD/TEU +/- 40 USD/TEU +/- USD ~0.5 bn level Average bunker price 318 USD/mt Increas
Slide 20: Hapag-Lloyd with clearly defined financial policy
4 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 21: Appendix
A Appendix 21
Slide 22: Convincing equity story resulted in higher share price
A Appendix Convincing equity story resulted in higher share price… Share trading 210 200 Frankfurt Stock Exchange / 190 Stock Exchange Hamburg Stock Exchange 180 170 160 150 Market segment / Regulated market (Prime Standard) / Index SDAX 140 130 120 110 ISIN / WKN DE000HLAG475 / HLAG47 100 90 80 70
Slide 23: Bonds continue to trade above par
A Appendix …and bonds continue to trade above par Bonds trading 110 105.9 105 102.3 100 95 HL EUR 6.75 % 2022 HL EUR 5.125% 2024 EUR Bond 2024 EUR Bond 2022 Listing Open market of the Luxembourg Stock Exchange (Euro MTF) Volume EUR 450 m EUR 450 m ISIN / WKN XS1645113322 XS1555576641 / A2E4V1 Maturi
Slide 24: Hapag-Lloyd with equity ratio of 41%
A Appendix Hapag-Lloyd with equity ratio of 41% Balance sheet [USD m] Financial position [USD m] 31.03.2018 31.12.2017 31.03.2018 31.12.2017 Assets Cash and cash equivalents 736.5 725.2 Non-current assets 15,028.2 15,146.1 Financial debt 7,454.6 7,595.5 of which fixed assets 14,936.7 15,071.1 Restri
Slide 25: Hapag-Lloyd with positive EBITDA of USD 269.8 m
A Appendix Hapag-Lloyd with positive EBITDA of USD 269.8 m Income statement [USD m] Transport expenses [USD m] Q1 2018 Q1 2017 % change Q1 2018 Q1 2017 % change Expenses for raw materials & supplies 428.3 275.3 56% Revenue 3,217.2 2,270.9 42% Cost of purchased services 2,219.6 1,626.0 37% Other oper
Slide 26: Financial Calendar 2018
Financial Calendar 2018 February 28th, 2018 Preliminary Financials 2017 March 28th, 2018 Annual Report 2017 May 14th, 2018 Quarterly Financial Report Q1 2018 July 10th, 2018 Annual General Meeting 2018 August 10th, 2018 Halfyear Financial Report 2018 November 8th, 2018 Quarterly Financial Report 9M
Slide 27: Hapag-Lloyd Investor Relations
Hapag-Lloyd Investor Relations Ballindamm 25 20095 Hamburg Tel: +49(40) 3001-2896 ir@hlag.com https://www.hapag-lloyd.com/en/ir.html 27