Dfds A/s · OMXCOP:DFDS
Dfds A/s — Non-Deal Roadshow (March 2019)
77 slides from Dfds A/s's roadshow presentation, March 2019
Slide 1: Ferry Routes & Logistics – DFDS Group Overview
FERRY ROUTES & LOGISTICS DFDS Group Overview March 2019
Slide 2: What We Do
WHAT WE DO . 2 2
Slide 3: We move freight and passengers on ferry routes in and around Europe
We move freight and passengers on 23 ferry routes in and around Europe 3
Slide 4: It's all about the routes – and their location
It’s all about the routes – and their location Serving industrial clusters Combined trade and travel 4
Slide 5: Routes are part of Europe's and Turkey's infrastructure
Routes are part of Europe’s and Turkey’s infrastructure And part of business supply chains 5
Slide 6: We mainly move fast moving freight
We mainly move fast moving freight for delivery same day, next day or day after (A,B,C) 85% of carried volumes are trailers 6
Slide 7: Our key freight customers are forwarders and hauliers
Our key freight customers are forwarders and hauliers Manufacturers of heavy goods are also important customers 7
Slide 8: On routes we move freight and passengers together
On 9 routes we move freight and passengers together 8
Slide 9: People travelling by car are our key customers
People travelling by car are our key customers as is cruise passengers Both for holiday and transport purposes 9
Slide 10: We also provide transport and logistics solutions
We also provide transport and logistics solutions to a wide range of businesses 10
Slide 11: Freight, logistics & pax – northern Europe & Mediterranean
Freight, logistics & pax – northern Europe & Mediterranean 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
Slide 12: 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 12 12
Slide 13: Ferry types
FERRY TYPES Day ferry (ro-pax), Channel Freight ferry (ro-ro) Cruise ferry Combined freight and passenger ferry (ro-pax)
Slide 14: It's all about the route
IT’S ALL ABOUT THE ROUTE . 14 14
Slide 15: Ferry route capacity dynamics
FERRY ROUTE CAPACITY DYNAMICS - stepwise addition of ferries on a route 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 ddd
Slide 16: Structure & Performance
STRUCTURE & PERFORMANCE . 16 16
Slide 17: DFDS structure, ownership and earnings split
DFDS structure, ownership and earnings split DFDS Group DKK bn Revenue 2018 per division People & Ships Finance 18 16 14 12 Ferry Division Logistics Division 10 11.1 Ferry Division 8 Logistics Division • 24 ferry routes - freight • Door-door transport 6 Eliminations and other and passengers • Contra
Slide 18: DFDS key figures
DFDS key figures DKK bn Revenue DKK bn EBITDA & margin before special items Margin, % 18 3.5 20 16 3.0 18 14 2.5 16 12 10 2.0 14 8 1.5 12 6 1.0 10 4 2 0.5 8 0 0.0 6 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Ferry Logistics Invested capital & ROIC before special items ROIC, % NIBD/EBITDA Oper
Slide 19: Ferry Division
FERRY DIVISION 2018: Ferry Division Business units & ROIC, 2018 Revenue North Sea Baltic Sea Channel North Sea Baltic Channel Mediterranean Passenger Mediterranean Sea EBIT Passenger 17% 29% 21% 4% 18% 0% 20% 40% 60% 80% 100% . 19 19
Slide 20: Logistics Division
LOGISTICS DIVISION 2018 Logistics Division Business units & ROIC 2018 Revenue Nordic Continent Nordic Continent UK & Ireland UK & Ireland EBIT 23% 11% 10% 0% 50% 100% . 20 20
Slide 21: Brexit
BREXIT . 21 21
Slide 22: DFDS' UK exposure
DFDS’ UK exposure • Ferry routes connecting UK to Continent and Ferry routes: UK-Continent/Scandinavia LTM Scandinavia (business units Channel and North Sea revenue: DKK 5.3bn plus Amsterdam-Newcastle) 29% • LTM revenue of around DKK 5.3bn with average operating leverage of 65% • Logistics: UK & Ire
Slide 23: DFDS ready for no-deal Brexit
DFDS ready for no-deal Brexit Customs processes Prepared to sustain IT core Brexit and people operations functionalities communication operational in place AEO1 status obtained or about Processes, plans and teams IT automation secured Customers informed of post- to be in key areas ready 24/7 support
Slide 24: Sustainability
SUSTAIN ABILITY . 29 24
Slide 25: Our sustainability focus
Our sustainability focus Environmental footprint Caring employer • Support marine environment • Focus on wellbeing for all employees • Be a good and responsible neighbour • Support an inclusive worksplace • Improve air quality • Provide opportunities to do good in communities and society 25
Slide 26: Digital
DIGITAL . 31 26
Slide 27: Digital moving to centre of strategy
Digital moving to centre of strategy • Digital go-to-market • Web development • Marketing automation • Easier access for smaller freight customer • Digitising the core • Improve decision making through data • Optimise operations through automation • Prepare for autonomy through innovation and partne
Slide 28: Mediterranean
MEDITER RANEAN . 33 28
Slide 29: Mediterranean expansion through acquisition of U.N. Ro-Ro
Mediterranean expansion through acquisition of U.N. Ro-Ro • Leading freight ferry company with 34% market share of ferry & road market and 60% market share of ferry market • High growth region • Similar unaccompanied ferry business model and fleet create opportunities for synergies • Increased flexi
Slide 30: U.N. Ro-Ro port ownership structure
(1) U.N. Ro-Ro owns 60% of Port of Trieste’s operator (Samer Seaports Company), owns the company that has the concession agreement (2) Pendik port is fully owned 30 Source: U.N. Ro-Ro
Slide 31: 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 32: U.N. Ro-Ro overview
U.N. Ro-Ro overview Business overview Key figures • Established 1994, #1 freight ferry operator in Vessels 12 (total capacity of 45.4km lanemeters) Turkey in terms of market share, number and capacity of vessels Ports Owns Pendik and Trieste Port(1), operates in Ambarli, Toulon, Mersin and Bari • 5
Slide 33: 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 34: 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 35: 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 36: Ferry expected to continue to gain market share vs road
Ferry expected to continue to gain market share vs road Export freight from Turkey to Europe • Truck investment needs for forwarders and hauliers reduced by using Units '000 unaccompanied ferry solution 300 59% • Ferry also competitive vs driving through 250 57% Balkan region: 55% 200 • Transit time
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: 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 Romania France China Russia UAE Iran Iraq Germany US UK India Poland Spain Japan Italy Belgium Israel Switzerland Netherlands South Korea Source:
Slide 39: TRY crisis behind us and new invoicing model introduced
TRY crisis behind us and new invoicing model introduced • Currency loss on TRY/DKK – 2018-19 customer receivables in 1.70 Finance of DKK 42m in 2018 from TRY 1.60 depreciation 1.50 Q4: +17% • New invoicing model 1.40 introduced per beginning 2019 1.30 • Incentives offered for 1.20 payment in euros,
Slide 40: Turkish trade historically resilient in face of TRY depreciation
Turkish trade historically 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 5.17 5.00 240 250 Crisis 2 Crisis 1 Global financial crisis Banking led crisis EUR/TRY depreciat
Slide 41: 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 5.17 5,000,000 5.00 4.12 4,000,000 4.00 3.34 3,000,000 3.02 3.00 2.91 2.53 2.33 2.31 2.16 2,000,000 1.99 2.00 1.90 1.77 1.80 1.78 1.69 1.67 1.43 1.10 1,000,000 1.00 0.58 0 0.00 2000 2001 2002
Slide 42: UNRR – cargo split on routes
UNRR – cargo split on routes • Semi-manufactured UNRR: Turkey-Europe cargo split goods used as parts in 0% 10% 20% 30% 40% Turkish manufacturing plants comprise around Parts two thirds of import volumes carried on DFDS Auto industry routes Textiles Materials Machines Food Furniture, construction mat
Slide 43: Mediterranean volumes dropped end of Q4, rebound in January
Mediterranean volumes dropped end of Q4, rebound in January • FY* volumes: +0.3% Mediterranean volumes LM '000 • Q3 volumes: -0.8% 340 • Q4 volumes: -7.1% 320 300 • France volumes impacted by yellow vests in 280 December 260 • Extended Xmas and New Year break in Europe 240 lowered volumes in Decembe
Slide 44: 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 44
Slide 45: 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 46: How We Perform
HOW WE PERFORM . 51 46
Slide 47: Significant ROIC improvement
Significant ROIC improvement • Major challenges resolved: % DFDS Group: Return on invested capital (LTM) • Gothenburg-Immingham 20 19.0 19.3 • Russian market sanctions 17.8 18.1 18 18.1 • Channel turnaround 17.4 17.6 16.9 16 16.4 • Closure of 3 routes end 15.3 14.8 2014 14 13.7 Acquisition of UNRR I
Slide 48: 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 49: Capital distribution
Capital distribution • Total distribution to shareholders was Capital distribution overview DKK 409m in 2018 equal to 3% yield 2016 2017 2018 on equity market value DKK m Actual Actual Actual Dividend per share, DKK 6.00 10.00 4.00 • The NIBD/EBITDA multiple was 2.8 at the end of 2018 Dividend, Mar
Slide 50: Dividend proposed resumed in 2019
Dividend proposed resumed in 2019 NIBD/EBITDA • Dividend proposed resumed with 3.5 DKK 4.00 per share 3.0 2.9 2.8 • Free cash flow lowered by 2.5 2.7 acquisitions of DKK 3.6bn 2.0 Times 1.5 • Free cash flow increased 23% excluding acquisitions of 1.0 0.9 0.9 DKK 3.6bn 0.5 0.0 • NIBD/EBITDA-multiple
Slide 51: Cash generation and CAPEX
Cash generation and CAPEX DKK bn Cash flow and investments • Limited tax payments due to European 5.0 tonnage tax regime 4.5 4.0 3.5 Capex outlook 2019: 3.0 2.5 • Freight ferry (ro-ro) new buildings: 2.0 1.5 DKK 1,150m 1.0 • Combined freight and passenger ferry (ro-pax) 0.5 new buildings: DKK 250m 0
Slide 52: DFDS fleet overview and key figures 2018
DFDS fleet overview and key figures 2018 Sideport Average Freight & and age of Freight passenger Cruise container Ownership owned Total fleet ferries ferries ferries ships share, % ships, yrs DFDS Group 70 35 16 4 15 - - Ferry Division 53 35 14 4 - - - North Sea 17 17 - - - 76 14 Baltic Sea 1 9 2 7
Slide 53: Appendices
APPENDICES . 58 53
Slide 54: North Sea
North Sea • Only freight ferry routes (ro-ro) • High share of industrial customers Sweden-UK/Continent • Forwarders main customer group UK-Continent North Sea Invested DKK m Revenue EBIT capital ROIC, % 2018 3,734 651 3,805 16.7 2017 3,699 670 4,164 15.8 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY 2
Slide 55: Baltic Sea
Baltic Sea • Freight ferry (ro-ro) and combined freight and passenger ferry routes (ro-pax) • Forwarders main freight customer group • Russia to a large degree ‘closed for business’ by sanctions Baltic Sea Invested DKK m Revenue EBIT capital ROIC, % 2018 1,509 361 1,237 29.1 2017 1,465 379 1,201 31.
Slide 56: Channel
Channel • Combined freight and passenger ferry routes (ro-pax) • Forwarders main freight customer group • Seasonal passenger market, Q3 high season Channel Invested DKK m Revenue EBIT capital ROIC, % 2018 2,803 397 1,854 21.3 2017 2,683 353 1,956 18.0 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY 2018
Slide 57: Mediterranean
Mediterranean • Freight ferry routes connecting Europe and Mediterranean DKK m Revenue EBIT Invested capital ROIC, % Turkey (UNRR acquired 7 June 2018) 2018 1,124 180 4,574 3.9 • Turkish forwarders and hauliers main 2017 103 9 99 9.3 customer group Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY • Freig
Slide 58: Passenger
Passenger • Cruise ferry routes, overnight crossings • Seasonal passenger market, Q3 high season • Increasing share of overseas passengers • Also carries freight Passenger Invested DKK m Revenue EBIT capital ROIC, % 2018 1,728 116 633 17.9 2017 1,674 183 678 26.6 Lane metres, '000 ∆ vs LY Pax, '000
Slide 59: Key Northern European Ferry Companies
KEY NORTHERN EUROPEAN FERRY COMPANIES • Logistics office/warehouse ― Container/sideport route 64 59
Slide 60: 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 • Freight ferry (ro-ro) capacity expected to LM '000 metres 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 61: 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 62: 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 63: 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- • Northern Ireland-UK loads (trailers, UK/Baltics/Continent Scandinavia/ • Ireland/UK-Spain containers & rail) UK/Ireland • UK domestic Contract logistics
Slide 64: Logistics Division is a key customer of the route network
Logistics Division is a key customer of the route network • Top 3 customer NORDIC of Shipping Division UK & IRELAND • 8% of total shipping volumes • 10-20% Logistics Division Invested volume target DKK m Revenue EBIT capital ROIC, % on individual Nordic routes CONTINENT 2018 1,866 88 342 23.1 2017 1
Slide 65: Creating value from operational and strategic synergies
Creating value from operational and strategic synergies • Focus on both transformational and Revenue bolt-on acquisitions 2017, Routes Regions Major activity DKK bn Across Northern Europe, Mediterranean DFDS 14 27 9 (incl. sideport/container) • Ferry routes: Stena Line 10 23 6 Across Northern Europe
Slide 66: Growth set to continue in 2019 – Q4 & FY 2018
GROWTH SET TO CONTINUE IN 2019 DFDS GROUP Q4 & FY 2018 7 February 2019
Slide 67: Growth set to continue on the back of record 2018
Growth set to continue on the back of record 2018 DKK bn Revenue • Revenue up 10% in a busy 2018 and EBITDA 18 16 up 11% to DKK 3.0bn (DKK 3.6bn restated 14 for IFRS 16*) 12 10 8 • EBITDA up 20% to DKK 688m in Q4 2018 6 4 2 • Revenue and earnings set to continue to 0 2014 2015 2016 2017 2018 grow in
Slide 68: 20% Q4 EBITDA increase
20% Q4 EBITDA increase Change Change DKK m Q4 18 Q4 17 vs LY % • 13% revenue growth mainly driven by UNRR REVENUE 3,955 3,497 458 13% EBITDA BEFORE SI 688 574 114 20% margin, % 17.4 16.4 1.0 n.a. • EBITDA up 20% to DKK 688m mainly P/L associates -3 0 -3 n.a. driven by UNRR as northern European Gain/
Slide 69: 11% EBITDA increase in 2018
11% EBITDA increase in 2018 Change Change DKKm 2018 2017 vs LY % • 10% revenue growth mainly driven by UNRR REVENUE 15,717 14,328 1,389 10% EBITDA BEFORE SI 2,988 2,702 286 11% margin, % 19.0 18.9 0.2 n.a. • EBITDA up 11% to DKK 3.0bn mainly P/L associates 1 6 -5 -86% driven by UNRR and 26% increase
Slide 70: Mediterranean main EBIT driver in Q4 2018
Mediterranean main EBIT driver in Q4 2018 Q4 2018 DFDS Group EBIT development vs LY • North Sea +9m: Lower operating costs DKK m offset 2.3% lower volumes 440 430 4 • Baltic Sea -7m: Freight earnings 420 -28 impacted by engine breakdown 410 10 • Channel -3m: Some loss of ferry 400 -1 market share du
Slide 71: TRY crisis behind us and new invoicing model introduced
TRY crisis behind us and new invoicing model introduced • Currency loss on TRY/DKK – 2018-19 customer receivables in 1.70 Finance of DKK 42m in 2018 from TRY 1.60 depreciation 1.50 Q4: +17% • New invoicing model 1.40 introduced per beginning 2019 1.30 • Incentives offered for 1.20 payment in euros,
Slide 72: North Sea volumes aligned with European growth
North Sea volumes aligned with European growth North Sea, volumes • FY volumes: +1.0% LM '000 • Q4 volumes: +0.9% 1,000 950 • H1 volumes up 1.2%. Growth slowed to 900 0.5% in Q3 850 • Extended Xmas and Q3 slowdown New Year break 800 Easter timing difference lowered volumes in December 750 700 • Janu
Slide 73: 5 key DFDS performance drivers will drive growth in 2019
5 key DFDS performance drivers will drive growth in 2019 1. Growth benefits from Mediterranean expansion: Full-year UNRR integration impact and expanded cooperation with Ekol Logistics 2. Well prepared for Brexit, incl. Department for Transport (DfT) contract 3. Route network to be strengthened by t
Slide 74: Market growth prospects 2019
Market growth prospects 2019 Euro Zone 3% 2% 1.9% 1.5% 1.5% 2% Visibility on Europe’s growth prospects 1% below ‘normal’ 1% 0% 2018 2019 2020 • Brexit outcome still not clear United Kingdom 2% 1.5% • Global and European growth outlook 2% 1.3% 1.3% trending down, although still positive 1% 1% 0% • Eu
Slide 75: Outlook 2019 – growth set to continue
Outlook 2019 – growth set to continue • ‘Soft’ Brexit likely to support growth and add upside OUTLOOK 2019 • Revenue growth of 10-12% • ‘Hard’ Brexit scenario somewhat mitigated by own preparations and • EBITDA range of DKK 3,800-4,000m DfT contract (2018: restated DKK 3,589m) • Ferry Division: DKK
Slide 76: Priorities going into 2019
Priorities going into 2019 • Adapting to market changes • Mediterranean • Delivering on our 5 DFDS growth performance drivers • Prepared for Brexit • As always, Customer Satisfaction • New freight ferries – grow the topline • Digital goes live • Pursue value-creating M&A and • Improvement and invest
Slide 77: Q&A
Q&A . 77