Slide 1: Investor Presentation – Full Year Results 2014
Additional slides / backups to be added (esp. for BPK): 1. German flag (>40 vessels, HL commitment, new ships) 2. Environmental topics (“Landstrom” / certified scrapping) 3. Elbe dredging (European Court of Justice etc) Investor Presentation – 4. Employee information (7.001 10.949, 4th region) Ful
Slide 2: Executive summary
Executive summary Executive summary Operating performance in 2014 clearly below previous year – dissatisfying result caused by persistently strong competition and one-off expenses Key highlight in 2014 was the merger of Hapag-Lloyd and CSAV container shipping activities • “New” Hapag-Lloyd is th
Slide 3: Agenda
Agenda A. Financials 2014 B. Market Update C. Our Way Forward 3
Slide 4: Hapag-Lloyd revenues increase to EUR 6.8 bn in 2014 – CCS activities consolidated as of 2 December 2014
Hapag-Lloyd revenues increase to EUR 6.8 bn in 2014 – CCS activities consolidated as of 2 December 2014 Transport volume [TTEU] Freight rate [USD/TEU] CCS (1M) +7.5% 1,700 2012 2013 2014 +4.6% HL (12M) 1,600 5,907 5,255 5,496 1,500 1,604 150 1,400 CCS (1M) 1,409 1,439 1,300 5,255 +4.6% 5,496 +4.7% 5
Slide 5: Transport volume growth with 4.7% in line with market – Far East trade main contributor
Transport volume growth with 4.7% in line with market – Far East trade with 8.6% main contributor in 2014 Transport volume [TTEU] 2012 2013 2014 Transport 5,255 5,496 5,907 volume +4.6% +4.7%1) +1.1% [TTEU] Growth 10.5% 1.6% -4.4% -2.4% 0.2% 2.3% 8.6% 7.5% 5.5% 6.1% 5.9% 1.6%1) YoY [%] 1,560 2014 1,
Slide 6: Average freight rate at 1,434 USD/TEU – Average bunker price at 575 USD/t
Average freight rate was at 1,434 USD/TEU (-48 USD/TEU) – Average bunker price of Hapag-Lloyd was at 575 USD/t Freight rate1) [USD/TEU] vs. bunker price2) [USD/t] 2012 2013 2014 Bunker cost / TEU as share 22.8% 20.9% 19.3% of freight rate [%] 1,700 1,647 1,100 1,594 1,604 1,600 1,000 1,546 1,484 1,4
Slide 7: Hapag-Lloyd further optimized its cost base in 2014
Hapag-Lloyd further optimized its cost base in 2014 – Transport expenses reduced by -32 USD/TEU1) Transport expenses [EUR m] Transport expenses per TEU [USD/TEU] Transport expenses 7,952 7,669 8,0531) [USD m] FY 2013 1,395 6,182 6,060 Raw materials 5,773 174 and supplies -38 Port, canal and terminal
Slide 8: EBIT adjusted at EUR -112 m in 2014 – High non-recurring one-off effects due to CSAV transaction
EBIT adjusted at EUR -112 m in 2014 (incl. CCS for 1 month) – High non-recurring one-off effects due to CSAV transaction Operational KPIs EBITDA bridge [EUR m] FY FY . 23 205 6 212 ∆ 107 0 2014 2013 99 -24 Transport volume [TTEU] 5,907 5,496 411 1) Freight rate [USD/TEU] 1,434 1,482 -48 1) EBITDA PP
Slide 9: Hapag-Lloyd considerably strengthened its capital structure and gained an additional anchor shareholder
Hapag-Lloyd considerably strengthened its capital structure and gained an additional strong anchor shareholder Enhanced equity base Strong shareholder base EUR m 25.50%12.75% 12.75% 4,170 Shareholders Agreement 1.4x Kühne CSAV 2,915 HGV Equity 34.0% 23.2% 20.8% Consortium company Nordbank Warburg SI
Slide 10: Agenda
Agenda A. Financials 2014 B. Market Update C. Our Way Forward 10
Slide 11: Container shipping continues to be a growth industry – Global order book on low levels
Container shipping has been and continues to be a growth industry – Global order book currently on low levels Container volume and global GDP Global order book 2000 = 100 TEU m % % +5.9% 8 70 260 7 56% 60 240 Latest orders Transport 6 of c. 384 TTEU 220 volume (c. 2%) not yet 50 included 5 200 40 +3
Slide 12: Short-term freight rate pressures and volatilities remain in the container shipping industry
Short-term freight rate pressures and volatilities remain in the container shipping industry Shanghai – Europe (SCFI) Shanghai – USA (SCFI) 2,500 6,000 USWC (USD/FEU) USEC (USD/FEU) NEurope (USD/TEU) Mediter. (USD/TEU) 2,000 5,000 4,355 4,000 1,500 3,000 1,000 808 2,000 1,748 620 500 1,000 0 0 Jan A
Slide 13: Capacity measures help to restore supply and demand balance
Capacity measures help to restore supply and demand balance Global capacity management Scrapping [TTEU] Idle fleet [TTEU] 28.2 average age scrappings 12% 1.2% 26.1 26.8 500 23.4 1.420 1.480 22.0 21.6 1.500 400 300 1.000 838 830 779 200 444 379 334 385 500 356 100 228 21 101 131 77 0 0 2007 2008 2009
Slide 14: Bunker price and EUR/USD rate have significantly decreased
Bunker price and EUR/USD rate have significantly decreased – LSF to be used in emission control areas as of Jan 2015 Bunker price [Rotterdam; USD/t] Exchange rate [EUR/USD] 1,042 1,029 1,050 -21% 1,000 1.40 1.39 950 922 1.36 1.35 900 1.35 850 800 1.30 750 721 822 1.25 700 665 1.25 -52% 650 602 600 1
Slide 15: East-West trades: Now consolidated in 4 key alliances
East-West trades: Now consolidated in 4 key alliances Top 20 – Current fleet [TEU m]1) Transpacific (capacity share) Other Maersk 2.8 O3 4% MSC 2.5 13% CKYHE CMA CGM 1.6 35% Hapag-Lloyd 1.0 Evergreen 0.9 2M 16% COSCO 0.9 CSCL 0.7 Hanjin 0.6 32% MOL 0.6 G6 Alliance APL 0.6 Hamburg Süd 0.5 Far East (c
Slide 16: North-South trades: Hapag-Lloyd joins forces in Latin America
North-South trades: Hapag-Lloyd joins forces in Latin America New cooperation in Latin America Compelling rationale Our increased presence in Latin America since New product between Asia and Latin America with integration of CSAV container shipping activities reliable weekly services has resulte
Slide 17: Agenda
Agenda A. Financials 2014 B. Market Update C. Our Way Forward 17
Slide 18: Our Way Forward: Short-term improvements under way, mid-term initiatives defined
Our Way Forward: Short-term improvements under way, mid-term initiatives defined Short- and mid-term initiatives 1 Project CUATRO Close deal and integrate CSAV business SHORT-TERM 2 Project OCTAVE Short-term profit improvement in 8 modules 3 Structural Improvements Align board structure and responsi
Slide 19: Project CUATRO: USD 300 m net synergy potential expected
Project CUATRO: USD 300 m net synergy potential expected Synergies of approx. USD 300 m p.a. Competitive and flexible fleet ~300 Average age of the combined fleet roughly 8 years as of 31 December 2014 65% of combined capacity younger than 10 years, only 5% older than 20 years Network Overhead O
Slide 20: Integration progressing well – Current focus on Voyage Cut-over
Integration progressing well – Current focus on Voyage Cut-over Integration status Organization and staffing – New organization implemented, staff selection nearly completed Office set-up & IT infrastructure – Offices selected, infrastructure set-up progressing Customer and vendor information – Cust
Slide 21: Transfer of operating business to conclude end of June 2015
Transfer of operating business to conclude end of June 2015 Timeline Signature Start of Voyage Cut-over – Planned IPO/ of BCA Booking on HL systems 2nd Capital 16 April 2014 2 March 2015 Increase in 2015 Closing and Main Period for Trainings Signature start of for HL systems of MoU transition Mid of
Slide 22: Project OCTAVE: Further short-term improvements targeted
Project OCTAVE: Further short-term improvements targeted Hapag-Lloyd improvement areas Inland Pricing & Steering Procurement & Inland Bunker Procurement Fleet Renewal Targeted cost Fleet & savings: Fleet Refurbishment Network Low three- Service Structure digit USD million figure for 2015 Utilization
Slide 23: "New" Hapag-Lloyd optimizes its competitive and flexible fleet
“New” Hapag-Lloyd optimizes its competitive and flexible fleet Vessel fleet structure as of 31 December 2014 Owned1) Chartered Current Orderbook Fleet ownership [%] fleet Capacity [TEU] 131,674 131,674 >10,000 TEU Vessels 10 10 Capacity [TEU] 197,114 68,036 265,150 46,500 45% 46% chartered 55% owned
Slide 24: Hapag-Lloyd intends to further optimize its fleet on the Latin America-Europe market
For the upcoming years, Hapag-Lloyd intends to further optimize its fleet on the Latin America-Europe market Transport volume by trade, 31 Dec 2014 Fleet considerations “New” Hapag-Lloyd The new ships would be deployed primarily on Latin American routes 17% New ships would optimize network / pro
Slide 25: Hapag-Lloyd expects a significant improvement in profitability in 2015
Hapag-Lloyd expects a significant improvement in profitability in 2015 Guidance for 2015 Comments Guidance for 2015 based on pro-forma inclusion of Transport CCS for 2014 – however, one-off volume and rate Increasing moderately volume effects not taken into account in the guidance • CCS transport
Slide 26: 26
26
Slide 27: Income statement of Hapag-Lloyd [EUR m]
Income statement of Hapag-Lloyd [EUR m] Income statement Transport expenses 2014 2013 ∆ 2014 2013 ∆ 5,907 5,496 Transport expenses 6,060 5,773 287 Transport volume [TTEU] 411 Cost of raw materials, supplies and purchased goods 1,362 1,437 -74 Freight rate without CCS activitites [USD/TEU] 1,434 1,48
Slide 28: Balance sheet of Hapag-Lloyd [EUR m]
Balance sheet of Hapag-Lloyd [EUR m] Assets Equity and liabilities 31.12.2014 31.12.2013 ∆ 31.12.2014 31.12.2013 ∆ Goodwill 1,375.6 664.6 711.0 Equity 4,169.6 2,915.1 1,254.5 Other intangible assets 1,309.7 529.7 780.0 Provisions 807.3 279.8 527.5 Property, plant and equipment 5,176.0 4,067.6 1,108.
Slide 29: Integration of the CCS – Composition of Goodwill (1/2)
Integration of the CCS – Composition of Goodwill (1/2) Consolidated statement of financial position CCS [EUR m] Dec 2, 2014 Other intangible assets 745 Property, plant and equipment 733 Investments in equity-accounted investees 50 Inventories 37 Trade accounts receivable 218 Other assets 51 USDm EUR
Slide 30: Integration of the CCS – Composition of Goodwill (2/2)
Integration of the CCS – Composition of Goodwill (2/2) Purchase price allocation [USD m] Dec 2, 2014 COMMENTS Purchase price 1,531 Assets are regularily depreciated Equity acquisition (at book value) 890 Elimination of Goodwill and others positions -807 The purchase price allocation identified N
Slide 31: Hapag-Lloyd generated a free cash flow of EUR 120 m in 2014
Hapag-Lloyd generated a free cash flow of EUR 120 m in 2014 Cash flow 2014 [EUR m] Operating Investing Financing cash flow cash flow cash flow 377 -258 82 748 -792 Free cash flow = EUR 120 m 922 -31 211 310 307 -182 -341 45 534 44 69 99 5 34 711 465 Liquidity EBITDA Working Other Invest- Dividends C
Slide 32: Hapag-Lloyd is one of the world's leading container shipping companies
Hapag-Lloyd is one of the world’s leading container shipping companies Hapag-Lloyd at a glance Pure play container shipping company Headquartered in Hamburg, Germany Founding member of Grand and G6 Alliance 191 container ships with TEU 1 million Transport volume of 7.7 million TEU in 20141
Slide 33: Strong rationale for merger of Hapag-Lloyd and CCS
Strong rationale for merger of Hapag-Lloyd and CCS Deal rationale A “New” Hapag-Lloyd catches up to top 3 players Strategic Selective market leadership and economies of scale rationale Creation of a global platform as a base for further consolidation Strategic fit due to complementary trade
Slide 34: Size matters – #4 global carrier with selected market leadership
Size matters – #4 global carrier with selected market leadership Top #4 in global carrier ranking Top #4 in reefer equipment capacity 2.8 TEU m TTEU 2.5 496 1.6 270 1.0 0.9 0.9 170 0.8 0.7 0.6 0.6 144 144 0.6 110 102 80 75 Hamburg COSCO Hapag- Hapag- Maersk Hapag- Hapag- Hanjin Maersk "New" CSCL Llo
Slide 35: Growth of above 5% projected for the coming years
Growth of above 5% projected for the coming years Global container trade [TEU m] +5% +5% +6% +7% +6% 166 +5% 158 +4% +5% 150 +16% +2% +2% +7% 142 +10% 134 -10% 128 +14% +9% 118 120 122 110 +10% 102 106 92 95 +8% 85 +4% 79 69 59 63 56 CAGR*: +8.8% CAGR*: +5.3% 2000 2001 2002 2003 2004 2005 2006 2007
Slide 36: Development of global capacity
Development of global capacity Annual net capacity development [TEU m] Net Capacity Growth (during year) +4% +1% Nominal Capacity (beginning of year) +11% 22.3 22.6 +5% +5% 21.4 0.9 0.3 +5% +8% 19.3 2.1 +9% 18.3 +6% 17.4 1.0 16.6 0.9 +13% 15.3 0.8 14.0 1.3 13.2 1.3 11.7 0.8 1.5 1.3 21.4 22.3 18.3 19
Slide 37: Nominal fleet growth is not comparable with demand growth
Nominal fleet growth is not comparable with demand growth Nominal vs. effective capacity Example Existing nominal capacity Atlantic + Newbuildings to be delivered this year – Scrappings Weekly Capacity 5,000 TEU = New nominal capacity Far East – Requirements for long-distances services Example – Ope
Slide 38: Imbalances: Hapag-Lloyd outperforms the market
Imbalances: Hapag-Lloyd outperforms the market Number of full non-dominant leg containers Container Steering per 10 full dominant leg containers1) Dominant 10 Special Know-How/ IT leg Trans- 6 Advantageous customer pacific 6 portfolio Cost-efficient management of Trans- 7 equipment flows atlantic 8
Slide 39: Long-standing and diversified customer base of blue chip customers
Long-standing and diversified customer base of blue chip customers and a diversified base of goods transported Highly diversified customer base1) Strong relationship with blue chip customers 100% 27% Top 50 Customers (∑ = 40%) 23% 10% 10% 11% 20% TOP 10 TOP TOP TOP TOP > 500 Total Hapag-Lloyd has a
Slide 40: Alliances allow Hapag-Lloyd to leverage its fleet and ensure worldwide presence
Alliances allow Hapag-Lloyd to leverage its fleet, increase utilization and ensure a worldwide presence G6 partners G6 advantages Cost efficiencies Increased average vessel size Reduced average sailing speed Thus lower bunker consumption Increased bargaining power Direct coverage / feeder
Slide 41: The average freight rates decreased over all trades
The average freight rates decreased over all trades Atlantic Latin America Far East 1,800 1,600 1,500 1,731 1,503 1,750 1,400 1,323 1,681 1,500 1,700 1,653 1,390 1,300 1,650 1,400 1,327 1,200 1,151 1,122 1,600 1,300 1,100 1,550 -2.7% -1.8% -6.1% 1,200 1,000 1,500 Ø 1,748 Ø 1,679 Ø 1,634 Ø 1,444 Ø 1,
Slide 42: Effects of tightened Low Sulphur Fuel Regulations
Effects of tightened Low Sulphur Fuel Regulations Change in regulation Sulphur Emission Control Areas (SECAs) As of 2015, stricter regulations apply in designated SECAs – vessels must use higher-quality fuels with sulphur content of no more than 0.1% (previous limit: 1.0%) The change affects all
Slide 43: Decreasing bunker consumption due to economies of scale
Decreasing bunker consumption due to economies of scale – Bunker consumption per TEU decreased by further 4.5% Fuel consumption 2009-2014 [k mt; mt/TEU] 5.78 Bunker COMMENTS consumption per slot Over the last few [mt/slot1)] 4.90 4.87 years significant 4.55 decreases in bunker Bunker 3.96 consumpt
Slide 44: Hapag-Lloyd has issued three bonds on debt capital markets
Hapag-Lloyd has issued three bonds on debt capital markets EUR Bond 2019 EUR Bond 2018 USD Bond 2017 Issuer Hapag-Lloyd AG Hapag-Lloyd AG Hapag-Lloyd AG Volume EUR 250 m EUR 400 m USD 250 m Minimum order 100,000 EUR 100,000 EUR 150,000 USD Issue date November 20, 2014 September 20, 2013 October 01,
Slide 45: HL Bonds continously trade above par
HL Bonds continously trade above par Hapag-Lloyd bonds 110 104.8 104.8 104.5 100 90 80 Jan/ 13 Mai/ 13 Sep/ 13 Jan/ 14 Mai/ 14 Sep/ 14 Jan/ 15 HL USD 9.75% 2017 HL EUR 7.75% 2018 HL EUR 7.50% 2019 Hapag-Lloyd YTW 10% 8% 5.99% 6% 5.68% 4% 5.67% 2% 0% Jan/ 14 Feb/ 14 Mrz/ 14 Apr/ 14 Mai/ 14 Jun/ 14 Ju
Slide 46: Key investment highlights
Key investment highlights Strong and highly experienced management team and committed shareholder base A global market leader with strong strategic alliances and a global footprint – fourth largest container shipping company worldwide Well balanced market positions in high-volume trades – more resil
Slide 47: Henrik Schilling, Senior Director Investor Relations
Henrik Schilling Senior Director Investor Relations Tel +49 40 3001-2896 Fax +49 40 3001-72896 Henrik.Schilling@hlag.com http://www.hapag-lloyd.com/en/investor_relations/overview.html 47
Slide 48: Disclaimer
Disclaimer STRICTLY CONFIDENTIAL This presentation is provided to you on a confidential basis. Delivery of this information to any other person, the use of any third-party data or any reproduction of this information, in whole or in part, without the prior written consent of Hapag-Lloyd is prohibite