Slide 1: Investor Presentation Full Year 2017 Results
Investor Presentation Full Year 2017 Results Hamburg, 28 March 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 We continued to deliver on our initiatives 01 Deliverables (UASC integration, cash capital increase & continuous cost control) Clearly increased operating result (EBIT) of USD 466 m in FY 2017 (+234% YoY) Sector fundamentals remain favourable 02 Sector Update Orderbook remain
Slide 4: Hapag-Lloyd looks back on a challenging but successful year 2017
1 Deliverables Strategic Highlights: Hapag-Lloyd looks back on a challenging but successful year 2017… € € € € 2017 2018 January / March 2017 February 2017 FY 2016 closed with May 2017 August 2017 Successful positive operating Closing of the H1 results bond refinancing of results merger with UASC si
Slide 5: Financial Highlights: substantially improved operating result
1 Deliverables Financial Highlights: …with a substantially improved operating result Transport volume Freight rate Transport expenses per TEU +29% +1% -0.2% FY 2017: 9.8 TEU m FY 2017: 1,051 USD/TEU FY 2017: 939 USD/TEU EBIT EBITDA Group profit USD 466 m USD 1,198 m USD 35 m 4.1% EBIT margin 10.6% E
Slide 6: Hapag-Lloyd has improved a lot – bigger, stronger, more efficient
1 Deliverables Hapag-Lloyd has improved a lot – Today we are bigger, stronger and more efficient At a glance 5 Trade portfolio 219 ~12,500 387 offices in 120 Regions The new Hapag-Lloyd has a very container ships are operated employees worldwide Services As result of the balanced trade portfolio, co
Slide 7: Synergies: USD 435 m p.a. from 2019 onwards confirmed
1 Deliverables Total synergies of USD 435 m p.a. from 2019 onwards confirmed – Significant synergy ramp-up in 2018 expected Synergy potential Full run rate [USD m] Synergy ramp up USD 435 m USD 435 m Network Overhead Other Total 2017 2018 2019 Full run rate Network Overhead Other (terminals, equipme
Slide 8: Capital increase strengthened equity while reducing financing costs
1 Deliverables As result of the capital increase, we have strengthened our equity – while at the same time reducing financing costs Capital Market Projects Capital Increase Bond Issuances Listing of former UASC shares through a contribution in kind Issuance of two new bonds with a total value of
Slide 9: Demand: Container shipping growth remains healthy and constant
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% +3.7% 110 5.0% +3.9% 105
Slide 10: Supply: Orderbook remains at historically low level
2 Sector Update Supply: Orderbook remains at a historically low level, while almost no idle capacity is available Orderbook-to-fleet Orders placed [TEU m, %] [TEU m] YTD Worldfleet Feb 22 3.2 61% 2018 20 2.2 6.5 50% 2.0 1.8 18 6.0 1.2 1.1 38% 16 0.6 0.7 0.4 0.2 0.2 5.0 27% 28% 0.1 14 21% 21% 2007 20
Slide 11: Mid-term supply/demand gap is closing further
2 Sector Update Even though, short term supply pressure will most likely persists, mid-term supply/demand gap is closing further Net Capacity Growth Vessel deliveries [in % of worldfleet] [TEU m] 1.7 1.5 1.5 1.5 1.4 1.3 1.2 1.3 1.2 0.8 0.3 2016 1.2% 0.7 0.7 0.5 0.6 0.9 1.0 0.6 0.5 0.7 0.4 0.5 1.2 0.
Slide 12: Consolidation is still ongoing
2 Sector Update Consolidation is still ongoing – Full effects of the higher concentration not fully visible yet Industry consolidation Carrier capacity [TEU m] 24 May 2017 2.5 Ranking end of 2013 2.3 + 1.5 0.8 0.8 0.7 0.7 0.6 0.6 0.5 30 November 2017 0.5 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.3 Maersk MS
Slide 13: Operational margins of container lines improved in 2017
2 Sector Update Operational margins of container lines have improved in 2017 – Hapag-Lloyd is one of the most profitable carriers Carrier EBIT-margins [%] 2015 FY 2014 FY 2015 FY 2016 FY 2017 Maersk Line 9.2% Wan Hai 6.3% Wan Hai 3.3% CMA CGM 7.2% Wan Hai 8.1% Maersk Line 6.0% Hapag-Lloyd 1.6% Hapag
Slide 14: Significantly improved EBIT of USD 466 m, EBITDA almost doubled
3 Financials We have achieved a significantly improved EBIT of USD 466 m while EBITDA almost doubled to USD 1,198 m in 2017 Operational KPIs Q4 2017 Q4 2016 ∆% FY 2017 FY 2016 ∆% Transport volume [TTEU] 2,774 1,949 +42% 9,803 7,599 +29% Freight rate [USD/TEU] 1,030 1,033 0% 1,051 1,036 +1% Bunker [U
Slide 15: One-offs mainly related to integration of UASC
3 Financials One-offs are mainly related to the first time consolidation and integration of UASC – Total one-off costs estimated at USD 115 m Transaction & integration related one-off costs [USD m] Transaction & integration related one-off costs in 2017 Total transaction & integration related one-of
Slide 16: Interest result affected by early redemption of bonds
3 Financials Interest result mainly affected by extraordinary cost as a result of the early redemption of bonds Q4 2017 FY 2017 132 404 108 351 -14 -1 -34 -9 -10 -9 Interest result Bond effect Double interest Other Interest result Interest result Bond effect Double interest Other Interest result rep
Slide 17: Transport volume up 29% YoY
3 Financials Transport volume was up by 29% YoY, on a pro-forma basis transport volume with a healthy growth of 4.8% YoY in line with market growth Transport volume [TEU m] Q4 2016 vs. Q4 2017 FY 2016 vs. FY 2017 Reported Pro-forma1) Reported Pro-forma1) +29.0% +4.8% +42.3% 0.0% 9,803 11,212 10,698
Slide 18: Pro-forma freight rates increased by 9.4% YoY
3 Financials On a pro-forma basis, freight rates have increased by 9.4% YoY Reported freight rate [USD/TEU] vs. Pro-forma freight [USD/TEU] 2016 2017 Freight rate 1,036 1,051 +1.4% 1,067 1,064 1,065 1,047 1,027 1,033 1,030 1,019 -0.3% 1,011 957 954 +10.9% 929 919 907 928 1,015 Pro-forma1) +9.4% Q1 2
Slide 19: Optimized bunker consumption, but higher bunker price
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 550 Bunker 0.41 500 consumption per TEU 0.40 [mt/TEU] 450 137 FY 2017 400 318 350 +41% 100 FY 2016 300 226 Bunker 25
Slide 20: Transport expenses per TEU flat YoY despite higher bunker prices
3 Financials Despite higher bunker prices, transport expenses per TEU are flat YoY due to continuous cost management – excl. bunker -5.0% YoY Transport expenses per TEU [USD/TEU] -3 (-0.4%) 37 15 925 3 922 -40 -18 -40 (-5%1)) FY 2016 Expenses for raw Port, canal and Chartering, leases Container Main
Slide 21: Substantial free cash flow of USD 1,048 m in FY 2017
3 Financials Substantial free cash flow of USD 1,048 m in FY 2017 – Increased EBITDA and low CAPEX as major driver for CF generation Cash flow FY 2017 [USD m] Operating Investing Financing cash flow cash flow cash flow 1,020 28 -925 1,854 Free cash flow = USD 1,048 m -2,823 -22 414 -178 32 -468 427
Slide 22: Solid equity at USD 7.3 bn and strong liquidity reserve
3 Financials Solid equity at USD 7.3 bn and strong liquidity reserve at USD 1.3 bn but also higher net debt as a result of the merger with UASC Enhanced equity base [USDm] Net debt [USDm] Financial Debt 4,415 7,596 7,263 Cash 602 725 5,342 1) 6,812 3,793 1) Net Debt 31.12.2016 31.12.2017 31.12.2016
Slide 23: Outlook for 2018
4 Way Forward Outlook for 2018 2018 FY 2017 Outlook for 2018 Sensitivities for 2018 Transport volume 9,803 TTEU Increasing clearly +/- 100 TTEU +/- USD <0.1 bn Average freight rate 1,051 USD/TEU On previous year‘s level +/- 40 USD/TEU +/- USD ~0.5 bn Average bunker price 318 USD/mt Increasing clearl
Slide 24: 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 25: Executive Board – Changes in organisational structure
4 Way Forward Executive Board – Changes in organisational structure Executive Board CEO CPO CFO COO Rolf Habben Joachim Nicolás Burr Anthony J. Firmin Jansen Schlotfeldt Digitalization & customer Ensure deleveraging path & Full focus on operational Grasp further procurement centricity become
Slide 26: Appendix
A Appendix 26
Slide 27: 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 28: Bonds continue to trade above par
A Appendix …and bonds continue to trade above par Bonds trading 110 105 105.3 100 101.1 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 29: Commercial integration of UASC completed only five months after closing
A Appendix Commercial integration of UASC completed only five months after closing Timeline of UASC merger and integration Q4 Q1/2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2016 2016 2017 2017 2017 2017 UASC merger Due Diligence Deal contracts Merger Closing Closing and Cut-over and Completion negotiations cleara
Slide 30: Fleet optimization ongoing
A Appendix Fleet optimization ongoing – Efficient and young fleet with a low level of investment needed Young and fuel-efficient fleet Vessel fleet (31 December 2017) Owned3) Average fleet age1) Hapag-Lloyd 7.1 Vessel Chartered Current fleet COSCO 7.8 >14,000 TEU [years]2) CMA CGM 7.9 TEU 284,143 -
Slide 31: Network optimization ongoing
A Appendix Network optimization ongoing – Fleet and Network optimization as key contributor to synergies Network optimization in 2017 31 March 2017 30 June 2017 30 September 2017 31 December 2017 118 129 125 120 HL Services Services Services Services 45 UASC Services 5.9 Ø vessel size [TTEU] 7.2 31
Slide 32: Trade portfolio optimization
A Appendix Trade portfolio optimization – Enhanced market presence in attractive Middle East trade and solid position in all other trades Transport volume by trade Hapag-Lloyd FY 2016 UASC FY 20161) Combined Entity Pro-forma FY 2017 20% 20% 11% 13% 4% 33% 17% 16% 18% 6% 30% 13% 30% 5% 8% 3% 3% 15% 2
Slide 33: As of April, Alliances have been reshuffled
A Appendix As of 1 April, Alliances have been reshuffled THE Alliance competitive on all trades Atlantic Transpacific Far East Others 9% 2M 41% Others 12% 2M 21% Others 0% 2M 41% 2 2 THE Alliance 3 THE Alliance THE Alliance 25% 34% Ocean 16% 27% Ocean 40% Ocean 35% Alliance members THE Alliance 2M O
Slide 34: Top players now make up more than 64% capacity share
A Appendix On important trades TOP 5 players now make up more than 64% capacity share TOP 5 concentration on individual trades (2013 versus 2018) Global capacity share [%] Top 5 Top 6-10 Remaining 44% 65% 82% 79% 81% 79% 73% 67% 64% 59% 17% 41% 43% 19% 39% 16% 2013 2018 (incl. announced mergers) 201
Slide 35: Contracted freight rates show continuous recovery
A Appendix Contracted freight rates have shown continuous recovery and slightly less volatility Comprehensive Index (CCFI) Shanghai – Europe (CCFI) 1,100 CCFI Comprehensive Index 2,500 NEurope (USD/TEU) Mediter. (USD/TEU) 1,000 2,000 900 1,500 800 789 1,000 1,041 700 978 600 500 500 0 Jan Apr July O
Slide 36: Capital increase successfully completed
A Appendix Capital increase successfully completed – Key terms of the rights issue 11,717,353 new shares (c. 7.1 % of current share Offer size capital), resulting in EUR 351.5 m of gross proceeds Shareholders‘ agreement/ Controlling shareholders Freefloat EUR 30 per share (17.8 % discount to XET
Slide 37: Solid long-term and diversified financing portfolio
A Appendix Solid long-term and diversified financing portfolio Debt maturity profile [USD m] Facility USD m 2,541 EUR Bond 2022 539 EUR Bond 2024 538 Other 30 Total Bonds 1,107 1,622 1,700 Total liabilities from finance lease 148 contratcs Total other financial liabilities 648 1,042 1,018 Vessel fin
Slide 38: Hapag-Lloyd with equity ratio of 40.9%
A Appendix Hapag-Lloyd with equity ratio of 40.9% Balance sheet [USD m] Financial position [USD m] 31.12.2017 31.12.2016 31.12.2016 31.12.2016 Assets Cash and cash equivalents 725.2 602.1 Non-current assets 15,146.1 10,267.4 Financial debt 7,595.5 4,414.9 of which fixed assets 15,071.1 10,183.3 Net
Slide 39: Hapag-Lloyd with positive EBITDA of USD 1,198 m
A Appendix Hapag-Lloyd with positive EBITDA of USD 1,198 m Income statement [USD m] Transport expenses [USD m] FY 2017 FY 2016 % change FY 2017 FY 2016 % change Expenses for raw materials & supplies 1,339.6 760.0 76% Revenue 11,286.2 8,545.5 32% Cost of purchased services 7,699.5 6,271.6 23% Other o
Slide 40: 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 40