Slide 1: Investor Presentation 9M 2017 Results
Investor Presentation 9M 2017 Results Hamburg, 14 November 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 deliver on our initiatives (UASC integration, cash capital increase & 01 Deliverables continuous cost control) Substantially improved positive operating result of USD 299 m in 9M 2017 Integration of the operational business of UASC successfully concluded in only
Slide 4: We achieved major progress on our initiatives
1 Deliverables Strategic highlights: We achieved major progress on our initiatives… UASC Integration Financial Position The merger with UASC was successfully completed on We have continued to strengthen our capital structure: 24 May 2017 and has strengthened Hapag-Lloyd’s competitive position substa
Slide 5: Clearly improved operating result in 9M 2017
1 Deliverables Financial highlights: …and delivered a clearly improved operating result in 9M 2017 Transport volume Freight rate Transport expenses per TEU +24.4% +2.2% -0.2% 9M 2017: 7,029 TTEU 9M 2017: 1,060 USD/TEU 9M 2017: 939 USD/TEU EBIT EBITDA Group profit / loss USD 299 m USD 808 m USD 8 m 3
Slide 6: Integration of UASC well on track
2 UASC Integration Integration of UASC well on track – Commercial cut-over achieved 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 an
Slide 7: Since Closing, we successfully integrated the UASC business and staff
2 UASC Integration Since Closing, we successfully integrated the UASC business and staff and have strengthened our position amongst the TOP 5 carriers Integration facts and figures 3 3 months to migrate UASC bookings to Hapag-Lloyd (“Cut-over”) 5 5th Region created, UASC Regions integrated and UASC
Slide 8: Network optimization ongoing
2 UASC Integration Network optimization ongoing – Fleet and Network optimization as key contributor to synergies Fleet Network 31 March 2017 30 Sep 2017 5.9 7.3 Ø vessel size 31 March 2017 Ø vessel size 30 Sep 2017 [TTEU]1) [TTEU] Total fleet [# vessels] Charter fleet [# vessels] 215 1721) 951) 96 1
Slide 9: Trade portfolio optimization
2 UASC Integration Trade portfolio optimization – Enhanced market presence in attractive Middle East trade and solid position in all other trades Transport volume by trade Hapag-Lloyd 9M 2016 UASC 9M 20161) Combined Entity 9M 2017 19% 20% 11% 12% 4% 34% 17% 15% 18% 6% 30% 14% 30% 6% 8% 3% 3% 14% 21%
Slide 10: Total synergies of USD 435 m p.a. from 2019 onwards
2 UASC Integration Total synergies of USD 435 m p.a. to be achieved from 2019 onwards – Significant synergy ramp-up in 2018 expected Synergy potential, full run-rate [USD m] USD 435 m Network Overhead Other Expected synergies Total transaction and integration related one-off costs are expected to am
Slide 11: Demand: Strong GDP and volume growth leads to rising freight rates
3 Sector Update Demand: Strong GDP and volume growth leads to gradually increasing freight rates Global Container Trade Growth [%] CCFI Development +1.6ppt +0.1ppt 1,000 4.8% 4.9% CCFI Comprehensive Index 900 +13% 3.2% 800 784 700 600 500 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep 2016 2017E 2018E
Slide 12: Supply: Consolidation leads to structurally lower orderbook
3 Sector Update Supply: Consolidation leads to structurally lower orderbook, reflecting a more disciplined market environment Orderbook-to-fleet Net capacity growth 2017E [TEU m, %] 7.0% 8 61% 7 -1.4% 6.5 50% 3.4% 6.0 6 38% -2.3% 5.0 27% 28% 5 21% 21% 4.3 18% 19% 16% 14% Scheduled Postponements Scra
Slide 13: EBITDA of USD 808 m in 9M 2017
4 Financials EBITDA of USD 808 m in 9M 2017 – Operating result significantly above previous year’s level Operational KPIs Q3 2017 Q3 2016 YoY 9M 2017 9M 2016 YoY Transport volume Transport volume [TTEU] [TTEU] 2,808 1,947 44% 7,029 5,650 24% Freight rate [USD/TEU] 1,065 1,027 4% 1,060 1,037 2% Bunke
Slide 14: 9M result incl. one-off effects related to UASC
4 Financials 9M result incl. one-off effects related to first-time consolidation and integration of UASC – Total one-off costs estimated at USD 130 m Transaction & integration related Total transaction & integration related one-off costs [USD m] 9M 2017 one-off costs [USD m] ~1302) 82 82 ~301) ~30 -
Slide 15: Strong increase in transport volume of 24.4% YoY
4 Financials Strong increase in transport volume of 24.4% YoY in 9M 2017 – Pro forma volume increased by 6.5% YoY Transport volume per trade [TTEU] Transport volume [TTEU] 2016 2017 Reported Pro forma1) Growth +44.2% [YoY%] +24.4% +6.5% 2,808 7,029 8,438 436 7,923 2,288 5,650 465 1,892 1,947 1,949 1
Slide 16: Pro forma freight rates up 15.9% YoY in Q3 2017
4 Financials Pro forma freight rates significantly up 15.9% YoY in Q3 2017 – despite the merger effect, reported rates have increased 3.7% YoY Freight rate development Hapag-Lloyd reported vs. Combined Entity Pro forma1) [USD/TEU] Ø Freight Rate 9M 2016 9M 2017 +2.2% [USD/TEU] 1,037 1,060 1,100 1,06
Slide 17: Optimized bunker consumption, but higher bunker price
4 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 Trend Q4 500 0.42 Bunker consumption 450 per TEU 0.40 [mt/TEU] 400 135 9M 2017 350 311 +47% 94 300 9M 2016 212 Bunke
Slide 18: Transport expenses per TEU flat YoY despite higher bunker prices
4 Financials Despite higher bunker prices, transport expenses per TEU are flat YoY due to continuous cost-cutting – excl. bunker -5% YoY Transport expenses per TEU [USD/TEU] -2 (0%) 41 2 941 939 -31 -13 0 -43 (-5%1)) 9M 2016 Expenses for raw Port, canal and Chartering, leases Container Maintenance 9
Slide 19: Substantial free cash flow of USD 886 m in 9M 2017
4 Financials Substantial free cash flow of USD 886 m in 9M 2017 – Improved EBITDA major driver for CF generation Cash flow 9M 2017 [USD m] Operating Investing Financing cash flow cash flow cash flow 751 135 -46 -1,569 1,791 Free cash flow = USD 886 m 1,903 460 -241 -1 -25 -57 400 -317 808 52 802 200
Slide 20: Solid equity at USD 6.8 bn and liquidity reserve at USD 1.9 bn
4 Financials Solid equity at USD 6.8 bn and strong liquidity reserve at USD 1.9 bn which were partly used for bond repayments after balance sheet date Equity base [USD m] Net debt [USD m] Financial Debt 4,415 8,768 6,829 Cash 602 1,443 5,342 1) 7,258 3,7931) Net Debt 31.12.2016 30.09.2017 31.12.2016
Slide 21: Hapag-Lloyd Guidance: Unchanged compared to H1 2017
5 Way Forward Hapag-Lloyd Guidance (incl. UASC): Unchanged compared to H1 2017 Guidance for 2017 FY 2016 Guidance for 2017 (HL stand-alone) (Combined Entity) Transport volume 7.6 TEU m Increasing clearly Bunker price 210 USD/mt Increasing clearly Freight rate 1,036 USD/TEU Unchanged EBITDA USD 671 m
Slide 22: Hapag-Lloyd with clearly defined financial policy
5 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 23: Backup
Slide 24: Convincing equity story resulted in higher share price
Backup Convincing equity story resulted in higher share price… Share trading 220 Frankfurt Stock Exchange / Stock Exchange Hamburg Stock Exchange 200 180 Market segment / Regulated market (Prime Standard) / 160 Index SDAX 140 120 ISIN / WKN DE000HLAG475 / HLAG47 100 80 Ticker Symbol HLAG 60 Primary
Slide 25: …and lower bond yields
Backup …and lower bond yields Bonds trading 110 108.0 105 104.5 101.8 100 100.0 95 HL EUR 7.75% 2018 HL EUR 7.50% 2019 HL EUR 6.75% 2022 HL EUR 5.125% 2024 EUR Bond 2024 EUR Bond 2022 EUR Bond 2019 EUR Bond 2018 Listing Open market of the Luxembourg Stock Exchange (Euro MTF) Volume EUR 450 m EUR 450
Slide 26: Current consolidation wave leads to higher concentration
Backup Current consolidation wave leads to higher concentration Carrier capacity [TEU m] and global capacity share [%] Global capacity share [%] Global capacity share [%] 14% 13% 8% Top 5 2.5 Ranking end of 2013 2.3 Top 6-10 Remaining 1.5 4% 4% 4% 4% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 1% 44% 0.8 0.
Slide 27: Scrapping and postponements keep net capacity growth low
Backup Supply / Demand: Scrapping and postponements help to keep net capacity growth low – Supply / demand gap is closing Scrapping Idle fleet [TTEU] [TTEU] Share of world fleet 2.7% 27 28 28 24 23 23 23 21 1,480 1,359 1,324 19 654 809 779 444 400 351 332 381 364 595 544 193 356 131 228 75 2009 2010
Slide 28: Fleet optimization ongoing
Backup Fleet optimization ongoing – Efficient and young fleet with a low level of investment needed Young and fuel-efficient fleet Vessel fleet (as of 30 September 2017) Owned3) Chartered Current fleet Average fleet age1) Hapag-Lloyd 7.0 Vessel CMA CGM 7.7 >14,000 TEU [years] COSCO 7.7 TEU 284,143 -
Slide 29: As of April, Alliances have been reshuffled
Backup As of 1 April, Alliances have been reshuffled THE Alliance competitive on all trades Atlantic Transpacific Far East Others 10% 2M 43% Others 12% 2M 22% Others 1% 2M 39% 2 2 THE Alliance 3 THE Alliance THE Alliance 24% 32% Ocean 15% 26% Ocean 40% Ocean 36% Alliance members THE Alliance 2M Ocea
Slide 30: Capital increase successfully completed
Backup 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 XETRA c
Slide 31: Freight rates with continued recovery since Q2 2016 low
Backup Freight rates with continued recovery since historic low in Q2 2016 Comprehensive Index (SCFI) Shanghai – Europe (SCFI) 1,500 Comprehensive Index SCFI 2,500 NEurope (USD/TEU) Mediter. (USD/TEU) HL Far East* 2,000 1,000 782 1,500 1,000 500 728 500 619 0 0 Jan Apr Jul Oct Jan Apr Jul Oct Jan Ap
Slide 32: 9M 2017: Group profit of USD 7.7 m
Backup 9M 2017: Hapag-Lloyd with Group profit of USD 7.7 m Income statement [USD m] Transport expenses [USD m] 9M 2017 9M 2016 % change 9M 2017 9M 2016 % change Expenses for raw materials & supplies 948.8 531.4 79% Revenue 8,167.7 6,364.0 28% Cost of purchased services 5,648.7 4,783.7 18% Other oper
Slide 33: 9M 2017: Equity ratio of 36.5%
Backup 9M 2017: Hapag-Lloyd with equity ratio of 36.5% - reflecting the capital increase as well as the initial inclusion of UASC Balance sheet [USD m] Financial position [USD m] 30.09.2017 31.12.2016 30.09.2016 30.09.2017 31.12.2016 30.09.2016 Assets Cash and cash equivalents 1,442.6 602.1 549.3 No
Slide 34: 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 34