Slide 1: Investor Presentation – Half Year Results 2015
Investor Presentation – Half Year Results 2015 26 August 2015 1
Slide 2: “Way Forward” well on track
“Way Forward” well on track STRATEGIC HIGHLIGHTS H1 2015 CUATRO: The integration is well on track – substantial portion of synergies already realized in H1 2015 • HL targets net synergies of c. USD 400 m p.a. by 2017 (USD 100 m more than initially anticipated) OCTAVE: The additional cost saving
Slide 3: Strong earnings growth trajectory
Strong earnings growth trajectory FINANCIAL HIGHLIGHTS H1 2015 Key return figures2) [USD m] In a challenging market environment, H1 2014 H1 2015 HL significantly increased its EBITDA to USD 551 m (margin: 10.6%) in H1 2015 – MARGIN 10.6% 5.7% EBIT reached USD 299 m (margin: 5.7%) 2.1% -3.2% • Subs
Slide 4: Agenda
Agenda A. Strategy – “Way Forward” well on Track B. Industry – Improving Mid-term Fundamentals C. Financials – Strong Earnings Growth Trajectory 4
Slide 5: We have a clear way forward – Our five key initiatives
We have a clear way forward – Our five key initiatives are off to a good start with significant further upside Good start Further upside 3 Structural improvements 2 Alignment of board structure Project and responsibilities OCTAVE Strong performance driven culture Short-term profit 1 improvement in 8
Slide 6: Project CUATRO: Integration well on track
Project CUATRO: Integration well on track Strong consolidation track record Integration: 4 key elements PREPARATION New organisation structure implemented (2005) (2014) Staff selected and successfully on-boarded Canadian container shipping Chilean container shipping TRAINING Familiarisatio
Slide 7: Project CUATRO: Targeted net synergies of USD 400 m p.a.
Project CUATRO: Targeted net synergies of USD 400 m p.a. Synergy run-rate [USD m] Synergy ramp-up [USD m] Plan = Savings potential based on bottom-up estimate C Implemented = All preconditions fulfilled to realise savings Realised = Cumulated result impact realised year-to-date ~400m B ~400m ~275m A
Slide 8: Project OCTAVE: Further improvement measures across all areas of operations
Project OCTAVE: Further improvement measures across all areas of operations Eight clear workstreams defined OCTAVE delivers as planned OBJECTIVE Procurement & Inland Pricing & Steering Focus on operational measures with immediate effects Inland Bunker Procurement Mobilisation of mgmt. with limit
Slide 9: Project OCTAVE: Savings of USD 200 m planned by 2016
Project OCTAVE: Savings of USD 200 m planned by 2016 OCTAVE run-rate [USD m] OCTAVE ramp-up [USD m] Plan = Savings potential based on bottom-up estimate C Implemented = All preconditions fulfilled to realize savings ~200m Realized = Cumulated result impact realized year-to-date B ~200m 97% 80% 77% ~
Slide 10: Structural improvements: Strong performance driven culture
Structural improvements: Strong performance driven culture Performance management Rolf Habben Nicolás Anthony J. Thorsten Clear responsibilities and Executive Jansen Burr Firmin Haeser accountability Chief Executive Chief Financial Chief Operating Chief Commercial Board Officer (CEO) Officer (CFO)
Slide 11: Close the Cost Gap: New ships suitable esp. for Latin America
Close the Cost Gap: New ships suitable esp. for Latin America underway – Further investments to come Already initiated… …with more to come Delivered: 10x 13,200 TEU Improve competitiveness on East-West trades Strengthened competitiveness and market share along with G6 plans to introduce ULCV loo
Slide 12: Hapag-Lloyd has a highly competitive and flexible fleet
Hapag-Lloyd has a highly competitive and flexible fleet Vessel fleet structure as of 30 June 2015 Owned1) Chartered3) Current Current fleet orderbook Fleet age [% of total capacity] Capacity [TEU] 131,674 131,674 52,945 Average age 7.3 years5) >10,000 TEU Vessels 10 10 5 MODERN Capacity [TEU] 234,31
Slide 13: Compete to win: New commercial approach
Compete to win: New commercial approach will drive mindset change and energise the sales organisation Improve revenue quality Sales Planning Pricing and Yield Management Sales Execution Sales Organisation Improve commercial planning to Drive active yield management Introduce incentive scheme
Slide 14: Agenda
Agenda A. Strategy – “Way Forward” well on Track B. Industry – Improving Mid-term Fundamentals C. Financials – Strong Earnings Growth Trajectory 14
Slide 15: Fundamentally attractive industry growing faster than GDP
Fundamentally attractive industry growing faster than GDP – despite short-term volatilities Attractive container shipping volume and global GDP growth1) 2000 = Indexed to 100 Containerisation dynamics are intact 2000 – 2008 2010 – 2014 2014 – 2016e • Trade deregulation GDP • Global relocation of 1
Slide 16: Short-term freight rate pressures and volatilities will remain
Short-term freight rate pressures and volatilities will 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 4,000 1,500 3,000 2,846 1,000 2,000 1,585 500 469 449 1,000 0 0
Slide 17: Increasingly favourable supply side factors
Increasingly favourable supply side factors provide backdrop for profitable growth in the medium term Orders for newbuilds have normalized to sustainable levels Declining incremental benefits of ever larger vessels 80% Relative order book (% of world fleet) 60% 56% Total cost for transport chain 40%
Slide 18: Top global player by capacity and leading member of the G6 Alliance
Top 4 global player by capacity and leading member of the G6 Alliance with well-balanced global exposure Solidly established top 4 player in a fragmented market… Well-balanced exposure to global trades1) … with additional scale benefits 2,962 from the G6 Alliance 2,588 5,550 TEU (000') 3,634 3,406 2
Slide 19: East-West: Substantial presence in important trades
East-West: Substantial presence in important trades and leading expertise in niche businesses Established capacity shares on competitive East-West trades 56% of capacity Substantial market share in Atlantic Other 11% 18% 5% G6 Alliance NYK 33% 2% 28% Atlantic 11% OOCL 2 3% 1 50% CMA CGM 40% 9% MSC M
Slide 20: North-South: Significantly strengthened market position in Latin America
North-South: Hapag-Lloyd with significantly strengthened market position in Latin America Strong position on Latin America trades, within top 4 liners1) 44% of capacity New cooperation in Latin America Lat. America – N. America Lat. America – Far East Lat. America – Europe Together with Hamburg Sü
Slide 21: Agenda
Agenda A. Strategy – “Way Forward” well on Track B. Industry – Improving Mid-term Fundamentals C. Financials – Strong Earnings Growth Trajectory 21
Slide 22: Hapag-Lloyd significantly increased its EBITDA to USD 551 m
Hapag-Lloyd significantly increased its EBITDA to USD 551 m (EBITDA margin: 10.6%) in the first half-year of 2015 Operational KPIs Comments H1 H1 ■ 2015 first fiscal year with full reflection of CSAV ∆/% 2015 2014 transaction Revenue Transport volume [TTEU] 3,719 2,873 846 / 29.4% ■ Transport volume
Slide 23: Transport volumes increased 29.4% due to the CCS integration
Transport volumes increased 29.4% due to the CCS integration Transport volume [TTEU] Breakdown by trade [TTEU] 2014 2015 +7.5% Adjusted for pro-forma 5,907 5,907 3,719 CCS transport volume H1 yoy 5,496 in H1 2014, the HL H1 2,873 1,945 Growth transport volume was 2.7% down year-on-year 1,774 408 7.3
Slide 24: Average freight rate decreased by 128 USD/TEU
Average freight rate decreased by -128 USD/TEU mainly driven by the structurally lower CCS freight rate Freight rate1) [USD/TEU] vs. bunker price2) [USD/t] 2013 2014 H1 2015 Bunker cost / TEU as share 20.9% 19.3% 10.8% of freight rate [%] -128 USD (-9.0%) 1,600 1,546 Ø 1,424 1,200 Freight rate 1,499
Slide 25: Hapag-Lloyd remains focused on unit cost reduction
Hapag-Lloyd remains focused on unit cost reduction Significant improvement of cost structure already achieved… …and still more upside ahead Transport expenses per TEU (USD/TEU) Further Upside Structural 1 CUATRO 2 OCTAVE 3 5 Improvements Industry Structure Compete to Win New commercial approach (mul
Slide 26: Benefits from a reduced bunker price and consumption
Benefits from a reduced bunker price and consumption – Change in bunker mix due to emission control areas Bunker price [Rotterdam; USD/mt] Bunker consumption [mt/slot; mt/TEU; k mt] 1,029 MFO -10% 922 Bunker cons. 4.09 822 MDO per slot1) 3.83 3.44 606 Bunker cons. 0.52 0.50 per TEU 0.46 644 602 462
Slide 27: Step-change in Hapag-Lloyd's profitability also versus peers
Step-change in Hapag-Lloyd's profitability also versus peers Company H1 2014 EBIT1) (USDm) Company H1 2015 EBIT1) (USDm) Delta Maersk Line 1,070 8.0% x% EBIT margin (%) Maersk Line 1,266 10.1% 2.1pp CMA CGM 296 3.9% Hapag-Lloyd2) 299 5.7% 8.9pp OOCL 145 4.5% OOCL 222 7.3% 2.8pp CSCL 100 4.1% Hanjin
Slide 28: Hapag-Lloyd further improved its capital structure
Hapag-Lloyd further improved its capital structure – Equity at USD 5.2 bn (equity ratio: 43%) Enhanced equity base Comments Gearing 84.7 72.1 71.7 Gearing [%] Hapag-Lloyd improved its capital structure and is 5,068 5,234 committed to maintaining a solid leverage 4,013 • Secure strong equity base E
Slide 29: Slightly negative cash flow in H1 2015
Hapag-Lloyd generated a slightly negative cash flow in H1 2015 Cash flow H1 2015 [USD m] Operating Investing Financing cash flow cash flow cash flow 362 -370 -191 Free cash flow = USD -8 m -106 1,121 -84 551 256 -488 247 927 928 – 1352) -309 118 -111 263 -18 0 865 665 Liquidity EBITDA Working Other
Slide 30: Expects a significant improvement in profitability in 2015
On the basis of H1 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 Largely unchanged volume effects not taken into account in the guid
Slide 31: 31
31
Slide 32: Income statement of Hapag-Lloyd [USD m]
Income statement of Hapag-Lloyd [USD m] Income statement Transport expenses H1 H1 H1 H1 ∆ ∆ 2015 2014 2015 2014 3,719 2,873 846 Transport expenses 4,234.1 3,941.2 292.9 Transport volume [TTEU] Cost of raw materials, supplies and purchased goods 656.1 926.6 -270.5 Freight rate [USD/TEU] 1,296 1,424 -
Slide 33: Balance sheet of Hapag-Lloyd [USD m]
Balance sheet of Hapag-Lloyd [USD m] Assets Equity and liabilities 31.06.2015 31.03.2015 ∆ 31.06.2015 31.03.2015 ∆ Goodwill 1,672.1 1,672.1 0.0 Equity 5,234.3 5,136.0 98.3 Other intangible assets 1,549.4 1,571.1 -21.7 Provisions 774.1 937.0 -162.9 Property, plant and equipment 6,576.1 6,496.6 79.5 I
Slide 34: Solid long-term and diversified financing portfolio
Solid long-term and diversified financing portfolio Debt maturity profile [USD m] 1,202 841 2751) 648 326 623 1,051 555 1002) 322 275 277 446 377 378 248 280 208 61 11 11 49 49 38 37 44 41 90 14 26 29 31 32 Q3 - Q4 2016 2017 2018 2019 ≥ 2020 2015 Liabilities to banks Bonds Liabilities from finance l
Slide 35: 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 36: Hapag-Lloyd bonds continuously trade above par
Hapag-Lloyd bonds continuously trade above par Hapag-Lloyd bonds 110 101.6 101.5 100 100.6 90 Jan/14 Apr/14 Jul/14 Oct/14 Jan/15 Apr/15 Jul/15 HL USD 9.75% 2017 HL EUR 7.75% 2018 HL EUR 7.50% 2019 YTW Hapag-Lloyd bonds 9.75% 2017 7.75% 2018 7.50% 2019 Current Yield 9.1% 6.9% 7.0% Current Trading 100
Slide 37: 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- 5.5 Advantageous customer pacific 6.2 portfolio Cost-efficient management of Trans- 7.0 equipment flows atlan
Slide 38: Long-standing and diversified customer base
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% 32% Top 50 Customers ( = 36%) 23% 10% 10% 9% 17% TOP 10 TOP TOP TOP TOP > 500 Total Hapag-Lloyd has a h
Slide 39: 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 39
Slide 40: 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