Slide 1: Investor Presentation – 9M Results 2016
Investor Presentation – 9M Results 2016 14 November 2016 1
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 continue to progress on our strategic initiatives and Introduction achieved a profit in Q3 2016 (after a disappointing H1) The industry fundamentals are showing signs of improvement Market Update The sector is consolidating and approaching a turning point Rate levels have
Slide 4: We delivered a positive operating result in 9M 2016
Introduction Market Update HL Financials Financial highlights: UASC Merger We delivered a positive operating result in 9M 2016 … Next Steps Transport volume Freight rate Transport expenses +1.3% -17.7% -15.3% 9M 2016: 5.7 TEU m 9M 2016: 1,037 USD/TEU 9M 2016: 941 USD/TEU Q3 EBIT: EBITDA EBIT Group p
Slide 5: … and continue to progress on our strategic initiatives
Introduction Market Update HL Financials Strategic highlights: UASC Merger … and continue to progress on our strategic initiatives Next Steps Way Forward THE Alliance UASC Merger CUATRO and OCTAVE are THE Alliance plans to deploy With the UASC acquisition expected to deliver synergies a fleet of mor
Slide 6: World container volume
Introduction Market Update HL Financials In Q3 most liners will continue to post negative results UASC Merger but freight rates are slowly improving from Q2 lows Next Steps Global volumes in line with expectations … … while rates slowly improve from Q2 lows +2.4% CCFI composite index (SSE) World con
Slide 7: Demand: Container shipping remains an industry with healthy growth
Introduction Market Update HL Financials Demand: Container shipping remains an industry with UASC Merger healthy growth (and more balanced trade dynamics) Next Steps Container shipping volume and global GDP growth 2000 = Indexed to 100 2000 – 2008 2010 – 2015 2016E – 2017E GDP multiplier 2.1x 1.3x 1
Slide 8: Supply: Capacity growth is slowing
Introduction Market Update HL Financials Supply: Capacity growth is slowing (as a result of UASC Merger decreasing incremental benefits of ever larger vessels) Next Steps Orderbook continues to deplete … … with decreasing new orders … Orderbook-to-fleet [TEU m, %] Orders placed by year [TEU m] 8 3.3
Slide 9: Supply: Scrapping and idling help to further reduce effective supply growth
Introduction Market Update HL Financials Supply: Scrapping and idling help to further reduce UASC Merger effective supply growth Next Steps Highest scrapping level ever … … and idling remains high … [TTEU] [TTEU] Share of world fleet 8% 26 27 28 Especially in 23 22 22 23 19 Panamax segment +98% +217
Slide 10: Freight rates have started to stabilize slowly
Introduction Market Update HL Financials UASC Merger Freight rates have started to stabilize slowly Next Steps Shanghai – Europe (SCFI) Shanghai – USA (SCFI) 2,500 6,000 USWC (USD/FEU) USEC (USD/FEU) HL Transpacific* NEurope (USD/TEU) Mediter. (USD/TEU) HL Far East* 5,000 2,000 4,000 1,500 3,000 2,6
Slide 11: Consolidation has accelerated as scale is important
Introduction Market Update HL Financials Consolidation has accelerated as scale is important – UASC Merger Hapag-Lloyd is actively participating in that process Next Steps Consolidation in container shipping industry Oct 2005 Dec 2014 Dec 2016 + + + 0.5 TEU m 1.0 TEU m 1.6 TEU m 2005 2015 2016 2016
Slide 12: Gap between TOP and the rest is widening rapidly
Introduction Market Update HL Financials UASC Merger Gap between TOP 6 and the rest is widening rapidly Next Steps Current consolidation wave … … leads to higher concentration Carrier capacity [TEU m] and global capacity share [%] Global capacity share [%] 14% 13% 8% Ranking end of 2013 2.5 2.3 1.5
Slide 13: Alliances have been re-shaped with start of operations in April 2017
Introduction Market Update HL Financials On the back of this consolidation, alliances have been UASC Merger re-shaped with start of operations in April 2017 Next Steps THE Alliance competitive on all trades Strong partners in THE Alliance 10% THE Alliance covers all East-West trades • Comprehensiv
Slide 14: Hapag-Lloyd achieved a profit in the third quarter
Introduction Market Update HL Financials Hapag-Lloyd achieved a profit in the third quarter – UASC Merger Positive operating result after nine months Next Steps Hapag-Lloyd Results 9M 2016 Q1 2016 Q2 2016 Q3 2016 9M 2016 9M 2015 YoY ∆ / % Transport volume [TTEU] 1,811 1,892 1,947 5,650 5,579 71 / 1.
Slide 15: Transport volume up 1.3% to 5.7 TEU m in 9M 16
Introduction Market Update HL Financials UASC Merger Transport volume up 1.3% to 5.7 TEU m in 9M 2016 Next Steps Transport volume [TTEU] Transport volume 2014 2015 9M 2016 [TTEU / YoY %] 5,907 7,401 5,650 7.5% 25.3% 1.3% 5.5% 6.0% 5.9% 12.3% 26.8% 32.0% 26.3% 16.8% 2.1% -2.7% 4.6% 9M growth 1,945 1,
Slide 16: 9M average freight rate decreased by 17.7%
Introduction Market Update HL Financials 9M average freight rate decreased by 17.7% – But Q3 UASC Merger freight rate slight up vs. Q2 (first time after 2 years) Next Steps Freight rate1) [USD/TEU] vs. bunker price2) [USD/t] Freight rate 1,427 1,225 1,037 500 1,10 1,448 -17.7% 1,422 1,426 1,412 1,00
Slide 17: Transport expenses reduced thanks to bunker, synergies and efficiency programs
Introduction Market Update HL Financials Transport expenses reduced by USD 885 m thanks to UASC Merger bunker, synergies and efficiency programs Next Steps Transport expenses per TEU [USD/TEU] -170 5 (-15.3%) Compete 1,111 to Win 4 -76 Close the -21 941 Cost Gap -28 8 -54 -95 3 (-10%)1) Structural I
Slide 18: Cost savings clearly visible in relative performance
Introduction Market Update HL Financials The effects of our further cost savings are clearly UASC Merger visible when looking at the relative performance Next Steps Company FY 2015 EBIT [USD m] Company FY 2015 H1 2016 EBIT [USD m] Company Q3 2016 EBIT [USD m] Maersk Line 1,431 6.0% Wan Hai 21 2.4% H
Slide 19: Equity at USD 5.3 bn and liquidity at USD 0.7 bn
Introduction Market Update HL Financials Equity at USD 5.3 bn and liquidity at USD 0.7 bn – UASC Merger Capital increase of USD 400 m post Closing Next Steps Strong equity base [USD m] Stable financial debt [USD m] Net Debt 3,653 3,631 3,812 5,068 5,497 5,280 Cash 865 625 549 4,518 4,256 4,361 Finan
Slide 20: Positive free cash flow of USD 27 m in 9M 2016
Introduction Market Update HL Financials UASC Merger Positive free cash flow of USD 27 m in 9M 2016 Next Steps Cash flow 9M 2016 [USD m] Operating Investing Financing cash flow cash flow cash flow 254 -228 -102 1,048 -171 588 -531 423 425 -265 684 37 -159 601) 75 625 549 Free cash flow = USD 27 m Li
Slide 21: Hapag-Lloyd / UASC merger creates a top tier pure-play carrier
Introduction Market Update HL Financials Hapag-Lloyd / UASC merger creates UASC Merger a top tier pure-play carrier Next Steps At a glance Deal rationale Combined Combination assures top 5 position globally Scale Entity1) and on key trades in a consolidating market Corporate Hamburg Dubai Hamburg
Slide 22: Scale: TOP 5 players ~70% capacity share after consolidation
Introduction Market Update HL Financials Scale: On important trades TOP 5 players now make up UASC Merger ~70% capacity share after current consolidation wave Next Steps TOP 5 concentration on individual trades (2013 versus 2017E) Capacity share of TOP 5 container shipping lines 85% 79% 77% 71% 67%
Slide 23: Network: Balanced trade portfolio
Introduction Market Update HL Financials Network: Balanced trade portfolio – More than any TOP 5 UASC Merger liner – Further improved through merger with UASC Next Steps Transport volume by trade, 2015 (indicative) Hapag-Lloyd UASC Combined Entity 19% 21% 17% 8% 7% 32% 16% 17% 21% 30% 46% 23% 12% 4%
Slide 24: Fleet: Access to young and fuel-efficient fleet
Introduction Market Update HL Financials Fleet: Access to young and fuel-efficient fleet UASC Merger with large share of ULCVs … Next Steps Company Avg. fleet age H1 16 [yrs] Company FYFleet 2015ownership EBIT [USD[%] m] Company Average vessel size [TEU] COSCO / Combined 6.4 64% 36% Combined 6,800 C
Slide 25: Fleet: no need to further invest due to newbuildings
Introduction Market Update HL Financials Fleet: … with no need to further invest in the next UASC Merger years due to complimentary ship newbuildings Next Steps Vessel delivery schedule 2015-2017 No further investments needed 2015 2016e 2017e VESSEL H1 H2 H1 H2 H1 In order to be competitive mid-te
Slide 26: Synergies of USD 435 m expected mainly in network and overhead
Introduction Market Update HL Financials Synergies: Synergies of USD 435 m expected mainly UASC Merger in network and overhead Next Steps Synergy potential, full run-rate [USD m] 435 Comments 1 Network − Optimized new vessel deployment / network − Slot cost advantages − Efficient use of new fleet
Slide 27: Partner: New core shareholders with strategic interest
Introduction Market Update HL Financials Partner: New core shareholders with strategic interest UASC Merger in the Combined Entity Next Steps Transaction overview UASC shares contributed to Hapag-Lloyd Other Free QH1) PIF2) CSAV HGV Kühne TUI Minorities3) Float in exchange for newly issued Hapag-
Slide 28: Closing expected by the end of the year
Introduction Market Update HL Financials Closing expected by the end of the year depending on UASC Merger approvals of competition authorities and banks Next Steps Indicative timeline Signing Hapag-Lloyd Closing1) of BCA AGM Pre-signing DD Preparation Implementation of Cash Capital of legal legal re
Slide 29: Clearly defined financial policy
Introduction Market Update HL Financials UASC Merger Hapag-Lloyd with a clearly defined financial policy Next Steps Based on improved fleet ownership structure and synergy Profitability realization the EBITDA margin will increase significantly Investments No new vessel investments in next years – Ma
Slide 30: Q&A
Q&A 30
Slide 31: Strategic projects to enhance profitable growth
We delivered on our defined initiatives Tangible results and further upside CUATRO synergies: Initial target: Strategic projects to enhance profitable growth USD 300 m Compete Revised target: USD 400 m to Win Improvement of Close the revenue quality OCTAVE programs: Successful Cost Gap OCTAVE
Slide 32: Hapag-Lloyd stock in SDAX since March 2016
Hapag-Lloyd stock in SDAX since March 2016 – New bond call dates from October 2016 Share trading Bonds trading 120 110 100 101.0 100.8 80 100 100.0 60 6-Nov 6-Dec 6-Jan 6-Feb 6-Mar 6-Apr 6-May 6-Jun 6-Jul 6-Aug 6-Sep 6-Oct 6-Nov 90 Hapag-Lloyd Maersk Jan/14 Mai/14 Sep/14 Jan/15 Mai/15 Sep/15 Jan/16
Slide 33: Hapag-Lloyd with positive EBITDA of USD 425 m
Introduction Market Update HL Financials UASC Merger Hapag-Lloyd with positive EBITDA of USD 425 m Next Steps Income statement [USD m] Transport expenses [USD m] % 9M 2016 9M 2015 % change 9M 2016 9M 2015 change Revenue 6,364.0 7,589.4 -16% Expenses for raw materials 531.4 948.0 -44% and supplies Ot
Slide 34: Hapag-Lloyd with equity ratio of 44.6%
Introduction Market Update HL Financials UASC Merger Hapag-Lloyd with equity ratio of 44.6% Next Steps Balance sheet [USD m] Financial position [USD m] 30.09.2016 31.12.2015 30.09.2015 30.09.2016 31.12.2015 30.09.2015 Assets Cash and cash equivalents 549.3. 625.0. 542.8. Non-current assets 10,241.0
Slide 35: Investor Relations contact
Henrik Schilling Senior Director Investor Relations Tel +49 40 3001-2896 Fax +49 40 3001-72896 Henrik.Schilling@hlag.com https://www.hapag-lloyd.com/en/ir.html 35