Slide 1: Investor Presentation Full Year 2016 Results
Investor Presentation Full Year 2016 Results Hamburg, 24 March 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 progress on our strategic initiatives (Way Forward, THE Alliance, 01 Deliverables UASC Merger) and delivered a positive operating result for full-year 2016 Improving industry fundamentals – 2017 dependent on continuous market discipline 02 Market Update Sector c
Slide 4: We continued to progress on our initiatives
1 Deliverables Strategic highlights: We continued to progress on our initiatives … € € 2016 2017 January 2016 March 2016 August 2016 January / Compete to Win Inclusion in Annual General February 2017 roll-out SDAX Meeting approves Successful all agenda items bond issuance & debt refinancing April 20
Slide 5: Delivered a positive operating result in 2016
1 Deliverables Financial highlights: … and delivered a positive operating result in 2016 Transport volume Freight rate Transport expenses +2.7% -15.4% -15.0% FY 2016: 7.6 TEU m FY 2016: 1,036 USD/TEU FY 2016: 925 USD/TEU EBITDA EBIT Group profit / loss USD 671 m USD 140 m USD -103 m 7.9% EBITDA marg
Slide 6: Demand: Container shipping remains an industry with healthy growth
2 Market Update Demand: Container shipping remains an industry with healthy growth and balanced trade dynamics Container shipping volume and global GDP growth GDP 6 2000-2008 2010-2015 2016-2018E 2.1x 1.3x 1.2x multiplier +4.6% 300 +4.3% +4.7% +3.5% 250 +9.1% +3.6% +3.1% +3.4% 200 +3.5% Transport vo
Slide 7: Supply: Capacity growth is slowing
2 Market Update Supply: Capacity growth is slowing (as a result of decreasing benefits of ever larger vessels) 8 Orderbook-to-fleet [TEU m, %] Orders placed by year [TEU m] 61% 3.2 -91% 7 50% 2.2 2.0 1.8 6 38% 1.2 1.1 28% 0.6 27% 0.4 5 0.2 0.1 0.0 21% 21% 18% 19% 17% 2007 2008 2009 2010 2011 2012 20
Slide 8: Supply: Scrapping and idling help to further reduce effective supply growth
2 Market Update Supply: Scrapping and idling help to further reduce effective supply growth Highest scrapping level ever … … and idling remains high … [TTEU] [TTEU] Share of world fleet 6.6% 27 28 30 Especially in 24 23 23 23 1,480 1,359 1,441 1,324 19 18 Panamax segment +237% 809 779 650 595 444 38
Slide 9: Freight rates are slowly improving from Q2 2016 lows
2 Market Update Freight rates are slowly improving from Q2 2016 lows – But continuous market discipline needed during 2017 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 1,5
Slide 10: 5-7 significant global liner shipping companies going forward
2 Market Update We believe that going forward there will be 5-7 significant global liner shipping companies – Gap to the rest is widening rapidly Consolidation wave leads to higher concentrations Carrier capacity [TEU m] and global capacity share [%] Global capacity share [%] 14% 13% 8% 2.5 Ranking
Slide 11: Alliances re-shaped with start of operations in April 2017
2 Market Update On the back of consolidation, alliances have been re-shaped with start of operations in April 2017 Strong partner in THE Alliance Atlantic THE Alliance covers all East-West trades Others 5% 2M1) 49% Comprehensive network of 32 services will connect more than 75 major ports THE Alli
Slide 12: Strategic projects to enhance profitable growth
3 HL Financials We delivered on our defined initiatives Tangible results and further upside CUATRO synergies: Initial target: USD 300 m Strategic projects to enhance profitable growth Compete Revised target: USD 400 m to Win Successful Improvement of implementation Close the revenue quality OCTA
Slide 13: Overall we achieved an operating profit in 2016
3 HL Financials Overall we achieved an operating profit in 2016 Hapag-Lloyd Results FY 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FY 2016 FY 2015 ∆% Transport volume [TTEU] 1,811 1,892 1,947 1,949 7,599 7,401 +3% Freight rate [USD/TEU] 1,067 1,019 1,027 1,033 1,036 1,225 -15% Bunker price [USD/t] 178 182
Slide 14: Transport volume up 3% to 7.6 TEU m in 2016
3 HL Financials Transport volume up 3% to 7.6 TEU m in 2016 – Q4 volume up strongly by 7% year-on-year 2014 2015 2016 Transport volume [TTEU / YoY%] 5,907 7,401 7,599 7.5% 25.3% 2.7% 5.5% 6.0% 5.9% 12.3% 26.8% 32.0% 26.3% 16.8% 2.1% -2.7% 4.6% 7.0% 1,945 1,892 1,947 1,949 1,861 1,822 1,811 1,774 408
Slide 15: 2016 average freight rate decreased by 15.4%
3 HL Financials 2016 average freight rate decreased by 15.4% – However, rates slowly improve from Q2 lows Freight rate1) [USD/TEU] vs. bunker price2) [USD/t] Freight rate 1,427 1,225 1,036 -14.2% -15.4% 1,500 1,100 1,448 1,422 1,426 1,412 1,000 1,400 900 1,331 800 1,300 1,264 700 1,189 600 1,200 595
Slide 16: Transport expenses reduced by USD 1 bn
3 HL Financials Transport expenses reduced by USD 1 bn mainly driven by bunker, synergies and efficiency programs Transport expenses per TEU [USD/TEU] -163 (-15%) Transport expenses per unit decreased year-on- 1,089 year by 163 USD/TEU to 925 USD/TEU in 2016 -60 4 925 The decline results both fr
Slide 17: Cost savings visible in relative performance
3 HL Financials The effects of our further cost savings are clearly visible when looking at the relative performance FY 2015 EBIT [USD m] 9M 2016 EBIT [USD m] Q4 2016 EBIT [USD m] Maersk Line 1,431 6.0% Wan Hai 31 2.4% CMA CGM 201 4.5% CMA CGM 894 5.9% Hapag-Lloyd 29 0.5% Hapag-Lloyd 111 5.1% Hapag-
Slide 18: Equity at USD 5.3 bn and liquidity reserve at USD 0.8 bn
3 Financials Equity at USD 5.3 bn and liquidity reserve at USD 0.8 bn – Capital increase of USD 400 m post Closing Strong equity base [USD m] Stable net debt [USD m] Financial Debt 4,256 4,415 5,497 5,342 Cash 625 602 3,631 3,7931) Net Debt 2015 2016 2015 2016 Solid liquidity position [USD m] UASC m
Slide 19: Positive free cash flow of USD 109 m in 2016
3 HL Financials Positive free cash flow of USD 109 m in 2016 Cash flow 2016 [USD m] Operating Investing Financing cash flow cash flow cash flow 461 -352 -132 -950 1,067 -210 1,048 671 -391 802 423 39 -229 200 -20 Free cash flow = USD 109 m 625 602 Liquidity EBITDA Working capital Investments Disinve
Slide 20: Optimized maturity profile via debt capital markets
3 HL Financials Hapag-Lloyd optimized its maturity profile via debt capital markets at more attractive pricing levels Bond coupon and maturity profile Coupon 9.75% 7.75% 7.50% 6.75% EUR 450 m On 18 Jan 2017 Hapag-Lloyd successfully priced a Yield to maturity new bond of EUR 250 m due 2022 – on 7 F
Slide 21: Clearly increasing EBITDA expected for 2017
3 HL Financials We expect a clearly increasing EBITDA for 2017 with the majority of revenue and operating profits in H2 2017 Hapag-Lloyd guidance for 2017 Hapag-Lloyd sensitivities for 2017 FY 2016 Guidance for 2017 Transport volume +/- 100 TTEU +/- USD <0.1 bn Freight rate +/- 50 USD/TEU +/- USD ~0
Slide 22: Hapag-Lloyd / UASC merger creates a top tier pure-play carrier
4 UASC Merger Hapag-Lloyd / UASC merger creates a top tier pure-play carrier – Final preparations on track for closing during next weeks At a glance Deal rationale The merger between Hapag-Lloyd and UASC strengthens the Group’s 225 market position as one of the world’s leading container shipping HAM
Slide 23: Scale: TOP 5 players now make up more than 70%
4 UASC Merger Scale: On important trades TOP 5 players now make up more than 70 % capacity share TOP 5 concentration on individual trades (2013 versus 2017) Atlantic Latin America Far East Transpacific Middle East / Indian Subcontinent 90% 79% 81% 73% 70% 67% 59% 53% 41% 43% 2013 2017 (incl. announc
Slide 24: Network: Balanced trade portfolio
4 UASC Merger Network: Balanced trade portfolio – More than any TOP 5 liner Transport volume by trade, FY 2016 (indicative) Hapag-Lloyd UASC1) Combined Entity1) Trade Million TEU Trade2) Million TEU Trade1) Million TEU Atlantic 1,534 Atlantic 93 Atlantic 1,627 20% 20% 16% Transpacific 1,493 13% 4% 5
Slide 25: Fleet: Young and fuel-efficient fleet
4 UASC Merger Fleet: Access to young and fuel-efficient fleet with large share of ULCVs with no planned need to invest in next years Young and fuel-efficient fleet Ship deliveries 2015-2017 Average fleet age1) Combined 6.3 2017 2015 2016 CMA CGM 7.2 Vessel -1.6 H1 H2 H1 H2 H1 COSCO 7.4 yrs Top 152)
Slide 26: Synergies of USD 435 m expected from 2019 onwards
4 UASC Merger Synergies: Synergies of USD 435 m expected from 2019 onwards – Mainly in network and overhead Synergy potential, full run-rate [USD m] USD 435 million Network Overhead Other Expected synergies Synergies of USD 435 m per year from 2019 onwards – approx. 1/3 to be achieved in 2017 alread
Slide 27: Partner: New core shareholders with strategic interest
4 UASC Merger Partner: New core shareholders with strategic interest in the Combined Entity Transaction overview QH1) PIF2) Other CSAV HGV Kühne TUI Free UASC shares contributed to Hapag-Lloyd in exchange for newly Minorities3) Float issued Hapag-Lloyd shares 51.3% 36.1% 12.6% 31.4% 20.6% 20.2% 12
Slide 28: 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
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Slide 30: Hapag-Lloyd shares with supportive tradings in recent months
Hapag-Lloyd shares with supportive tradings in recent months Share trading 160 Frankfurt Stock Exchange / Stock Exchange Hamburg Stock Exchange 140 Market segment / Regulated market (Prime Standard) / 120 Index SDAX 100 ISIN / WKN / Ticker Symbol DE000HLAG475 / HLAG47 80 Ticker Symbol HLAG 60 Primar
Slide 31: Hapag-Lloyd bonds continuously trade above par
Hapag-Lloyd bonds continuously trade above par Bonds trading 110 105.8 105 104.9 102.6 100 95 HL EUR 7.75% 2018 HL EUR 7.50% 2019 HL EUR 6.75% 2022 EUR Bond 2022 EUR Bond 2019 EUR Bond 2018 Listing Open market of the Luxembourg Stock Exchange (Euro MTF) Volume EUR 450 m EUR 250 m EUR 200 m1) ISIN /
Slide 32: Hapag-Lloyd with positive EBITDA of USD 671 m
Hapag-Lloyd with positive EBITDA of USD 671 m Income statement [USD m] Transport expenses [USD m] FY 2016 FY 2015 % change FY 2016 FY 2015 % change Expenses for raw materials & supplies 760.0 1,185.3 -36% Revenue 8,545.5 9,814.4 -13% Cost of purchased services 6,271.6 6,871.6 -9% Other operating inc
Slide 33: Hapag-Lloyd with equity ratio of 44.6%
Hapag-Lloyd with equity ratio of 44.6% Balance sheet [USD m] Financial position [USD m] 31.12.2016 31.12.2015 31.12.2016 31.12.2015 Assets Cash and cash equivalents 602.1 625.0 Non-current assets 10,267.4 10,363.7 Financial debt 4,414.9 4,256.3 of which fixed assets 10,183.3 10,301.7 Net debt 3,793.
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