Slide 1: Investor Presentation Full Year 2018 Results
Investor Presentation Full Year 2018 Results Hamburg, 22 March 2019
Slide 2: Opening Remarks
Opening Remarks Full run rate of UASC synergies in the amount of USD 435 m achieved ahead of time in 2018 1 Highlights “Strategy 2023” launched at the Capital Markets Day in November 2018 Stable container demand despite recent reduction in trade projections and geopolitical risks 2 Market Upda
Slide 3: The first half of 2018 was affected by a tough market environment
1 Highlights The first half of 2018 was affected by a tough market environment and a steep increase in bunker prices – but H2 2018 gradually improved Launch of Strategy 2023 Hapag-Lloyd reports AGM approves increased dividend Launch of group profit payment WebChannel – 2018 Quick Quotes 2019 Success
Slide 4: Synergy target of USD 435 million achieved ahead of time in 2018
1 Highlights Synergy target of USD 435 million achieved ahead of time in 2018 Synergy potential Full run rate [USD m] Synergy ramp up [USD m] USD 435 m USD 435 m USD 435 m Initial target for 2018 Network Overhead Other Total 2017 2018 Full run rate Visibility of synergies in P&L in FY 2018 is limi
Slide 5: We have defined our Strategy 2023 and will deliver on our 3 overarching goals
1 Highlights We have defined our Strategy 2023 and will deliver on our 3 overarching goals Profitability Number one Deliver unparalleled Be profitable for quality quality, be customer- throughout the cycle oriented, and create value for customers as well as capture value for Hapag-Lloyd Focus on cus
Slide 6: Further progress on our initiatives of Strategy 2023
1 Highlights Since the Capital Markets Day in November 2018, we have made further progress on our initiatives of Strategy 2023 Profitability Number one for quality Global Player Terminal Partnering Digitization Attractive Markets Successful pilots in i.a. Singapore, Volumes booked via the Web Channe
Slide 7: Continuously improving volumes booked via WebChannel
1 Highlights Continously improving volumes booked via WebChannel, since launch in August 2018 Quick Quotes development [% of total bookings] Comments +4 ppt 7% ▪ Total of 350 TEUk 6% booked via Quick Performance Quotes in 2018 Marketing 5% ▪ Current run rate of MVP ~15,000 TEU per week 4% Tests ▪ Co
Slide 8: Financial Highlights FY 2018
1 Highlights Financial Highlights FY 2018 Transport volume Transport expenses per TEU Freight rate +21.1% +1.4% -1.5% FY 2018: TEU 11.9 m FY 2018: 935 USD/TEU FY 2018: 1,044 USD/TEU EBIT EBITDA Group profit USD 524 m USD 1,345 m USD 54 m 3.8% EBIT margin 9.9% EBITDA margin 3.7% ROIC Equity Net debt
Slide 9: Industry profitability slumped in H1 2018 but recovered in H2
1 Highlights Industry profitability took a slump in H1 2018, but came back in H2 – Hapag-Lloyd is one of the most profitable carriers 6.1% 7.2% FY 2018 5.1% 5.4% 4.6% 3.4% 3.5% 5.0% Hapag-Lloyd 3.8% 2.1% 2.7% 1.2% 1.1% 0.4% 0.6% 0.2% CMA CGM 2.6% -0.9% -1.2% Maersk1) 1.6% -2.4% -3.0% Q4 2018 -5.8% H
Slide 10: Container shipping volume growth expectation remains healthy
2 Market Update Despite increasing geopolitical risks, container shipping volume growth expectation remains on a healthy level… Real GDP Growth vs. Global Container Volume Growth [%] GDP multiplier 0.9x 1.5x 1.1x 1.2x-1.3x 1.2x-1.3x 5.6% 4.9% IHS: 4.7% 4.0% 4.4% Drewry: 4.1% 3.8% 3.3% 3.7% 3.6% 3.5%
Slide 11: Low orderbook and reasonable new orders
2 Market Update …which, combined with the historically low orderbook and reasonable new orders… Orderbook-to-fleet Newly placed orders [TEUm, %] [TEUm, %] Orderbook 61% Vessels > 13,999 TEU YTD 2.0 2.2 March 2019 Share of World Fleet 1.8 6.5 50% 1.1 1.2 6.0 0.8 38% 0.4 0.2 <0.1 5.0 27% 28% 2011 2012
Slide 12: Further improving supply / demand balance
2 Market Update …will lead to a further improving supply / demand balance in the years to come Scheduled vessel deliveries Scrapping [% of world fleet] [TEUm] 1.7 3.0% 2.0% 2.1% 2.1% 1.1% 1.2 1.2 1.2 0.5% 1.0 2015 2016 2017 2018 2019e 2020e 0.9 Supply / Demand Balance 10 8.0% 8.0% 8 6.1% 6.3% 5.5% 5
Slide 13: Clearly increased EBITDA of USD 1,345 m and positive Group Profit
3 Financials Clearly increased EBITDA of USD 1,345 m and positive Group Profit in FY 2018, despite a challenging H1 2018 Operational KPIs Q4 2018 Q4 2017 YoY FY 2018 FY 2017 YoY Transport volume [TTEU] 2,974 2,774 +7% 11,874 9,803 +21% Freight rate1) [USD/TEU] 1,079 1,038 +4% 1,044 1,060 -1% Bunker
Slide 14: Transport volume growth of 21.1% YoY due to UASC merger
3 Financials Continuously strong transport volume growth of 21.1% YoY due to UASC merger – pro-forma transport volume grew by 5.9% YoY Transport volume development by trade [TTEU] 11,874 134 308 850 1,504 195 FY 2017 544 2,466 1,709 1,696 9,803 440 1,033 +21.1% 582 9,803 252 160 1,473 FY 2018 678 2,
Slide 15: Freight rates up pro forma, bunker price increased sharply
3 Financials On a pro-forma basis, freight rates have increased by 2.1% YoY, but average bunker consumption price increased sharply by 32.4% YoY Freight rate [USD/TEU] vs. Bunker price development [USD/mt] Ø FY 2017 Ø FY 2018 Freight rate, 1,060 -1.5% 1,044 reported Freight rate, 1,022 +2.1% 1,044 p
Slide 16: Higher expenses largely offset by cost-cutting and synergies
3 Financials Higher expenses for raw materials and supplies were largely offset by cost-cutting programs and synergies from the UASC integration Transport expenses per TEU [USD/TEU] +13 (+1%) 922 32 7 935 -4 -11 -11 -19 (-2%)1) Includes bunker stock devaluation of USD ~32m (~11 USD/TEU) in Q4 2018 F
Slide 17: Strong free cash flow of USD 1,145 m in 2018
3 Financials Strong free cash flow of USD 1,145 m in 2018 driven by a high cash conversion ratio of ~94% and limited investment needs Cash flow FY 2018 [USD m] Operating Investing Financing cash flow cash flow cash flow 1,268 -123 -1,117 924 -77 -1,590 -389 40 225 1,270 1,345 1,297 545 -375 545 11 5
Slide 18: Stable equity base, solid liquidity and reduced net debt
3 Financials Stable equity base, solid liquidity reserve and reduced net debt – Net debt / EBITDA reduced to 4.6x as at 31 December 2018 Equity base [USD m] Net debt [USD m] Financial Debt 7,596 6,891 7,263 7,168 Net Debt / EBITDA 5.7x 4.6x 1) 6,812 1) 6,131 31 December 2017 31 December 2018 Liquidi
Slide 19: Implementation of IFRS 16 – indicative figures for 2018
3 Financials Implementation of IFRS 16 – indicative figures for 2018 Key KPIs for 2018 incl. IFRS 16 IFRS 16 FY 2018 As of 1 January 2019, Hapag-Lloyd will publish FY 2018 impact Incl. IFRS 16 financial figures including IFRS 16. Prior year figures will not be restated or adjusted. FY 2018 (incl.
Slide 20: New P&L structure from Q1 2019
3 Financials We will implement a new P&L structure from Q1 2019 onwards which will be more transparent and will allow a more driver based analysis New split in Container Handling & New P&L Structure as of Q1 2019 Vessel Voyage related costs allows better Revenues Driver explanation of (unit) cost de
Slide 21: Outlook for 2019 including IFRS 16
4 Way Forward Outlook for 2019 including IFRS 16 2018 FY 2018 Outlook 2019 Sensitivities for 20191) (incl. IFRS 16) Transport volume 11,874 TTEU Increasing slightly +/- 100 TTEU +/- USD <0.1 bn Average freight rate 1,044 USD/TEU Increasing slightly +/- 50 USD/TEU +/- USD ~0.6 bn Average bunker price
Slide 22: Major targets for 2019 and beyond
4 Way Forward Major targets for 2019 and beyond: Continue to increase profitability and further deleverage our company Prepare for IMO 2020 Continue to implement our “Strategy 2023” and create more value for our customers and shareholders as we strive to become number one for quality Further develop
Slide 23: Q&A
Q&A
Slide 24: Hapag-Lloyd with positive EBITDA of USD 1,345 m in FY 2018
Appendix Hapag-Lloyd with positive EBITDA of USD 1,345 m in FY 2018 Income statement [USD m] Transport expenses [USD m] FY 2018 FY 2017 % change FY 2018 FY 2017 % change Expenses for raw materials & supplies 2,001.6 1,338.9 49% Revenue 13,605.1 11,286.2 21% Cost of purchased services 9,100.5 7,699.5
Slide 25: Stable equity ratio of 40.9% and reduced gearing of 85.5%
Appendix Hapag-Lloyd with a stable equity ratio of 40.9% and a reduced gearing of 85.5% Balance sheet [USD m] Financial position [USD m] 31.12.2018 31.12.2017 31.12.2018 31.12.2017 Assets Cash and cash equivalents 752.4 725.2 Non-current assets 14,709.1 15,146.1 Financial debt 6,891.1 7,595.5 of whi
Slide 26: Optimized bunker consumption, but bunker price increase harms P&L
Appendix Hapag-Lloyd benefits from optimized bunker consumption, but substantial increase in bunker price harms P&L Bunker consumption price [USD/mt] Bunker consumption & expenses per TEU 700 Bunker 0.40 consumption 650 per TEU 0.37 [mt/TEU] 600 169 137 550 Bunker expenses per TEU [USD] 500 MDO FY 2
Slide 27: Improved maturity structure of financial liabilities
Appendix Reduced financing Capital increasecosts II as well as improved maturity structure of financial liabilities Financial Debt Profile as per 31 December 20181), [USDm] 2,170 1,495 1,401 1,042 913 775 3272) 747 672 515 654 617 645 5153) 612 1 44 20 16 253 77 78 87 49 17 45 15 2019 2020 2021 2022
Slide 28: New P&L structure from Q1 2019 – Transport expenses
Appendix Hapag-Lloyd’s new P&L structure from Q1 2019 onwards – Transport expenses New P&L Structure Revenues Transport expenses (new structure) Transport expenses Handling & Haulage Handling & Equipment and Vessel & voyage Equipment and repositioning Bunker Haulage repositioning (excluding bunker)
Slide 29: Policy to create shareholder value
Appendix Hapag-Lloyd has a clearly defined policy to create shareholder value… Financial Targets to be achieved until 2023 Profitability ROIC (throughout the cycle) > WACC [This implies an EBITDA-margin of ~ 12%] Deleveraging Net Debt / EBITDA ≤ 3.0x Equity Equity ratio > 45% Liquidity Adequate liqu
Slide 30: …as well as customer value
Appendix …as well as customer value Non-Financial Targets to be achieved until 2023 Achieve best in class Net Promoter Score (NPS) Quality Measure and improve On Time Delivery Superior landside Increase share of door-to-door business to over 40% of total by 2023 capabilities Grow volume in selected
Slide 31: Share price development
Appendix Share price development Share trading since November 2015 240 Frankfurt Stock Exchange / 220 Stock Exchange Hamburg Stock Exchange 200 180 Market segment / Regulated market (Prime Standard) / Index SDAX 160 140 ISIN / WKN DE000HLAG475 / HLAG47 120 100 80 Ticker Symbol HLAG 60 40 Primary lis
Slide 32: Bond trading
Appendix Bond trading Bonds trading 110 104.2 105 104.1 100 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 280 m ISIN / WKN XS1645113322 XS1555576641 / A2E4V1 Maturity Date Jul 15, 2024 Feb 1,
Slide 33: Non-Investment Grade ratings
Appendix Moody‘s has recently upgraded Hapag-Lloyd‘s corporate family rating from B2 to B1 / Stable – S&P rates Hapag-Lloyd at B+ / Stable Corporate Family Rating Bond Rating Aaa Aaa Stable outlook reflects Moody’s expectation of a steady performance Aa1 Aa1 due to the company’s: Investment Grade Aa
Slide 34: Financial Calendar 2019
Financial Calendar 2019 25 February 2019 Preliminary Financials 2018 22 March 2019 Annual Report 2018 09 May 2019 Quarterly Financial Report Q1 2019 12 June 2019 Annual General Meeting 2019 07 August 2019 Half-year Financial Report 2019 14 November 2019 Quarterly Financial Report 9M 2019 34
Slide 35: 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 36: 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 36