Slide 1: Ferry Shipping and Logistics: DFDS Group Overview
FERRY SHIPPING AND LOGISTICS DFDS Group Overview June 2017
Slide 2: Disclaimer
Disclaimer The statements about the future in this announcement contain risks and uncertainties. This entails that actual developments may diverge significantly from statements about the future. 2 2
Slide 3: Content overview
Content overview What we do How we run DFDS How we perform Introduction Strategy Financial performance overview 5 27 36 Shipping Continuous improvement ROIC Drive 8 29 37 Route capacity dynamic Digitisation Profit drivers 17 31 39 Ferry tonnage market M&A Cash flow, CAPEX & distribution 19 33 41 Log
Slide 4: What we do
WHAT WE DO . 4 4
Slide 5: DFDS structure, ownership and earnings split
DFDS structure, ownership and earnings split DFDS Group DKK bn Revenue LTM Q1 2017 per division 16 People & Ships Finance 14 12 5.0 10 Shipping Division Logistics Division 8 Logistics Division Shipping Division 6 • Ferry services for freight • Door-door transport Eliminations and other and passenger
Slide 6: Freight, logistics and passengers – focus northern Europe
Freight, logistics and passengers – focus northern Europe Freight routes Logistics solutions Passenger routes Trailers, unaccompanied Door-door full & Overnight Key & accompanied part loads services Day Industry solutions Contract logistics Transport/holiday Port terminals Cruise f
Slide 7: DFDS route network
DFDS ROUTE NETWORK - part of Europe’s infrastructure 7 7
Slide 8: Shipping
SHIPPING LTM Q1 2017: Shipping Division Business units & ROIC LTM Q1 2017 Revenue North Sea Baltic Sea Channel North Baltic Channel Passenger France Passenger EBIT Sea Sea & Med France & Med 13% 29% 18% 43% n.a. 0% 50% 100% . 8 8
Slide 9: Roll on, roll off
Roll on, roll off • Ro-ro/ro-pax shipping: roll on, roll off of freight units and passenger cars • Routes carry both unaccompanied and accompanied trailers • Other types of cargo, e.g. heavy industrial goods and containers, are placed on carrying equipment (mafis) and tugged on to the ship 9 9
Slide 10: Ferry types
FERRY TYPES Freight only (ro-ro) . North Sea, e.g. Gothenburg-Immingham Combined freight and passengers (ro-pax). Baltic Sea, e.g. Kiel-Klaipeda Day ferry (ro-pax). Channel, e.g. Dover-Dunkirk Passengers with freight (cruise ferry). Passenger, e.g. Copenhagen-Oslo Trailer deck 10
Slide 11: North Sea
North Sea • Only ro-ro routes (freight-only) • High share of industrial customers out of Sweden • Forwarders main customer group UK-Continent North Sea Invested DKK m Revenue EBIT capital ROIC, % LTM Q1 2017 3,479 538 4,199 12.6 2016 3,365 515 4,168 12.1 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY L
Slide 12: Baltic Sea
Baltic Sea • Ro-pax and ro-ro routes • Forwarders main freight customer group • Russia ‘closed for business’ by sanctions Baltic Sea Invested DKK m Revenue EBIT capital ROIC, % LTM Q1 2017 1,391 359 1,251 29.0 2016 1,349 363 1,203 30.0 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q1 2017 4,229 4.
Slide 13: Channel
Channel • Ro-pax routes • Forwarders main freight customer group • Seasonal passenger market, Q3 high season Channel Invested DKK m Revenue EBIT capital ROIC, % LTM Q1 2017 2,317 385 2,127 18.0 2016 2,288 394 1,937 20.3 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q1 2017 20,475 0.7% 3,383 -2.2%
Slide 14: Passenger
Passenger • Cruise ferry routes, overnight crossings • Seasonal passenger market, Q3 high season • Increasing share of overseas passengers Passenger Invested DKK m Revenue EBIT capital ROIC, % LTM Q1 2017 1,699 255 581 42.9 2016 1,713 253 577 43.1 Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q1 2
Slide 15: France & Mediterranean
France & Mediterranean • Ro-pax and ro-ro routes • Forwarders main freight customer group • Newhaven-Dieppe concession route France & Med Invested DKK m Revenue EBIT capital ROIC, % LTM Q1 2017 481 9 -1 n.a. 2016 481 11 -29 n.a. Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY LTM Q1 2017 1,010 0.7% 346
Slide 16: It's all about the route
IT’S ALL ABOUT THE ROUTE . 16 16
Slide 17: Ferry route capacity dynamics
FERRY ROUTE CAPACITY DYNAMICS - stepwise addition of ferries leverages capacity significantly Minimum required No. of ships Capacity impact Route no. of ships for on route today of entry* entry Dover-Calais 8 3 38% Gothenburg-Immingham 3 2 67% Fredericia- Copenhagen- 1 1 100% Klaipeda ddddd * Assumi
Slide 18: Key northern European ferry companies
KEY NORTHERN EUROPEAN FERRY COMPANIES • Logistics office/warehouse ― Container/sideport route 18 18
Slide 19: Freight ferry capacity (ro-ro) – total down, large ships growing
Freight ferry capacity (ro-ro) – total down, large ships growing Global freight ferry (ro-ro) capacity per ship size, lane metres • Freight ferry (ro-ro) capacity expected to LM '000 decrease 2% in 2017 driven by smaller 1,000 CAGR: -2.4% ships 800 600 2501-4000+ • CAGR of -2.4% in global LM capacit
Slide 20: Ferry capacity (ro-pax) – stable, large ships growing
Ferry capacity (ro-pax) – stable, large ships growing Global ro-pax capacity per ship size, lane metres • Ferry (ro-pax) capacity expected to LM '000 remain flat in 2017 as increase in 600 CAGR: -0.2% capacity of large ships is balanced by 500 CAGR: +4.6% decrease for smaller ships 400 2501-4000+ 30
Slide 21: Orders for own routes set to maintain stable ferry market
Orders for own routes set to maintain stable ferry market • Trend towards larger ships set to Shipping Division: Fleet overview 2016 continue as ferry operators order ships Average age of for own route networks Ro-pax Passenger Ownership owned Total ships Ro-ro ships ships ships share, % ships, yrs
Slide 22: Logistics
LOGISTICS LTM Q1 2017 Logistics Division Business units & ROIC LTM Q1 2017 Revenue Nordic Continent Nordic Continent UK & Ireland EBIT UK & Ireland 15% 11% 12% 0% 50% 100% . 22 22
Slide 23: Logistics Division: growing share of contract logistics
Logistics Division: growing share of contract logistics Activity Nordic Continent UK & Ireland Door-door full & part • Scandinavia- • Continent-Scandinavia/ • Northern Ireland-UK loads (trailers, containers UK/Baltics/Continent UK/Ireland • Ireland/UK-Spain & rail) • UK domestic Contract logistics •
Slide 24: Logistics Division is a key customer of the route network
Logistics Division is a key customer of the route network • Top 3 customer of Shipping Division NORDIC • 8% of total shipping volumes UK & • 10-20% volume IRELAND target on individual routes Logistics CONTINENT Division Invested DKK m Revenue EBIT capital ROIC, % Nordic LTM Q1 2017 1,631 49 317 15.2
Slide 25: DFDS' freight business model integrates routes and logistics
DFDS’ freight business model integrates routes and logistics • DFDS’ logistics activities Manufacturers have a narrow scope of full/part load solutions Heavy Other Consumer industrial goods industrial goods goods • Own logistics provides access to market intelligence and ability to DFDS Freight forw
Slide 26: How we run DFDS
HOW WE RUN DFDS . 26 26
Slide 27: Core strategy supports path of value creation
Core strategy supports path of value creation Core strategy 1. The DFDS Way: Customer focus and continuous improvement 2. Network strength: Expand network to leverage operating model Value creation 3. Integrated shipping and logistics operations: Working together to optimise capacity utilisation Tra
Slide 28: 3 key strategic demands and supporting initiatives
3 key strategic demands and supporting initiatives 1. Top line focus 2. Increase 3. Acquisitions efficiency and and investments reduce cost base for future growth Continuous improvement projects M&A IT systems development Fleet strategy Digital DFDS WAY 2.0 28
Slide 29: Continuous improvement projects
Continuous improvement projects • Toplight – simplified rate structure and preparing for digital customer solutions and efficiency gains in freight shipping • Carpe Momentum – improve on board sales and spend per passenger on Channel routes • Haulage Drive – improve efficiency of subcontracted haula
Slide 30: 3 key strategic demands
3 key strategic demands 1. Top line focus 2. Increase 3. Acquisitions efficiency and and investments reduce cost base for future growth Continuous improvement projects M&A IT systems development Fleet strategy Digital DFDS WAY 2.0 30
Slide 31: DFDS' digital journey started in 2014
DFDS’ digital journey started in 2014 OUR INDUSTRY is still among the LEAST DIGITAL… DIGITAL: a KEY FOCUS AREA for DFDS since 2014… Impact of Digital Confusing MEDIA Fully digitized players own the 2015 focus areas customer market, such as Amazon and Netflix M DIGITALIZATION HIT OUR RADAR SCREEN LAS
Slide 32: 3 key strategic demands
3 key strategic demands 1. Top line focus 2. Increase 3. Acquisitions efficiency and and investments reduce cost base for future growth Continuous improvement projects M&A IT systems development Fleet strategy Digital DFDS WAY 2.0 32
Slide 33: Creating value from operational and strategic synergies
Creating value from operational and strategic synergies • Focus on both transformational and Revenue 2016, Routes Regions Major activity bolt-on acquisitions DKK bn Across Northern Europe, Mediterranean DFDS 13.8 22 8 (incl. sideport/container) • Shipping: Stena Line 9.7 23 6 Across Northern Europe,
Slide 34: Value creation supported by DFDS' incentive structures
Value creation supported by DFDS’ incentive structures • PIP – annual performance incentive programme • Around 300 managers included with individual goals • Bonus also linked to Group and Division goals • Share option programme • Extended to 25 managers in 2011 • Around 30 managers included today Fr
Slide 35: How we perform
HOW WE PERFORM . 35 35
Slide 36: EBITDA increased to DKK 2.6bn – ROIC now at 18%
EBITDA increased to DKK 2.6bn – ROIC now at 18% DKK bn Revenue Invested capital & ROIC before special items ROIC, % Inv cap, DKK bn 14 10 20 9 18 12 8 16 10 7 14 8 6 12 6 5 10 4 8 4 3 6 2 2 4 0 1 2 2013 2014 2015 2016 LTM Q1 2017 0 0 2013 2014 2015 2016 LTM Q1 2017 Shipping Division Logistics Divisi
Slide 37: ROIC Drive – activity by activity performance benchmark
ROIC Drive – activity by activity performance benchmark • Around 90 profit-generating activities covered by programme • Simple ROIC scorecard makes programme accessible for activity Activities performing managers above 10% • 3-year high-level rolling business plans, review meetings with top manageme
Slide 38: Steady ROIC improvement
Steady ROIC improvement • Major challenges resolved: DFDS Group: Return on invested capital (LTM) • Gothenburg-Immingham: 17.8 18 entry/exit competitor, Jan 2012 – 17.6 Mar 2013 17.4 • Russian market sanctions from 16 16.4 Jan 2014 15.3 • Channel turnaround from 2012 14 13.7 • Closure of 3 routes en
Slide 39: Overview of key profit drivers for DFDS
Overview of key profit drivers for DFDS Ferry volumes Ferry pricing Logistics Projects CAPEX M&A • Freight/pax revenue • Freight: annual price • Over half of activities • Toplight • Ongoing fleet renewal • Bolt-on ferry routes split 70/30 within negotiations either in UK or connect Shipping Division
Slide 40: Operational agility
Operational agility • Faster adaptation of capacity to changes in volumes • Capacity increased on routes in Baltic Sea, North Sea South and Channel to accomodate higher volumes • Capacity decreased between UK and Sweden • Adjustment options for freight routes to reduce fixed costs: • Changed frequen
Slide 41: Cash generation and CAPEX
Cash generation and CAPEX • Cash conversion around 100% Cash flow and investments DKK bn • Cash flow boosted by Light Capital project 3.0 started in 2013 to reduce working capital 2.5 • Limited tax payments due to European 2.0 tonnage tax regime 1.5 • Investments expected to stay below operating 1.0
Slide 42: Increased distribution of capital
Increased distribution of capital • Total of DKK 1.26bn distributed in 2016 to shareholders Capital distribution overview DKK m 2015 2016 2017 • Dividend per share proposed to be paid in Actual Actual Current plan 2017 increased by 33% to DKK 8.00 per Dividend per share, DKK 5.40 6.00 8.00 share Div
Slide 43: Strategic priorities 2017
Strategic priorities 2017 • Customer focus – growing the topline • Continuous improvement: achieve benefits from programmes • Fleet renewal: deployment of two freight ship (ro-ro) new buildings and further decisions on fleet strategy • Digital: significant spending boost in digital and IT capabiliti
Slide 44: Appendices
APPENDICES . 44 44
Slide 45: Digital journey
DIGITAL JOURNEY DFDS Group May 2017
Slide 46: Digital journey @dfds
Digital journey @dfds Digital project kick-off Digital service SELIS project kicked- catalogue & Editorial off (EU-funded) My Logistics 1.0 DFDS Digital Strategy Organization: Board established My Logistics launched Inital digital strategy Sophie-Kim Chapman joined DFDS as Digital Officer and Mobile
Slide 47: Our digital vision
Our digital vision A best-in-industry digital customer experience generating tangible business benefits for customers and DFDS Support businesses gain deep insights into customers’ needs to catalyse business change for sustained relevance 47
Slide 48: Goals for digital include response to disruption, people and cultural transformation
Goals for digital include response to disruption, people and cultural transformation 1 Best-in-industry customer experience, driven by insight 2 Grow top-line and make operations more efficient 3 Achieve maximum value for DFDS in Digital with least outlay in terms of time and money 4 Identify, attra
Slide 49: Digital experience: passenger customer lifecycle
Digital experience: passenger customer lifecycle Acquisition channels and onsite Email and onsite Paid search Satisfaction assessment Paid media Re-engagement Affiliates Inspiration Social customer care Booking flow Unified dfds.com Pre- Personalization Post- booking travel In ap
Slide 50: Digital experience: passenger customer lifecycle
Digital experience: passenger customer lifecycle Prebooking Booking Onboard 50
Slide 51: Digital experience: freight shipping customer lifecycle
Digital experience: freight shipping customer lifecycle my Freight, social and F2F channels Acquisition channels and onsite CFI Content marketing on dfds.com Customer panel Social selling via LinkedIn FAQs Request a quote on dfds.com Twitter feed (Channel) connected to CRM Claims & c
Slide 52: Digital experience: freight shipping customer lifecycle
Digital experience: freight shipping customer lifecycle Presales Booking Fulfillment 52
Slide 53: Digital experience: logistics customer lifecycle
Digital experience: logistics customer lifecycle my Logistics and in app Acquisition channels and onsite Invoices and PODs Content marketing on dfds.com Social selling via LinkedIn Claims management Request a quote on dfds.com KPI reporting connected to CRM My profile and settings Ha
Slide 54: Digital experience: logistics customer lifecycle
Digital experience: logistics customer lifecycle Presales Booking Fulfillment 54
Slide 55: Digital experience: logistics customer lifecycle
Digital experience: logistics customer lifecycle Fulfillment Driver tracked via GPS en route to provide tracking status to customer Geofencing detects when driver is within 600m of destination, and a signal is sent to Velocity for delivery time stamp Planned: automated invoicing 55
Slide 56: Q1 on track
Q1 ON TRACK DFDS GROUP Q1 2017 11 May 2017
Slide 57: European growth drives Q1 ahead of LY despite late Easter
European growth drives Q1 ahead of LY despite late Easter • Reported EBITDA up by 2% to DKK 414m Q1 EBITDA before special items DKK m 2017 414 • Q1 EBITDA up by 6% adjusted for net impact of Easter timing difference 2016 405 between Q1 and Q2 2015 228 • North Sea results fuelled by 10% higher 2014 9
Slide 58: North Sea and late Easter key EBIT drivers in Q1
North Sea and late Easter key EBIT drivers in Q1 • Passenger +1m: Positive variance from lower depre- ciations and fewer dockings offset negative Easter- Q1 2017 DFDS Group EBIT development vs LY DKK m impact 210 • North Sea +23m: High volumes, including positive Easter-impact, and lower UK costs of
Slide 59: Q1 2017 in numbers
Q1 2017 in numbers Change Change • 3% revenue growth, adjusted*. DKK m Q1 17 Q1 16 vs LY % Reported revenue up by 4% REVENUE 3,220 3,088 132 4% EBITDA BEFORE SI 414 405 9 2% • EBITDA increased to DKK 414m - margin, % 12.9 13.1 -0.2 n.a. Easter timing impact of DKK -15m P/L associates 6 -1 7 n.a. Gai
Slide 60: Impact on Q1 from GBP-depreciation and oil price
Impact on Q1 from GBP-depreciation and oil price GBP/DKK exchange rate 2016-17 • GBP/DKK was 10.8% lower in Q1 2017 10.5 vs LY (average rate for quarter) Brexit vote 10.0 • Negative revenue currency impact of 9.5 around DKK 73m in Q1 2017 vs 2016 from mainly the depreciation of GBP 9.0 8.5 • Positiv
Slide 61: Total ferry sailings on Channel up 3% in Q1 vs LY
Total ferry sailings on Channel up 3% in Q1 vs LY Channel sailings 2016-2017 1,800 3,300 • In Q1 2017, the total number of sailings was 3% above 2016 1,600 3,100 • DFDS increased sailings by 7% while 1,400 2,900 P&O decreased sailings by 1% 1,200 2,700 • DFDS and P&O had an equal number 1,000 2,500
Slide 62: Continued freight growth, pax reduced by Easter in Q1
Continued freight growth, pax reduced by Easter in Q1 Channel freight volume growth YOY, 2016-2017 • Freight market volumes were up by 3.8% 12% in Q1 2017 10% 8% • The YOY growth per rolling full-year was 6% after March at 5.8% 4% 2% 0% • Car market volumes were down by 9.8% -2% in Q1 2017 -4% Jan F
Slide 63: DFDS lost freight and car market share in Q1
DFDS lost freight and car market share in Q1 Channel freight market shares, 2016-2017 • Some transfer of freight volumes from 45% Dunkirk after shutdown of ‘jungle’ in Calais. As P&O operate six ferries on Dover-Calais vs 40% DFDS’ three ferries, DFDS’ freight market share was reduced 35% 30% • Dunk
Slide 64: 2017: Q1 update on major performance drivers for DFDS
2017: Q1 update on major performance drivers for DFDS Certain/Likely Expected Uncertain Macro drivers • Capacity expansion • Some freight shipping • Passenger volume • Impact of Brexit on selected routes volume growth – growth – slightly process on UK slightly ahead of weaker than expected economy a
Slide 65: EBITDA outlook for 2017 of DKK 2.6-2.8bn confirmed
EBITDA outlook for 2017 of DKK 2.6-2.8bn confirmed • Continued positive outlook for Europe in 2017 OUTLOOK 2017 • Outcome of French presidential • Revenue growth of around 4%, excluding revenue from bunker election expected to add stability surcharges and support continued growth in Europe • EBITDA
Slide 66: DFDS fleet overview and key figures 2016
DFDS fleet overview and key figures 2016 Container Average and age of Ro-pax Passenger sideport Ownership owned Total ships Ro-ro ships ships ships ships share, % ships, yrs DFDS Group 57 23 18 4 12 - 16 Shipping Division 41 23 14 4 - - - North Sea 19 19 - - - 68 12 Baltic Sea1 9 2 7 - - 67 15 Chann
Slide 67: Diverse customer base: forwarders, manufacturers & passengers
Diverse customer base: forwarders, manufacturers & passengers Passengers 21% Forwarders 36% Port terminal customers 3% PAX SOLUTIONS External charterers 3% Manufacturers (shipping) 5% TRAILER SHIPPING Manufacturers (transport & logistics) 32% Percent of total revenue per customer segment 67 67