Investor Presentation Preliminary Financials 20 Hamburg, 28 February 2018
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 uncertainties and contingencies that are subject to change. Actual results can differ materially from those anticipated in the Company s forward-looking statements as a result of a variety of factors, many of which are beyond the control of the Company, including those set forth from time to time in the Company s press releases and reports and those set forth from time to time in the Company s analyst calls and discussions. We do not assume any obligation to update the forward-looking statements contained in this presentation. This presentation does not constitute an offer to sell or a solicitation or offer to buy any securities of the Company, and no part of this presentation shall form the basis of or may be relied upon in connection with any offer or commitment whatsoever. This presentation is being presented solely for your information and is subject to change without notice. UASC s Ltd. and its subsidiaries have been included in the figures from the date control was transferred on 24 May 20.The key figures used are therefore only comparable with the previous year to a limited extent. All information on FY 20 financials is preliminary and unaudited. 2
Opening Remarks 01 02 Deliverables Sector Update We continued to deliver on our initiatives (UASC integration, cash capital increase & continuous cost control) Operating result (EBIT) of USD 466 m in FY 20 (+234% YoY) in line with market expectation Sector fundamentals remain favourable Orderbook remains at low level despite recent new orders 03 Financials Significantly improved EBITDA of USD 1,198 m in FY 20 (USD 390 m in 20) Further reduction of unit cost despite higher bunker prices 04 Way Forward Main focus going forward is to realise the synergies of the UASC integration and further cost optimisation Substantial deleveraging from the merger onwards 3
1 Deliverables Throughout the year, we have continued to deliver on our initiatives 20 2018 uary / February 20 Successful bond refinancing of EUR 450m at 6.75% March 20 FY 20 closed with positive operating results May 20 Closing of the merger with UASC August 20 H1 results significantly higher than last year 20 Admission to trading of new shares (Capital Increase I) ober 20 Successful cash capital increase of USD 413 m (Capital Increase II) February 2018 Hapag-Lloyd increased operating result significantly 4 February 20 Hapag-Lloyd increases results in 20 il 20 Start of THE Alliance Successful bond refinancing of EUR 450m at 5.125% September 20 ober /,000 TEU ship Afif delivered,000 TEU ship Al Jmeliyah delivered November 20 commercial integration of UASC completed
1 Deliverables and have further strengthened Hapag-Lloyd s position as one of the Top 5 global container carriers At a glance Deal rationale 1) 1) Combined Entity 4) Corporate HQ Hamburg Dubai Hamburg Strengthened market position Well-balanced trades Alliance membership G6 (until 31 March 20) Ocean 3 (until 31 March 20) The Alliance (since 1 il 20) Services 118 45 120 Large, young fleet Vessels [#] 2 58 219 Capacity [TEU m] 1.0 0.6 1.6 Significant synergy effects Container [TEU m] 1.6 2.3 Employees 9,413 3,534 12,567 Strong partnerships 5 1) As of 31 March 20; 4) Combined entity as of 31 December 20
Synergies 1 Deliverables Total synergies of USD 435 m p.a. to be achieved from 2019 onwards Significant synergy ramp-up in 2018 expected Synergy potential, full run-rate [USD m] USD 435 m Network Overhead Other Expected synergies Total transaction and integration related one-off costs are expected to amount to USD 130 m 1) 6 Network Overhead Other (terminals, equipment and intermodal) Optimized new vessel deployment/network Slot cost advantages Efficient use of new fleet 1) Including UASC as of date of first-time consolidation Consolidation of Corp. and Regional HQs Consolidation of country organizations Other overhead reductions (e.g. marketing, consultancy, audit) Lower container handling rates per vendor/location Imbalance reduction and leasing costs optimization Optimization of inland haulage network Best practice sharing
2 Sector Update Demand: Container shipping growth remains on a healthy and constant level driven by a solid global economic growth Global Container Trade & Global GDP Growth [%] GDP multiplier 125 120 20-20 1.1x Global Container Trade 2018E-2020E 1.3x 5.1% 5.1% 1 4.9% 110 4.7% +3.9% +3.7% 105 3.1% +3.9% +3.1% +3.7% Global GDP 100 20 20 20 2018E 2019E 2020e 7 Source: Global Insight (November 20), IMF WEO (uary 2018)
2 Sector Update Supply: Orderbook remains at a historically low level, while almost no idle capacity is available Orderbook-to-fleet [TEU m, %] 8 61% Orders placed [TEU m] 3.2 7 6 5 4 3 2 6.5 50% 6.0 38% 5.0 27% 3.9 28% 4.3 21% 3.4 21% 3.6 18% 3.3 19% 3.8 % 3.2 13% 2.8 13% 2.7 1.2 0.6 0.1 2007 2008 2009 2010 Idle Fleet 1.8 2.0 0.4 2011 2012 2013 2.2 1.1 0.2 2014 20 20 20 [TTEU] Share of world fleet 0.9% 1,480 1,359 1,324 0.2 YTD Feb 2018 YTD Feb 2018 1 0 2007 0.3 0.4 2008 2009 Orderbook 0.2 2010 1.4 1.0 0.5 0.5 2011 2012 2013 2014 Vessels > 14,000 TEU 2.0 1.7 1.7 1.6 20 20 20 2018E Share of World Fleet 2009 356 2010 595 2011 809 2012 779 2013 228 2014 20 20 4 191 20 8 Source: MDS Transmodal (February 2018), Drewry (4Q), Clarksons (), Alphaliner weekly (February 2018)
2 Sector Update Even though, short term supply pressure will most likely persist, mid-term supply/demand gap is further closing Vessel deliveries by year [TEU m] Supply / demand balance 1.4 1.4 1.2 0.6 1.4 1.2 0.5 1.3 0.5 1.3 0.6 1.5 1.7 0.8 0.9 0.4 1.5 1.0 1.5 0.3 14 12 10 8 6 4 2 0 13.7% 9.7% 6.8% 8.0% 7.8% 6.1% 3.1% 5.5% 2.2% 6.3% 4.3% 8.4% 1.1% 3.1% 1.2% 4.7% 4.2% 5.6% 4.9% 5.1% 3.7% 5.1% 3.2% 0.6 0.6 0.8 0.8 0.8 0.9 0.5 0.5 1.2 0.3 0.4 0.5 0.2 0.3-2 -4-6 -8-9.2% 2007 2008 2009 2010 2011 2012 2013 2014 20 20 20 2018E2019E 2020E -10 2009 2010 2011 2012 2013 2014 20 20 20 2018E 2019E 2020E H2 H1 Note: Vessel deliveries 2018E-2020E based on MDS Transmodal data including slippage; Supply based on Drewry data including slippage and scrapping 9 Source: Drewry (4Q), MDS Transmodal (February 2018), IHS Global Insight (November 20)) Demand Supply
2 Sector Update Contracted freight rates have shown continuous recovery and slightly less volatility Comprehensive Index (CCFI) Shanghai Europe (CCFI) 1,100 CCFI Comprehensive Index 2,500 NEurope (USD/TEU) Mediter. (USD/TEU) 1,000 900 800 700 600 848 2,000 1,500 1,000 500 1,078 1,121 500 18 0 18 Shanghai USA (CCFI) Shanghai Latin America (CCFI) 2,000 USWC (USD/TEU) USEC (USD/TEU) 1,500 LatAm (USD/TEU) 1,500 1,200 1,000 500 925 649 900 600 300 790 0 18 0 18 10 Source: Shanghai Shipping Exchange (23 February 2018)
2 Sector Update Current consolidation wave leads to higher concentration Carrier capacity [TEU m] and global capacity share [%] Global capacity share [%] Global capacity share [%] Ranking as of 2018 Ranking end of 2013 14% 13% 8% 2.5 Maersk 4.0 2.3 MSC 1.5 CMA CGM 3.1 4% 4% 4% 4% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 1% 0.8 Evergreen 0.8 COSCO Hapag- Lloyd Hanjin 0.6 APL 19% % 12% 12% 8% 2.5 2.5 1.6 0.6 CSCL 0.5 MOL 7% 1.5 0.5 NYK 0.5 Hamburg Süd 1.1 0.5 OOCL 0.4 Yang Ming 0.6 0.4 PIL 0.3 K-Line 0.4 0.3 5% 3% 2% 2% 0.3 0.3 0.3 ZIM Hyundai UASC CSAV 0.4 2% 0.3 44% % 39% 65% 19% % Top 5 Top 6-10 Remaining 11 Maersk / Hamburg Süd MSC CMA CGM / APL COSCO / CSCL / OOCL Hapag-Lloyd / UASC ONE Source: Drewry (4Q), MDS Transmodal (uary 2018, ober 2013) Evergreen Yang Ming PIL ZIM Hyundai 2013 2018 Note: Diagram assuming that all currently announced mergers (NYK & MOL & K-Line, COSCO & OOCL) will receive regulatory approvals and are executed as announced. Simple sum of stand-alone operating capacity as of uary 2018.
3 Financials On a pro-forma basis: Transport volume was up by 4.8% YoY, while freight rates have exceeded previous year s level by 9.4% Transport volume [TEU m] +4.8% 10,698 11,212 Freight rate [USD/TEU] 1,300 20 20 1,200 1,100 1.036 +1.4% 1,051 7,599 +29% 1,000 9,803 900 928 +9.4% 1,0 800 20 20 Q1 Q2 Q3 Q1 Q2 Q3 Transport expenses per TEU [USD/TEU] -0.3% 925 922 Bunker price [USD/mt] 400 300 12 20 20 Pro forma figures 200 100 Q1 Reported figures Note: UASC s Ltd. and its subsidiaries have been included in the figures from the date control was transferred on 24 May 20. The key figures used are therefore only comparable with the previous year to a limited extent. All information on FY 20 financials is preliminary and unaudited. Q2 226 +4% 318 Q3 Q1 Q2 Q3
3 Financials We have achieved a significantly improved EBIT of USD 466 m while EBITDA almost doubled to USD 1,198 m in 20 Operational KPIs 20 20 % FY 20 FY 20 % Transport volume [TTEU] 2,774 1,949 +42% 9,803 7,599 +29% Freight rate [USD/TEU] 1,030 1,033 0% 1,051 1,036 +1% Revenue [USD m] 3,119 2,182 +43% 11,286 8,546 +32% EBITDA [USD m] 390 246 +56% 1,198 671 +79% EBITDA margin 12.5% 11.3% +1.2 ppt 10.6% 7.9% +2.7 ppt EBIT [USD m] 7 111 +51% 466 140 +234% EBIT margin 5.4% 5.1% +0.3 ppt 4.1% 1.6% +2.5 ppt 13 Note: UASC s Ltd. and its subsidiaries have been included in the figures from the date control was transferred on 24 May 20. The key figures used are therefore only comparable with the previous year to a limited extent. All information on FY 20 financials is preliminary and unaudited.
3 Financials Solid equity at USD 7.3 bn and strong liquidity reserve at USD 1.3 bn as well as higher net debt as a result of the merger with UASC Equity base [USD bn] Net debt [USD bn] Financial Debt 4.4 7.6 7.3 Cash 0.6 5.3 6.8 1) Net Debt 3.8 31.12.20 31.12.20 31.12.20 31.12.20 Liquidity position [USD bn] 0.8 0.2 Unused credit lines 1.3 0.5 Comments Strong liquidity reserve of USD 1.3 bn Capital Increase of USD 413.4 m in ober has strengthened equity Net debt increased compared to 31.12.20 as a result of first time consolidation of UASC Group 0.6 Cash 31.12.20 31.12.20 14 Note: UASC s Ltd. and its subsidiaries have been included in the figures from the date control was transferred on 24 May 20. The key figures used are therefore only comparable with the previous year to a limited extent. All information on FY 20 financials is preliminary and unaudited. 1) incl. Restricted Cash
4 Way Forward Hapag-Lloyd with clearly defined financial policy Profitability Profitability going forward supported by improved fleet ownership structure and synergy realization Investments No planned new vessel investments in next years Maximize free cash flow Deleveraging Clear target to significantly deleverage over time Liquidity Maintain an adequate liquidity reserve for the Combined Entity
A Appendix Convincing equity story resulted in higher share price Share trading 210 200 190 180 0 0 0 140 130 120 110 100 90 80 70 60 50 40 Stock Exchange Market segment / Index ISIN / WKN Ticker Symbol Frankfurt Stock Exchange / Hamburg Stock Exchange Regulated market (Prime Standard) / SDAX DE000HLAG475 / HLAG47 HLAG Primary listing 6 November 20 HLAG Maersk Evergreen COSCO OOIL SDAX DAX Global Shipping Number of shares 5,760,293 Source: Bloomberg (23 February 2018)
A Appendix and lower bond yields Bonds trading 110 105 100 101.8 100.0 105.1 101.4 95 HL EUR 7.75% 2018 HL EUR 7.50% 2019 HL EUR 6.75% 2022 HL EUR 5.125% 2024 EUR Bond 2024 EUR Bond 2022 EUR Bond 2019 EUR Bond 2018 Listing Open market of the Luxembourg Stock Exchange (Euro MTF) Volume EUR 450 m EUR 450 m EUR 250 m 2) EUR 200 m 1) ISIN / WKN XS45113322 XS55576641 / A2E4V1 XS1144214993 / A13SNX XS0974356262 / A1X3QY Maturity Date Jul, 2024 Feb 1, 2022, 2019 1, 2018 Redemption Price as of, 2020:102.563%; as of, 2021:101.281%; as of, 2022:100% as of Feb 1, 2019:103.375%; as of Feb 1, 2020:101.688%; as of Feb 1, 2021:100% as of, 20:103.750%; as of, 20:101.875%; as of, 2018:100% as of 1, 20:103.875%; as of 1, 20:101.938%; as of 1, 20:100% Coupon 5.125% 6.75% 7.50% 7.75% 1) Full redemption on 1 ober 20; 2) Full Redemption on ober 20 18 Source: Citi (23 February 2018)
A Appendix Supply: Scrapping expected to stay at previous year s level, while net capacity growth slightly exceeds last year s growth Scrapping [TTEU] 27 28 28 24 23 23 23 19 21 Share of world fleet Average age 2.0% 654 351 131 75 332 444 381 193 414 400 2009 2010 2011 2012 2013 2014 20 20 20 2018E Net Capacity Growth 2018E 9.4% -2.4% 5.6% -1.5% Scheduled capacity growth Postponements Scrapping Net capacity growth 19 Source: Drewry (Forecaster 4Q), Alphaliner Weekly (ober 20)
A Appendix Scale: On important trades TOP 5 players now make up more than 64% capacity share TOP 5 concentration on individual trades (2013 versus 2018) Atlantic Latin America Far East Transpacific Middle East / Indian Subcontinent 79% 81% 67% 82% 59% 79% 73% 64% 41% 43% 20 Source: Alphaliner monthly newsletter (June 2013 / February 2018) 2013 2018 (incl. announced mergers) Note: Diagram assuming that all currently announced mergers (COSCO & OOCL; NYK & MOL & K-Line) will receive regulatory approvals and are executed as announced. Simple sum of stand-alone operating capacity as of February 2018.
A Appendix Spot rates with continued recovery since historic low in Q2 20 Comprehensive Index (SCFI) Shanghai Europe (SCFI) 1,500 Comprehensive Index SCFI 2,500 NEurope (USD/TEU) Mediter. (USD/TEU) 2,000 1,000 854 1,500 500 1,000 500 9 797 0... 18 0... 18 Shanghai USA (SCFI) Shanghai Latin America (SCFI) 6,000 5,000 4,000 3,000 2,000 1,000 0. USWC (USD/FEU). USEC (USD/FEU). 18 2,708 1,412 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0. LatAm (USD/TEU).. 18 2,539 21 Source: Shanghai Shipping Exchange (23 February 2018)
A Appendix Capital increase successfully completed Key terms of the rights issue Offer size 11,7,353 new shares (c. 7.1 % of current share capital), resulting in EUR 351.5 m of gross proceeds Freefloat Shareholders agreement/ Controlling shareholders Subscription price EUR 30 per share (.8 % discount to XETRA closing price as of 27 September 20,.8 % discount to TERP).4% 25.5% CSAV 1) Use of proceeds Listing Distribution Repayment of existing indebtedness, with any remainder to be used for general corporate purposes Regulated market of Frankfurt Stock Exchange (Prime Standard) and the regulated market of the Hamburg Stock Exchange Public offer in Germany and Luxembourg Offering in the US to QIBs under Rule 144A Private placement to institutional investors outside the US in reliance on Reg S PIF 4) QIA 10.2% 14.5% 3) TUI 12.3% 6 m shares 20.5% Kühne 2) 13.9% HGV Take-up ratio 96% 22 1) CSAV Germany Container Holding GmbH 2) Kühne Maritime GmbH 3) Qatar Holding Germany GmbH 4) The Public Investment Fund of the Kingdom of Saudi Arabia
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 23