Hapag-Lloyd AG

Investor Presentation • Mar 18, 2021

Investor Presentation FY 2020 Results Hamburg, 18 March 2021

Opening Remarks

1	Current developments	The year 2020 was characterized by major fluctuations on the demand side
		Performance of container shipping market in H2 much better than initially anticipated
		Freight rate development mainly driven by strong consumer demand, but also operational challenges
2	Strategic Highlights	Strategy 2023 is on track again – five quality promises and customer dashboard launched
		To increase efficiency and reduce emissions, we have ordered six LNG dual fuel powered ULCVs
		As part of our strategy, we will acquire NileDutch to increase our presence in Africa
3	Financials	EBITDA significantly improved to USD 3.1 bn (2019: USD 2.2 bn)
		Debt substantially reduced on the back of a clearly increased FCF of USD 2.8 bn (2019: USD 1.9 bn)
		Net debt/EBITDA reduced to 1.8x while liquidity reserve remained strong at USD 1.4 bn
		Based on a strong EPS of EUR 5.27, we propose to pay a dividend of EUR 3.50 per share
	Way forward	Market fundamentals remain favorable and supply & demand in 2021 / 2022 expected to be balanced
4		Outlook for Q1 & FY 2021 is positive due to persistent strong demand
		Continuously monitor evolving market conditions and adapt where needed

The coronavirus pandemic has lead to the biggest 'operational challenge' our industry has seen in many years …

1 Current developments

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… as 2020 was a very unusual year, characterized by strongly fluctuating demand that recovered unexpectedly quick in H2 2020 …

1 Current developments

… leading to significant operational challenges, capacity constraints, higher freight rates and higher costs …

Operational challenges

• Record container volumes are resulting in extreme port congestion
• At many ports in the US, Asia and Europe, ships experience waiting times of up to 1 week to get a berth
• Terminal capacity is further reduced by labor shortages due to COVID-19 and a shortage of truck drivers and feeder vessels

Bunker price development

Weekly CCFI development

… and therefore we have implemented a broad range of countermeasures to assist our customers

OUR CUSTOMERS OUR NETWORK

• We are continuously striving to optimize scarce equipment resources and provide customers with additional flexibility
• We offer heavily discounted detention rates online for all shippers
• We have initiated multiple initiatives to further improve Customer service at the Quality Service Centers

OUR FLEET

• All our vessels are in use and fully utilized with basically no charter vessels available
• We took steps early to buy and lease more than 300,000 TEU of additional container capacity in 2020 as well as repairs and maintenance of older containers
• We have deployed 52 extra-loaders to reposition hundreds of thousands of empty containers to high demand locations

• We moved capacity to highdemand trades like Far East-Europe and Trans-Pacific
• We re-route cargo through alternative gate-ways to bypass congested ports

We have launched the first 5 quality promises and our QP-dashboard, and we will launch the remaining ones until the end of 2021 …

2 Strategic Highlights

… we have ordered six LNG powered vessels of 23,500+ TEU to improve the efficiency of our fleet and to reduce our carbon footprint…

Vessel delivery schedule post signing and building phase

… and concluded green financings in an amount of USD ~900 m

• Hapag-Lloyd developed a Green Financing Framework
• Two debut transactions according to the Green Loan Principles of the Loan Market Association (LMA)
  • Syndicated green loan (USD 417 m) will finance 3 vessels with a 12-year maturity post delivery; Credit facility financed by international bank syndicate and backed by K-Sure
  • Green lease financing (USD 472 m) for remaining 3 vessels with a maturity of 17 years plus construction-phase structured by a Chinese Leasing house
• Both transactions fulfil the Green Loan Principles of the LMA the performance of the six vessels is in line with the Carbon Bond Initiative (CBI) trajectory and was certified with a Second Party Opinion by DNV GL
• Vessels also satisfy the current draft of EU Taxonomy's technical screening criteria for sea and coastal freight water transport
• We are also looking into other sources of financing with sustainability character, such as sustainability-linked financing

We have made steady progress on our Strategy 2023…

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2 Strategic Highlights

NileDutch

…and just signed a SPA with NileDutch yesterday

– a good strategic fit to further strengthen our presence in Africa

Extended network after the acquisition of NileDutch

Clear focus on connecting West and South Africa with Asia, Europe and South America

• ~35 TTEU transport capacity and ~80 TTEU container capacity
• ~200 TTEU transport volume per year
• 10 services to, from and within Africa
• 54 countries globally with 16 own offices and more than 300 employees

We were able to improve profitability, strengthen our balance sheet, and earned our cost of capital in 2020

Operational KPIs			P&L effects
Volume TTEU	11,838 (12,037)	Volume declined by 1.6% YoY due to COVID-19 impact on almost all trades	Revenue USD m	14,577 (14,115)	FY revenue increased slightly (3.3% YoY) mainly due to higher average freight rates
Rate USD/TEU	1,115 (1,072)	Average freight rate increase of 4.0% YoY is mainly driven by demand surge towards the end of the year	EBITDA USD m	3,082 (2,223)	EBITDA increased by USD 859 m on the back of strict cost management and lower bunker expenses
Bunker USD/mt	379 (416)	Average bunker consumption price decreased moderately by 37 USD/mt due to lower bunker prices	EAT USD m	1,068 (418)	Net profit more than doubled YoY, interest result improved due to accelerated debt reduction
Balance sheet			Financial KPIs
Assets USD m	18,640 (18,182)	Total assets increased by USD 458 m vs. 31 December mainly due to higher cash	FCF USD m	2,762 (1,857)	Strong Free Cash Flow generation due to improved profitability and low investments
Fin. Debt USD m	6,305 (7,180)	Strong cash flow was used to repay financial debt…	Net debt / EBITDA	1.8x (3.0x)	Ratio of net debt to EBITDA declined to lowest level since the financial crisis

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Results improved strongly on the back of successful PSP measures, higher freight rates and lower bunker prices

After volumes have decreased strongly in Q2, we have seen a strong recovery from Q3 onwards – Q4 volumes were up almost 4% YoY

Transport volume development by trade Q1 2019 – Q4 2020 [TTEU]

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Freight rates increased 4% YoY in spite of falling oil prices – Q4 spot rate surge is not fully reflected in the results yet

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In spite of high volume swings, unit cost remained flat due to agile cost management under PSP

Transport expenses per unit [USD/TEU]

• PSP measures have helped to reduce ex bunker unit cost in spite of lower volumes
• In addition, costs for "Vessel and voyage" decreased due to a higher share of charter vessels considered as Right of Use (RoU) with a respective negative impact on depreciation.
• Besides the Rights of Use related increase, depreciation & amortization increased also due to investments in scrubbers

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Strong Free Cash Flow of USD 2.8 bn was mainly used to pay down financial debt

Cash flow FY 2020 [USD m]

Unused credit lines Cash and cash equivalents

Over the past years we have continuously improved our financial KPIs…

Return on invested capital Interest coverage1)

1,048 1,857 1,146 2,762 Operating cash flow Free cash flow 1,020 1,268 2,270 3,307 IFRS 16

2017 2018 2019 2020

…and further strengthened our balance sheet

7,596 6,891 5,840 4,586 1,339 1,719 2017 2018 2019 2020 7,180 6,305 Cash Financial debt 725 752 574 836 IFRS 16 Leasing liabilities

5.7x

Based on the strong result in 2020, we propose a dividend of EUR 3.50 per share, while maintaining a prudent financial policy 3 Financials

Dividend policy

• In general, we intend to distribute at least 30 % of the consolidated profit (IFRS)
• On the basis of the strong result in 2020 and even better prospects for 2021 as well as the very low leverage ratio, the Executive Board has decided to distribute a large portion of earnings
• At the same time, we remain cautious and are willing to maintain our prudent financial policy

Financial policy

• Maintain financial solidity by keeping the right balance between shareholder participation, debt repayment, and additional investments
• Strong focus on cash, liquidity & cost management
• Strong M&A track record, with clear focus on our core competencies (pure play container liner)

4 Way forward

Market fundamentals remain favorable in the mid-term – Supply and Demand are expected to be fairly balanced in 2021/2022

2021

2008 2007 2009 2013 2010 2011 2012 2014 2018 2015 2017 2016 2020 2019

[TEU m] [Scheduled] vessel deliveries

• Recent order activity mainly driven by replacement needs (current orders will not be delivered before mid-2023)
• Expected supply growth (excl. scrapping) for 2021 and beyond will be limited and in line with demand growth
• Future scrapping is expected to increase
• Scheduled vessel deliveries in 2022 to be at a historical low
• Fleet modernization required to reduce carbon footprint

4 Way forward

Thanks to ongoing exceptionally strong demand for container transports, we expect a strong earnings growth in 2021

	FY 2020	Guidance for FY 2021
Transport volume	11,838 TTEU	Increasing slightly
Bunker consumption price	379 USD/mt	Increasing clearly
Freight rate	1,115 USD/TEU	Increasing clearly	Q1 2020	Guidance for Q1 2021
EBITDA	USD 3,082 m	Increasing clearly	USD 0.5 bn	> USD 1.8 bn
EBIT	USD 1,501 m	Increasing clearly	USD 0.2 bn	> USD 1.5 bn

• The forecast for the year is subject to considerable uncertainty due to a number of factors, including:
  • the above average volatility of freight rates at this time;
  • operational challenges caused by existing infrastructural bottlenecks, among other things;
  • and the inability to predict the further course or economic impacts of the coronavirus pandemic.
• Unlike in previous years, a large proportion of the 2021 earnings will already be generated in the first one or two quarters of the year.

4 Way forward

Our focus for 2021 and beyond:

Appendix

Hapag-Lloyd with an equity ratio of 44.3% and a gearing of 66.3%

million USD	31.12.2020	31.12.2019
Assets
Non-current assets	15,508.3	15,501.0
of which fixed assets	15,413.3	15,393.6
Current assets	3,131.9	2,680.7
of which cash and cash equivalents	836.4	574.1
Total assets	18,640.2	18,181.7
Equity and liabilities
Equity	8,252.8	7,430.3
Borrowed capital	10,387.4	10,751.4
of which non-current liabilities	5,731.3	6,269.4
of which current liabilities	4,656.1	4,482.0
of which financial debt and lease liabilities	6,305.1	7,179.6
of which non-current financial debt and lease liabilities	5,119.6	5,786.6
of which current financial debt and lease liabilities	1,185.5	1,393.0
Total equity and liabilities	18,640.2	18,181.7

Balance sheet [USD m] Financial position [USD m]

31.12.2020	31.12.2019
6,305.1	7,179.6
836.4	574.1
–	–
5,468.8	6,605.4
585.0	585.0
1,421.4	1,159.1
8,252.8	7,430.3
66.3	88.9
1.8x	3.0x
44.3	40.9

Hapag-Lloyd with positive EBIT of USD 1,501 m in FY 2020

Income statement [USD m]

				QoQ	YoY
million USD	Q4 2020	Q3 2020	Q4 2019	Change	change	FY 2020	FY 2019	Change
Revenue	4,052.5	3,519.4	3,460.4	15.1%	17.1%	14,577.1	14,114.5	3.3%
Transport
expenses	–2,735.7	–2,486.1	–2,679.6	10.0%	2.1%	–10,431.7	–10,867.0	–4.0%
Personnel
expenses	–203.5	–201.1	–197.4	1.2%	3.1%	–779.5	–764.0	2.0%
Depreciation, amortisation and
impairment	–502.3	–354.6	–339.7	41.7%	47.8%	–1,580.9	–1,314.7	20.2%
Other operating
result	–82.4	–86.5	–65.5	4.8%	–25.8%	–319.2	–300.9	–6.1%
Operating result	528.6	391.1	178.1	35.2%	196.7%	1,465.9	867.8	68.9%
Share of profit of equity-accounted
investees	8.7	10.6	8.6	–17.8%	1.0%	36.6	39.7	–7.9%
Result from
investments	–1.2	0.1	–0.7	n.m.	74.7%	–1.4	0.7	n.m.
Earnings before
interest and tax
(EBIT)	536.1	401.7	186.1	33.4%	188.1%	1,501.0	908.3	65.3%
Interest result	–58.6	–93.9	–86.9	–37.6%	–32.5%	–377.2	–444.1	–15.1%
Other financial
items	–2.2	–4.8	–0.5	–54.2%	n.m.	–4.0	1.8	n.m.
Income taxes	–12.5	–12.8	–14.0	–2.1%	–10.9%	–52.3	–48.1	8.8%
Group profit / loss	462.8	290.3	84.6	59.4%	446.9%	1,067.6	417.9	155.4%

Hapag-Lloyd with an equity ratio of 44.3% and a gearing of 66.3%

million EUR	31.12.2020	31.12.2019
Assets
Non-current assets	12,633.0	13,811.8
of which fixed assets	12,555.8	13,716.1
Current assets	2,551.2	2,388.6
of which cash and cash equivalents	681.3	511.6
Total assets	15,184.3	16,200.4
Equity and liabilities
Equity	6,722.7	6,620.6
Borrowed capital	8,461.6	9,579.8
of which non-current liabilities	4,668.7	5,586.2
of which current liabilities	3,792.9	3,993.6
of which financial debt and lease liabilities	5,136.2	6,397.2
of which non-current financial debt and lease liabilities	4,710.4	5,156.0
of which current financial debt and lease liabilities	965.7	1,241.2
Total equity and liabilities	15,184.3	16,200.4

Balance sheet [million EUR] Financial position [million EUR]

31.12.2020	31.12.2019
5,136.2	6,397.2
681.3	511.6
–	–
4,454.9	5,885.6
476.5	521.3
1,157.8	1,032.8
6,722.7	6,620.6
66.3	88.9
1.8x	3.0x
44.3	40.9

Hapag-Lloyd with positive EBIT of 935 million EUR in FY 2020

Income statement [million EUR]

million EUR	FY 2020	FY 2019	Change
Revenue	12,772.4	12,607.9	1.3%
Transport expenses	–9,140.2	–9,707.0	–5.8%
Personnel expenses	–683.0	–682.5	0.1%
Depreciation, amortisation and impairment	–1,385.2	–1,174.4	4.0%
Other operating result	–279.7	–268.8	–4.1%
Operating result	1,284.4	775.2	65.7%
Share of profit of equity accounted investees	32.1	35.5	–9.7%
Result from investments	–1.2	0.7	n.m.
Earnings before interest and tax (EBIT)	1,315.2	811.4	62.1%
Interest result	–330.5	–396.7	–16.7%
Other financial items Income taxes	–3.5 –45.8	1.6 –42.9	n.m. 6.7%
Group profit / loss	935.4	373.4	150.5%

Interest burden clearly reduced – extraordinary valuation effects weigh on financial result

Extraordinary interest result items [USD m]

Secured and unsecured debt reduced by USD 1.3 bn – IFRS 16 debt increased due to "less for longer" vessel charter renewals

Debt reduction1) [USD m]

1) Repayment amounts based on contractual debt as per 31.12.2020. Deviation from the total financial debt as shown in the balance sheet as per 31.12.2020 consists of transaction costs and accrued interest Note: Rounding differences may occur

Well balanced maturity structure of financial liabilities

Financial Debt Profile as per 31 December 20201) , [USD m]

1) As of January 2018 financial debt profile has been changed to the statement of repayment amounts. Deviation from the total financial debt as shown in the balance sheet as per 31.12.2020 consists of transaction costs and accrued interest 2) Liabilities from lease and charter contracts consist of USD 49 million liabilities from former finance lease contracts and USD 1,670 USD million from lease contracts presented as on-balance financial liability due to first-time application of IFRS 16 3) Repayment amounts based on contractual debt as per 31.12.2020 4) Total financial liabilities without Finance Leases at 4,668 USD m Note: Rounding differences may occur

Outlook & sensitivities

	Hapag-Lloyd sensitivities for 2020		Market forecasts for 2021
Transport volume	+/- 100 TTEU	+/- USD ~0.1 bn	Global economic growth (IMF, Jan 2021)	5.5%
Bunker price	+/- 50 USD/mt	+/- USD ~0.3 bn	Increase in global trade (IMF, Jan 2021)	8.1%
Freight rate	+/- 50 USD/TEU	+/- USD ~0.5 bn	Increase in global container transport volume (Seabury, Nov 2020)	4.8 %
Exchange Rate [USD/EUR]	+/- 0.05 USD/EUR	+/- USD <0.1 bn

Hapag-Lloyd`s shareholder structure

Kühne Maritime GmbH / Kühne Holding AG

CSAV Germany Container Holding GmbH

HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH Qatar Holding Germany GmbH

The Public Investment Fund on behalf of the Kingdom of Saudi Arabia

Free Float

Share price development

Stock Exchange	Frankfurt Stock Exchange / Hamburg Stock Exchange
Market segment	Regulated market (Prime Standard)
ISIN / WKN	DE000HLAG475 / HLAG47
Ticker Symbol	HLAG
Primary listing	6 November 2015
Number of shares	175,760,293

Bond trading

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 300 m	EUR 450 m
ISIN / WKN	XS1645113322	XS1555576641 / A2E4V1
Maturity Date	Jul 15, 2024	Feb 1, 2022
Redemption Price	as of July 15, 2020:102.563%; as of July 15, 2021:101.281%; as of July 15, 2022:100%	as of Feb 1, 2019: 103.375%; as of Feb 1, 2020: 101.688%; as of Feb 1, 2021: 100%
Coupon	5.125%	6.75%

Financial Calendar 2021

27 January 2021	Preliminary Financials 2020
18 March 2021	Annual Report 2020
12 May 2021	Quarterly Financial Report Q1 2021
28 May 2021	(virtual) Annual General Meeting 2021
12 August 2021	Half-year Financial Report 2021
12 November 2021	Quarterly Financial Report 9M 2021

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.

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Hapag-Lloyd Investor Relations Ballindamm 25 20095 Hamburg Tel: +49 (40) 3001-2896 ir@hlag.com All publication documents can be found here: https://www.hapag-lloyd.com/en/ir.html