Earnings Release • Feb 28, 2017
Earnings Release
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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 forwardlooking 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.
All information on FY 2016 financials is preliminary and unaudited.
| 01 | Deliverables | We continued to progress on our strategic initiatives and achieved a profit in H2 2016 (after a disappointing first half year with the low point in Q2) |
|---|---|---|
| 02 | Market Update | The industry fundamentals are showing continuous signs of improvement The sector is consolidating with Hapag-Lloyd proactively taking part |
| 03 | Hapag-Lloyd Performance |
We improved results in Q4 and achieved an operating profit of USD 140 m in 2016 We are delivering on our savings with top-tier unit costs (outperforming the sector) |
| 04 | UASC Merger | Our merger with UASC is strategically and operationally highly attractive Significant CAPEX savings and USD 435 m p.a. anticipated cost synergies |
| 05 | Way Forward | Main focus going forward on completing the transaction with UASC, starting THE Alliance and quickly integrating the UASC business to further reduce costs |
| Consolidating industry | "The current wave of consolidation in the sector, with so far only 13 global carriers remaining - down from 20 last year - and the related reshuffling of alliances, would likely lead to improved capacity management" |
"…which will create urgently needed concentration as TOP 5 in many cases will control ~70% of trades" |
|---|---|---|
| Lloyd's Loading List, January 2017 | BCA Investor Presentation, 2016 | |
| Re-shaping alliances | "The new shipping alliances taking effect in 2017 are looming large in the minds of shippers. This new year brings new vessel-sharing agreements into effect in April" Journal of Commerce, January 2017 |
"…new alliances create more stability, but it will take some time before things settle down" Investor Presentation, FY 2015 |
| Freight rates recover | "Although overcapacity is expected to initially further increase, spot freight rates from China have recently shown a stronger than expected recovery [and] doubled from the trough in April" Lloyd's Loading List, January 2017 |
"Freight rates expected to recover in 2016" Investor Presentation, FY 2015 |
| Orderbook depletes |
"The very low number of new building orders was backed up by an all-time high of demolition capacity reducing the harmful effects of new ships being delivered" Journal of Commerce, January 2017 |
"Vessel sizes are reaching their economic maximum, which will help reduce the orderbook going forward" Investor Presentation, FY 2015 |
| High scrapping | "The increased scrapping of Panamax tonnage, driven by the opening of the enlarged Panama Canal, also helped reduce the number of jobless vessels above 3,000 TEUs" Alphaliner, January 2017 |
"Scrapping is increasing (with Panama Canal expansion)" Investor Presentation, H1 2015 |
Container shipping volume and global GDP growth
6
7
H2 H1
… keeping net capacity growth low …
Net capacity growth 2017E
Further freight rate increases planned March 2017 by various carriers, e.g.:1)
Hapag-Lloyd: Asia– Latin America: USD 1050 / TEU – 15 March; Transpacific: USD 560 / TEU – 15 March
MSC: North Europe – Latin: USD 150 / TEU – 17 March; Mediterranean – North America: USD 200 / TEU – 19 March
OOCL: Asia – North America: USD 640 / TEU – 1 April
Market bunker price level increased in Q4 and beginning of 2017 compared to 9M 2016 which is also partially reflected in higher spot market rates
Carrier capacity [TEU m] and global capacity share [%]
Source: Drewry (Forecaster 4Q16), MDS Transmodal (January 2017, October 2013)
Note: Diagram assuming that all currently announced mergers (Hapag-Lloyd & UASC; NYK & MOL & K-Line, Maersk & Hamburg Süd) will receive regulatory approvals and are executed as announced. Simple sum of stand-alone operating capacity as of December 1, 2016.
10
Global capacity share [%]
Source: Alphaliner monthly (February 2017), Drewry (Forecaster 4Q16), MDS Transmodal (January 2017)
Comprehensive network of 32 services will connect more than 75 major ports
Combined capacity of ~3.5m TEU or around 17% of world fleet – vessel pool of more than 240 ships
Yang Ming K-Line, MOL, NYK
Leading product characterized by
After Japanese JV2) we are three partners in THE Alliance3): Hapag-Lloyd
45%
16%
39%
1) 2M including Hamburg Süd 2) Subject to regulatory approvals and closing 3) Total operating capacity of THE alliance partners, not all to be deployed in alliance (Hapag-Lloyd including UASC)
Transport volume [TEU m] Freight rate [USD/TEU]
Transport expenses per TEU [USD/TEU]
| 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 | 224 | 257 | 210 | 312 | -33% |
| Exchange rate [EUR/USD] | 1.10 | 1.12 | 1.13 | 1.10 | 1.10 | 1.11 | n/a |
| Revenue [USD m] | 2,124 | 2,088 | 2,152 | 2,182 | 8,546 | 9,814 | -13% |
| EBITDA [USD m] |
136 | 83 | 206 | 246 | 671 | 922 | -27% |
| EBITDA margin |
6.4% | 4.0% | 9.6% | 11.3% | 7.9% | 9.4% | -1.5ppt |
| EBIT [USD m] | 5 | -50 | 73 | 111 | 140 | 407 | -66% |
| EBIT margin | 0.2% | -2.4% | 3.4% | 5.1% | 1.6% | 4.1% | -2.5ppt |
Note: For selected peers including terminals and other business if no liner figure available. Translation into USD based on average FX rates for individual periods.
2016 5,342 2015 5,497
Strong equity base [USD m]
1) incl. Restricted Cash (USD 19.7 million booked as other assets)
Stable net debt [USD m]
Combined Entity1) Corporate HQ Hamburg Dubai Hamburg Alliance membership G6 Ocean 3 THE Alliance Ships [#] 166 59 225 Capacity [TEU m] 1.0 0.6 1.5 Container [TEU m] 1.6 0.7 2.3 Scale Combination assures a top 5 position globally and on key trades in a consolidating market Network Further balancing of trade portfolio with leadership on Middle East Trades Synergies Access to young and fuel-efficient fleet with large share of ULCVs Sustainable market position without further shortterm fleet investments Fleet Significant value creation through expected runrate synergies of USD 435 m p.a. starting 2019 – c. 1/3 in 2017 already Partner Strong partner in light of ongoing alliance reshuffling Supportive core shareholders and capital market investors
1) Sum of stand-alone figures as of 31 December 2016 (rounding differences may occur)
Note: Diagram assuming that all currently announced mergers (Hapag-Lloyd & UASC; NYK & MOL & K-Line; Maersk & Hamburg Süd) will receive regulatory approvals and are executed as announced. Simple sum of stand-alone operating capacity as of February 2017.
Transport volume by trade, FY 2016 (indicative)
| 20% 3 5 0 % % Trade |
16% 9 % TEU m |
4% 13% 3 3 % % Trade2) |
54% 2 2 % TEU m |
17% 2 2 % Trade2) |
27% 16% 5 % TEU m |
|---|---|---|---|---|---|
| 1.5 1.5 1.2 2.2 0.7 0.4 |
Atlantic Transpacific Far East Latin America Intra Asia EMAO |
0.1 0.3 1.2 0.1 0.5 0.1 |
Atlantic Transpacific Far East Latin America Intra Asia EMAO |
||
| Hapag-Lloyd/UASC | 7.6 Breakdown of capacity operated by trade3) |
Total Maersk/HSDG |
2.3 MSC |
Total CMA CGM |
COSCO |
Breakdown based on capacity deployed by individual carriers on direct services only. Excl. wayport capacity, transshipment services, slot exchange arrangements and cross-trade intra-alliance arrangements; numbers for Hapag-Lloyd based on exposure to global trades 4) Includes Middle East / ISC trades and idle fleet
1) Weighted by carrier capacities
Synergy potential, full run-rate [USD m]
1) 50% backstopped by QH and PIF, 50% backstopped by CSAV and Kühne
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 / WKN | XS1555576641 / A2E4V1 | XS1144214993 / A13SNX | XS0974356262 / A1X3QY | ||
| Maturity Date |
Feb 1, 2022 | Oct 15, 2019 | Oct 1, 2018 | ||
| Redemption Price | as of Feb 1, 2019:103.375%; as of Feb 1, 2020:101.688%; as of Feb 1, 2021:100% |
as of Oct 15, 2016:103.750%; as of Oct 15, 2017:101.875%; as of Oct 15, 2018:100% |
as of Oct 1, 2015:103.875%; as of Oct 1, 2016:101.938%; as of Oct 1, 2017:100% |
||
| Coupon | 6.75% | 7.50% | 7.75% |
1) Partial redemption by nominal EUR 200 m on 9 March 2017
Henrik Schilling Senior Director Investor Relations Tel +49 40 3001-2896 Fax +49 40 3001-72896 [email protected] https://www.hapag-lloyd.com/en/ir.html
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