Eimskipafélag Íslands — Earnings Release 2014

May 23, 2014

FIRST QUARTER 2014 FINANCIAL RESULTS

23 May 2014

HIGHLIGHTS

2

KEY HIGHLIGHTS

First quarter

EUR million	Q1 2014	Q1 2013	Change	%
Operating revenue	104.2	105.3	(1.1)	(1.1%)
EBITDA	6.0	7.2	(1.2)	(16.6%)
EBIT	0.4	2.1	(1.7)	(82.6%)
CAPEX	3.3	8.6	(5.3)	(61.6%)
Net cash from (to) operating activities	5.7	(2.4)	8.0	-
Total assets	314.8	307.2	7.6	2.5%
Equity ratio	64.2%	65.8%

KEY HIGHLIGHTS 2014

Several important items affected the results in Q1 2014

• Increased volume in reefer forwarding
• Price decrease affecting gross revenue
• Import to Iceland is growing
• Vehicles and construction supplies
• Export from Iceland decreased
• Poor capelin season
• Volume related to the Faroe Islands, Norway and transatlantic services is growing
• Imbalance in cargo flow
• Cost of positioning of empty containers
• Adverse weather conditions in January and February
• Caused delays, leading to higher cost of fuel and overtime
• Increased capacity of the sailing system in March 2013 affects the comparison between Q1 2013 and 2014
• Strike affecting the results of the ferry Herjólfur
• Less equipment sold than in Q1 last year

TRANSPORTED VOLUME 2009 TO 2014

Changes from previous year

Liner services Reefer forwarding

OPERATING REVENUE BY SEGMENT

Liner services and forwarding services

EBITDA BY SEGMENT

Liner services and forwarding services

GEOGRAPHICAL SPLIT OF OPERATING REVENUE

Less than half of operating revenue is related to Iceland

FREIGHT INDEX CHINA - EUROPE

Fluctuations in pricing from the deep sea carriers 2011 to 2014

Source: www.shippingchina.com

FISH CATCH IN ICELAND

Q1 2010 to 2014

FIRST QUARTER 2014 FINANCIAL RESULTS

INCOME STATEMENT

In line with the company's budget

due to EUR 0.2 million currency exchange loss this year compared to EUR 1.3 million currency exchange gain

EUR thousands Q1 2014 Q1 2013 Change % Operating revenue 104,200 105,313 (1,113) (1.1%) Operating expenses 98,182 98,096 86 0.1% EBITDA 6,018 7,217 (1,199) (16.6%) Depreciation and amortization (5,656) (5,134) (522) (10.2%) EBIT 362 2,083 (1,721) (82.6%) Net finance income (expense) (856) 949 (1,805) - Share of earnings of associated company (27) 0 (27) - Net earnings before income tax (521) 3,032 (3,553) - Income tax (272) (500) 228 (45.6%) Net earnings for the period (793) 2,532 (3,325) - Q1 is seasonally the slowest quarter of the year Revenue generally affected by prices, cargo combination and currency exchange rates Q1 results affected by several important items - Growth in import to Iceland - Decreased export from Iceland - Growing volume related to the Faroe Islands, Norway and transatlantic services - Imbalance in cargo flow causes increased cost of positioning empty containers - Adverse weather conditions during the two first months increased cost of fuel and overtime - Increased capacity of the sailing system in March 2013 affects comparison between Q1 2013 and 2014 - Strike affecting the results of the ferry Herjólfur - Fewer containers sold than in Q1 2013 Increased depreciation due to renewal of containers and regular dockings of vessels Change from net finance income to net finance expense

last year

OPERATING REVENUE AND EBITDA BY QUARTER

Adjusted for one-off items in 2011 and 2012

BALANCE SHEET

Solid with low leverage

• Equity decreased by EUR 3.6 million, mainly due to EUR 3.1 million declared dividend
• Equity ratio was 64.2% at the end of Q1 compared to 65.5% at year-end 2013
• Current liabilities increased by EUR 5.3 million, mainly explained by the unpaid dividend at the end of Q1
• Total interest bearing debt amounted to EUR 58.0 million at the end of Q1 compared to EUR 59.4 million at the end of 2013
• Net debt amounted to EUR 30.5 million at the end of Q1 compared to EUR 33.0 million at year-end 2013

EUR thousands	31.3.2014	31.12.2013	Change	%
Non-current assets	213,683	216,096	(2,413)	0.3%
Current assets	101,089	98,269	2,820	2.9%
Total assets	314,772	314,365	407	2.5%
Total equity	202,124	205,771	(3,647)	(0.0%)
Non-current liabilities	43,147	44,436	(1,289)	(10.1%)
Current liabilities	69,501	64,158	5,343	22.0%
Total liabilities	112,648	108,594	4,054	7.3%
Total equity and liabilities	314,772	314,365	407	0.1%

Net debt / EBITDA (adjusted)

EUR million

CASH FLOWS AND CASH FLOW BRIDGE

CAPEX is decreasing between years

EUR thousands	Q1 2014	Q1 2013	Change	%
Cash flows from operations	5,697	(2,357)	8,054	-
Investing activities	(2,824)	(8,045)	5,221	64.9%
Financing activities	(1,844)	(2,478)	634	25.6%
Changes in cash and cash equivalents	1,029	(12,880)	13,909	-
Cash at the beginning of the period	26,370	37,304	(10,934)	(29.3%)
Exchange rate fluctuations	88	(447)	535	-
Cash at the end of period	27,487	23,977	3,510	14.6%

CAPEX 2010 TO 2014

Affected by vessel investments

OUTLOOK

AVERAGE LARGE CARRIER OPERATING PROFIT MARGIN

2009 to 2013 by quarter

The five of the top carriers that already have disclosed their results for Q1 2014 are showing around -4% margin (operating loss)

Source: Alphaliner, profit margin for 30 top carriers

CONTAINER TRADE HISTORICAL GROWTH

Index of seaborne trade

Total seaborne trade has grown at a rate of 4.3% over the same period

• Global containerized trade has grown at an annual rate of 6.6% since 1997, resulting in almost a triple increase in containerized cargo movements
• Positive growth outlook shortmedium term, driven mainly by US and Asian economies

NUMBER OF APARTMENTS IN ICELAND

2000 to 2020

* Net demand for residential property in Iceland, according to Statistics Iceland's forecast on population development and assumptions on the size of an average household

• There is an average annual need for 1,500* new residential properties in the coming years 2014 to 2020
• One apartment equals one 40' container (2 TEU)
• About 3,000 TEU equal to 7 voyages with Brúarfoss

AVERAGE AGE OF VEHICLES IN ICELAND IS INCREASING

2002 to 2013

Required additional one-off import to reduce average age to 2002 levels*:

40,000 = 20,000 TEU equal to 41 voyages with Brúarfoss

Required annual import to maintain 2013 average age*:

About 7,250 TEU equal to 15 voyages with Brúarfoss

* Based on Eimskip's assumptions on de-registrations and age distribution

NEW REGISTRATION OF MOTOR VEHICLES IN ICELAND

2002 to 2013

Source: www.statice.is

INVESTMENT AS A SHARE OF GDP IN ICELAND

1980 to 2016

• Investment is well below a historical average
• According to Arion Bank research and the Central Bank of Iceland, a slight increase in investment is expected in the years 2014 to 2016
• In 2013 there was a gap of ISK 125 billion for investments to reach the average share of GDP

Source: www.statice.is, www.sedlabanki.is and www.arionbanki.is

MANY PLANNED LARGE SCALE PROJECTS IN ICELAND

Source: As published on www.mbl.is on 22 March 2014, discussing increased interest among investors

Construction about to commence (Alvogen and various Hotel projects)

DEVELOPMENT OF THE ICELANDIC TRANSPORT MARKET

2005 to 2014

HISTORICAL T/C RATES FROM 1998 TO END OF APRIL 2014

Time charter at historically low levels

• Time charter rates peaked in 2006
• Time charter have been at historically low levels since the end of 2009 due to the situation of the world economy
• Many owners have been forced to sell their vessels and many have gone bankrupt
• The KG system in Germany that did supply many feeder vessels in Europe has collapsed

Geared containership charter rates

Source: Clarkson

NEW BUILDINGS IN CHINA

Estimated delivery of Lagarfoss is at the end of June

• The first of the two vessels will be given the name Lagarfoss and will be the 7th vessel with that name
• The main engine was started at the end of April
• Sea trial is scheduled in early June
• Delivery is scheduled in the end of June
• The vessel is expected to be in Iceland late August
• Vessel fleet changes in the coming months
• 500 TEU vessel in services between the Faroe Islands and Scotland replacing a 700 TEU vessel
• The new Lagarfoss is 875 TEU and will replace the 724 TEU Selfoss on the Yellow Line
• Selfoss will replace one of the chartered vessels or will be chartered on bareboat in a different market

ESTIMATED DEVELOPMENT OF TEU CAPACITY

Container and reefer vessels in liner trade in the North Atlantic

DIVERSIFYING OPERATIONS

External growth

• External growth project with the intention of diversifying operations and increasing stability in earnings
• Eimskip's Annual General Meeting 2014 approved to increase the share capital by 110 million shares
• Expansion project at an early stage with Eimskip currently evaluating different opportunities
• Dual listing will provide
• Source of foreign currency enabling Eimskip to make material acquisitions overseas and facilitate the use of stock in acquisitions
• Improved access to investors and increased analyst coverage which should increase trading volumes
• Better access to debt-financing alternatives

GROWTH IN LINE WITH STRATEGY

Through joint ventures and acquisitions

• Focus on operations in Eimskip's home market where synergy is a clear driver in evaluation of potential targets
• Reasonably sized acquisitions or joint venture projects
• Container liner operations
• Reefer and dry vessel operations
• Vessel investment / management
• Terminal operations
• Port located cold storages with strong connection to the seafood industry
• Trucking to serve Eimskip's needs and third party
• Custom clearance / brokerage serving liner trade
• Reefer logistics worldwide
• Freight forwarding companies
• Continued focus on opening new offices supporting existing network

OUTLOOK FOR 2014

• Opportunities to benefit from increased volume to and from Iceland
• International operations well positioned for organic and external growth
• EBITDA forecast for this year EUR 37 to 41 million which includes no external growth

Information contained in this presentation is based on sources that Eimskipafélag Íslands hf. ("Eimskip" or the "Company") considers reliable at each time. Its accuracy or completeness can however not be guaranteed.

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This presentation is solely for information purposes and is not intended to form part of or be the basis of any decision making by its recipients. Nothing in this presentation should be construed as a promise or recommendation. Eimskip is not obliged to provide recipients of this presentation any further information on the Company or to make amendments or changes to this publication should inaccuracies or errors be discovered or opinions or information change.

Any statement contained in this presentation that refers to the Company's estimated or anticipated future results or future activities are forwardlooking statements which reflect the Company's current analysis of existing trends, information and plans. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially depending on factors such as the availability of resources, the timing and effect of regulatory actions and other factors. Eimskip undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this presentation. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. All forward-looking statements are qualified in their entirety by this cautionary statement.

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