Eimskipafélag Íslands — Earnings Release 2018

Aug 31, 2018

Financial Results – Q2 and 1H 2018 31 August 2018

NET EARNINGS EUR 4.6 MILLION IN Q2 2018

Net earnings EUR 4.6 million

KEY HIGHLIGHTS FOR Q2 2018

Investment in the weekly sailing system

Focus on Trans-Atlantic and Short-Sea

2014 2015 2016 2017 2018

Container Liner volume up 6.3% | Growth in forwarding volume driven by dry cargo

7.0% 6.9% 9.1% 3.5% 2.9% 0 20 40 60 80 100 120 140 160 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% LINER SERVICES FORWARDING SERVICES -5% 0% 5% 10% 15% 20% 25% 30% 35% 40%

TRANSPORTED VOLUME IN Q2 2014 TO Q2 2018

Volume index: 2010 volume at 100

Container Liner volume up 5.9% | Growth in forwarding volume driven by dry cargo

TRANSPORTED VOLUME IN 6M 2018

Volume index: 2010 volume at 100

LINER SERVICES FORWARDING SERVICES

-5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 7.9% 4.2% 5.9% 3.6% 3.4% 110 115 120 125 130 135 140 145 2014 2015 2016 2017 6M 2018 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

Increase in container liner services and Trans-Atlantic

LINER SERVICES VOLUME

Continued growth in dry cargo

FORWARDING SERVICES VOLUME

Growth in revenue and volume but lower earnings

KEY HIGHLIGHTS FOR 2Q 2018

Affecting revenue

• + Container liner volume
• + Dry cargo forwarding
• + Strong growth in TA
• ÷ Car import to Iceland
• ÷ International freight rates
• ÷ Currency exchange rates
• ÷ Volume in Norway

Affecting EBITDA

• ÷ Additional vessel on Green and Gray route
• ÷ Container cost
• ÷ Trade tension in reefer forwarding
• ÷ Bunker price

Continued top line growth | EBITDA affected by investment in the sailing system

REVENUE AND EBITDA 2014 TO 2018 BY QUARTER

*Add-back of EUR 2.3 million non-recurring charges in Q1 '17 is offset by a EUR 2.5 million non-recurring revenue item in Q4 '17 First half 2018 results affected by investment in sailing system and currency exchange rates

INCOME STATEMENT 1H 2018

EBITDA EUR 22.2 m down 14.8%

Net earnings EUR 3.0 m compared to net earnings of EUR 5.1 m in 1H 2017

Income statement relatively naturally hedged – long in USD and short in ISK

REVENUE AND EXPENSES BY CURRENCY

11

EUR/USD Development

Increase in total cost mainly due to increased activity

EXPENSE BRIDGE

Source: www.shippingchina.com 11

Average price decreased by 17% between Q2 2017 and Q2 2018

CHINA FORWARDERS FREIGHT INDEX

Average bunker price 31% higher in 1H 2018 compared to 1H 2017

BUNKER PRICE DEVELOPMENT

Minor changes in geographical split of revenue

GEOGRAPHICAL SPLIT OF REVENUE

Similar split between business segments between periods

REVENUE AND EBITDA BY BUSINESS SEGMENT

Increased leverage but strong financial position

FINANCIAL RATIOS 2014 TO Q2 2018

NET DEBT / LTM-EBITDA NET DEBT AND EQUITY RATIO EUR million

Investments have led to increase in borrowings

CASH FLOW BRIDGE

Included in 2018 budget is payment of vessel and new port crane in Sundahöfn

CAPEX 2014 TO 2018

2017 6M 2018 6M

DEVELOPMENT OF THE SAILING SYSTEM AND OTHER PROJECTS

Transformation period for the company – Container liner growth 6.3% 6M 2018 compared to 6M 2017

• The new sailing system is an investment for the future
• On the Gray route adding volume from Húsavík
• On the Gray route adding new volume from the UK
• On the Green route adding TA volume between North America and Northern Europe/Scandinavia
• Short-Sea volume between Halifax and Portland on the Green route for CMA and their international large scale customers
• Temporary sailing services to Gdynia and Klaipeda on the Red route during the mackerel season in Iceland

THE COMPANY INVESTED IN A NEW WEEKLY SAILING SYSTEM

Recent developments

Investment in Coldstore in Tromsö, Norway

• 51% ownership in the operational company Tromso Terminalen
• 49% ownership in the real estate company
• Sæferðir has signed a new 5 year contract for the operation of Baldur
• The company's investment in ELB Feeder, an investment company focused on container ship management, is on track
• USD 10 m investment in a portfolio of five vessels
• Eimskip has opened new offices in Copenhagen and Las Palmas
• The intended cooperation with Royal arctic Line is being evaluated by the Icelandic Competition Authority
• Building of two container vessels in China is on track
• Important milestone in the renewal of Eimskip's vessel fleet

OTHER PROJECTS

2015-2017 the years of mega consolidation and alliances

GLOBAL SHIPPING MARKET

Eimskip versus Samskip in the period 2015-2017

MARKET COMPARISON

• Increase in revenues over the period
• EIM 32.9% vs. SAM 6.9%
• Average EBITDA
• EIM EUR 52.0 m vs. SAM EUR 20.5 m
• EBITDA ratio
• EIM 9.3% vs. SAM 3.2%
• Total net results over the period
• EIM EUR 56.5 m vs. SAM EUR 18.3 m

	Eimskip			Samskip
Income Statement	2017	2016	2015	2017	2016	2015
Revenue	664.0	513.9	499.6	667.8	633.0	624.8
Expenses	606.8	460.4	454.4	648.9	610.8	604.5
EBITDA	57.2	53.5	45.2	18.9	22.2	20.3
Depreciation	$-30.1$	$-28.1$	$-24.7$	$-13.9$	$-12.7$	$-9.2$
EBIT	27.1	25.4	20.5	5.0	9.5	11.1
Finance expenses	$-7.3$	$-0.3$	0.4	$-2.5$	$-1.2$	$-0.2$
Shares in accociates	$-0.3$	0.2	0.3	0.3	2.6	0.4
EBT	19.5	25.3	21.2	2.8	10.9	10.9
Taxes	$-2.7$	$-3.4$	$-3.4$	$-2.5$	$-1.9$	$-1.9$
Net results	16.8	21.9	17.8	0.3	9.0	9.0

Source: KVK Netherlands Chamber of Commerce, Samskip Holding BV Annual Reports

The company expects to realize gains from a number of shortterm initiatives to improve the operation and its profitability

• Off-hire of one vessel in Norway
• Lowering of operational container cost
• Fine-tuning of the container sailing system
• Increased synergies between offices
• Reduction in salary cost
• Various other projects

SHORT-TERM INITIATIVES

EBITDA in the range of EUR 57-63 m and according to current assumptions the results will be in the lower to mid-range of 57-63 m

• Volume in the container liner services expected to continue to grow
• Volume in the Faroe Islands with a modest growth
• Volume in Norway expected to decrease from previous year
• Trans-Atlantic and Short-Sea volume expected to grow 40% yoy
• Volume on Gray and Green route expected to grow faster than other

Fine-tuning the cost of the sailing system is an ongoing project Savings through improved container control

Reefer volume expected to recover and show better results than first

• Volume in dry cargo to remain strong
• Ongoing work regarding synergies between freight forwarding companies in the group

There is general uncertainty regarding geopolitical risk, trade tension, global economic conditions, volumes, freight rates, bunker prices, rate of exchange and competition

• Other matters

Uncertainty about outcome of the investigation of the Icelandic Competition Authority

EBITDA GUIDANCE FOR 2018

2015 EBITDA

EUR million

QUESTIONS

DISCLAIMER

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.

Statements contained in this presentation that refer to the Company's estimated or anticipated future results or future activities are forward-looking 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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