Eimskipafélag Íslands — Investor Presentation 2016

Aug 26, 2016

Q2 2016 - 26 August 2016 | EBITDA up by 21.6% from previous year

STRONGEST Q2 PERFORMANCE SINCE 2009

HIGHLIGHTS

Q2 2016 compared to Q2 2015

KEY HIGHLIGHTS FOR Q2 2016

Net earnings up by 58.7%

Stronger cash flow

Changes from Q2 previous year

TRANSPORTED VOLUME IN Q2 2012 TO 2016

Volume index: 2010 volume at 100

Best Q2 since 2009

REVENUE AND EBITDA 2012 TO 2016 BY QUARTER

Adjusted for one-off items in 2012

China - Europe

CHINA FORWARDERS FREIGHT INDEX

6M 2016 compared to 6M 2015

KEY HIGHLIGHTS FOR 6M 2016

Net earnings up by 50.6%

Stronger cash flow

Changes from previous year

TRANSPORTED VOLUME 2012 TO 6M 2016

Liner services Forwarding services

Volume index: 2010 volume at 100

Iceland, Faroe Islands, Norway and Trans-Atlantic

LINER SERVICES VOLUME

Reefer and dry cargo forwarding

FORWARDING SERVICES VOLUME

FINANCIAL RESULTS

Key highlights

INCOME STATEMENT 6M 2016

Revenue EUR 239.4 m affected by freight forwarding rates

Operating expenses down by 3% despite salary expenses up by 20%

EBITDA EUR 25.8 m up by 35.2% EBITDA margin 10.8% up from 8%

EBIT EUR 12.6 m up by 67.2%

Currency exchange difference negative of EUR 1.6 m

Net earnings EUR 10.6 m up by 50.6%

About half of revenue is related to Iceland

GEOGRAPHICAL SPLIT OF REVENUE

Liner services and forwarding services

REVENUE BY BUSINESS SEGMENT

Liner services and forwarding services

EBITDA BY BUSINESS SEGMENT

Revenue and EBITDA

BUSINESS SEGMENT BRIDGES 6M 2016

Low leverage and strong financial position

FINANCIAL RATIOS 2012 TO 2016

Adjusted for one-off items in 2012

Increased cash flow from operating activities

CASH FLOW BRIDGE 6M 2016

Total CAPEX EUR 17.5 million in 6M 2016

CAPEX 2012 TO 2016

ONGOING PROJECTS AND FUTURE DEVELOPMENT

Acquisitions

• Eimskip has made significant progress on acquisitions and aims to close several transactions in Europe in its existing core business in the third and the fourth quarter
• The company has engaged international legal and audit firms to conclude due diligence
• The intent is to grow both organically and through strategic accretive acquisitions to increase shareholder value
• Evaluation will continue on additional acquisitions and vessel investments on an ongoing basis
• New equity will not be issued to conclude potential investments
• The plan is to use excess cash and issue additional debt, increasing the leverage of the company to more normal levels, still maintaining strong balance sheet

POTENTIAL INVESTMENTS

Joint Venture with Royal Arctic Line

• In May, Eimskip and Royal Arctic Line, the national carrier of Greenland, signed a letter of intent to connect Greenland with Eimskip's international sailing system
• The companies have been formalizing and evaluating the potential cooperation regarding container vessel investments and connecting sailing systems
• The project is progressing as planned and a final decision is expected shortly

POTENTIAL INVESTMENTS

EBITDA in the range of EUR 49 to 53 million

• The outlook for the third quarter is in line with expectations and the rest of
• Continued volume growth is expected in the Icelandic market
• Volumes in the Faroe Islands are expected to be similar to last year's
• Outlook for Norway remains positive
• Reefer forwarding has had a slow start in 6M due to the economic conditions in China, but rates are improving in Q3
• Dry cargo forwarding has been on a good track and similar growth is expected throughout the year
• Still uncertainty regarding wage agreements with a part of the Icelandic crew members on the company's vessels
• General uncertainty regarding global economic conditions, volumes, rates, fuel costs, currency rates and competition
• Estimated EBITDA related to new acquisitions and strategic investments and cost related to the transactions is not included in the current EBITDA

UNCHANGED EBITDA FORECAST FOR 2016

* In Q3 2015 the company received EUR 2 million one-off income related to cancellation of a vessel under construction

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.

Copyright of information contained in this presentation is owned by Eimskip. This presentation, including information contained therein, may not be copied, reproduced or distributed in any manner, neither wholly nor partly.

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.

By the receipt of this presentation the recipient acknowledges and accepts the aforesaid disclaimer and restrictions.