Hapag-Lloyd AG

Earnings Release • Nov 14, 2017

Investor Presentation

9M 2017 Results

Hamburg, 14 November 2017

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.

UASC's Ltd. and its subsidiaries have been included in the figures from the date control was transferred on 24 May 2017.The key figures used are therefore only comparable with the previous year to a limited extent.

Opening remarks

01 Deliverables	 We continued to deliver on our initiatives (UASC integration, cash capital increase & continuous cost control)  Substantially improved positive operating result of USD 299 m in 9M 2017
02 UASC Integration	 Integration of the operational business of UASC successfully concluded in only five months after Closing  Synergies of USD 435 m confirmed – high ramp up in 2018 expected
03 Sector Update	 Sector fundamentals remain favourable  Orderbook remains at low level despite recent new orders
04 Financials	 Significantly improved EBITDA of USD 808 m in 9M 2017 (USD 415 m in Q3 2017)  Integration of UASC generated one-off costs of USD 82 m in 9M 2017 (net of USD 52m badwill)
05 Way Forward	 Main focus going forward is to realise the synergies of the UASC integration and further cost optimization  Substantial deleveraging from 2018 onwards

Strategic highlights: We achieved major progress on our initiatives…

The merger with UASC was successfully completed on 24 May 2017 and has strengthened Hapag-Lloyd's competitive position substantially:

• Strengthened market position as one of the Top 5 players in the industry
• Solid position in all trades and an enhanced market presence in the attractive Middle East trade
• Efficient and young fleet with a low level investment needed in the future
• Annual synergies of USD 435 m fully starting in 2019, significant ramp up already in 2017 & 2018

The operative integration is progressing very well and is close to completion (commercial cut-over after only 5 months)

We have continued to strengthen our capital structure:

• Issuance of EUR 450 m bond with a maturity of seven years and a coupon of 5.125%
• Issue proceeds were used for the early repayment of existing 7.75% and 7.50% EUR bonds which were to fall due in 2018 and 2019
• Capital Increase of USD 413.4 m through the issue of 11,717,353 new no-par value shares shortly after balance sheet date, with positive impact on relevant balance sheet ratios

After the consolidation of the UASC container shipping activities Hapag-Lloyd does not plan further investments in new vessels

Financial highlights: …and delivered a clearly improved operating result in 9M 2017

Integration of UASC well on track – Commercial cut-over achieved only five months after Closing

Timeline of UASC merger and integration

Since Closing, we successfully integrated the UASC business and staff and have strengthened our position amongst the TOP 5 carriers

Integration facts and figures

8

Network optimization ongoing – Fleet and Network optimization as key contributor to synergies

Trade portfolio optimization – Enhanced market presence in attractive Middle East trade and solid position in all other trades

Transport volume by trade

Hapag-Lloyd 9M 2016

9

761

Far East

285

Transpacific

68 95

LatAm

Atlantic

60

EMAO

683

Middle East

320

Intra Asia

UASC 9M 20161) Combined Entity 9M 2017

1) Pro forma, UASC historic data allocated according to HL trade definition Note: Rounding differences may occur.

Total synergies of USD 435 m p.a. to be achieved from 2019 onwards – Significant synergy ramp-up in 2018 expected

Synergy potential, full run-rate [USD m]

Total transaction and integration related one-off costs are expected to amount to USD 130 m1)

s e	Network	Overhead	Other (terminals, equipment and intermodal)
gi  r e n  y S 	Optimized new vessel deployment/network Slot cost advantages Efficient use of new fleet	 Consolidation of Corp. and Regional HQs  Consolidation of country organizations  Other overhead reductions (e.g. marketing, consultancy, audit)	 Lower container handling rates per vendor/location  Imbalance reduction and leasing costs optimization  Optimization of inland haulage network  Best practice sharing

3 Sector Update

Demand: Strong GDP and volume growth leads to gradually increasing freight rates

GDP Growth [%]

CCFI Development

Comments

• IHS Global Insight expects the global container shipping volume to increase by 4.8% in 2017, outpacing the forecast rate of growth for global trade
• For 2018 to 2021 IHS is predicting annual growth of between 4.8% and 5.1%

3 Sector Update

Supply: Consolidation leads to structurally lower orderbook, reflecting a more disciplined market environment

Comments

• The Orderbook-to-fleet ratio remains well below its peak of approximately 61% in 2007 (recently placed new orders included)
• Based on the container ships on order and planned deliveries, the globally available transport capacity should see increases of around 1.1 million TEU in 2017 and around 1.3 million TEU in 2018
• Supply/Demand expected to further balance from 2018 onwards due to strong overall demand

EBITDA of USD 808 m in 9M 2017 – Operating result significantly above previous year's level

Operational KPIs	Q3 2017	Q3 2016	YoY	9M 2017	9M 2016	YoY
Transport volume [TTEU] Transport volume [TTEU]	2,808	1,947	44%	7,029	5,650	24%
Freight rate [USD/TEU]	1,065	1,027	4%	1,060	1,037	2%
[USD/t]1) Bunker price	308	238	29%	311	212	47%
Exchange rate [USD/EUR]	1.18	1.12	n.m.	1.11	1.11	n.m.
Revenue [USD m]	3,268	2,152	52%	8,168	6,364	28%
EBITDA [USD m]	415	206	101%	808	425	90%
EBITDA margin	12.7%	9.6%	+3.1 ppt	9.9%	6.7%	+3.2 ppt
EBIT [USD m]	202	73	177%	299	29	931%
EBIT margin	6.2%	3.4%	+2.8 ppt	3.7%	0.5%	+3.2 ppt
Group profit / loss [USD m]	56	9	522%	8	-149	105%
ROIC [Annualized in %]	5.5%	3.1%	+2.4 ppt	2.6%	0.2%	+2.4 ppt

13

9M result incl. one-off effects related to first-time consolidation and integration of UASC – Total one-off costs estimated at USD 130 m

Transaction & integration related one-off costs [USD m] 9M 2017

Total transaction & integration related one-off costs [USD m]

Comments

• In 9M 2017 first time consolidation of UASC generated one-off income of USD 52.3 m (badwill) and restructuring cost of USD 82 m
• Net one-off effect on 9M 2017 EBIT of USD ~30 m
• One-off costs amounted to USD ~10 m in Q3 2017
• Further one-off costs of USD ~30 m will occur

Strong increase in transport volume of 24.4% YoY in 9M 2017 – Pro forma volume increased by 6.5% YoY

Transport volume [TTEU]

Transport volume per trade [TTEU]

Pro forma freight rates significantly up 15.9% YoY in Q3 2017 – despite the merger effect, reported rates have increased 3.7% YoY

Freight rate development Hapag-Lloyd reported vs. Combined Entity Pro forma1) [USD/TEU]

4 Financials

Hapag-Lloyd benefits from optimized bunker consumption, but substantial increase in bunker price harms P&L

Bunker consumption price [USD/mt] Bunker consumption & expenses

18

Despite higher bunker prices, transport expenses per TEU are flat YoY due to continuous cost-cutting – excl. bunker -5% YoY

Transport expenses per TEU [USD/TEU]

19

Substantial free cash flow of USD 886 m in 9M 2017 – Improved EBITDA major driver for CF generation

Cash flow 9M 2017 [USD m]

Solid equity at USD 6.8 bn and strong liquidity reserve at USD 1.9 bn which were partly used for bond repayments after balance sheet date

Equity base [USD m] Net debt [USD m]

Liquidity position [USD m]

Comments

• Strong liquidity reserve of USD 1.9 bn partly used for repayment of existing bonds of USD 450 m shortly after balance sheet date
• Equity ratio decreases to 36.5% due to a substantial increase in assets; Capital Increase of USD 413.4 m in October will strengthen equity going forward
• Net debt increased compared to 31.12.2016 as a result of first time consolidation of UASC Group but decreased by USD 150 m compared to 30.06.2017; proceeds from Capital Increase will reduce net debt further

5 Way Forward

Hapag-Lloyd Guidance (incl. UASC): Unchanged compared to H1 2017

Guidance for 2017

	FY 2016 (HL stand-alone)	Guidance for 2017 (Combined Entity)
Transport volume	7.6 TEU m	Increasing clearly
Bunker price	210 USD/mt	Increasing clearly
Freight rate	1,036 USD/TEU	Unchanged
EBITDA	USD 671 m	Increasing clearly
EBIT	USD 140 m	Increasing clearly

Hapag-Lloyd with clearly defined financial policy

Convincing equity story resulted in higher share price…

Share trading

…and lower bond yields

Bonds trading

HL EUR 7.75% 2018 HL EUR 7.50% 2019 HL EUR 6.75% 2022 HL EUR 5.125% 2024

	EUR Bond 2024	EUR Bond 2022	EUR Bond 2019	EUR Bond 2018
Listing	Open market of the Luxembourg Stock Exchange (Euro MTF)
Volume	EUR 450 m	EUR 450 m	m2) EUR 250	EUR 200 m1)
ISIN / WKN	XS1645113322	XS1555576641 / A2E4V1	XS1144214993 / A13SNX	XS0974356262 / A1X3QY
Maturity Date	Jul 15, 2024	Feb 1, 2022	Oct 15, 2019	Oct 1, 2018
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%	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	5.125%	6.75%	7.50%	7.75%

1) Full redemption on 1 October 2017; 2) Full Redemption on 15 October 2017

Current consolidation wave leads to higher concentration

Note: Diagram assuming that all currently announced mergers (NYK & MOL & K-Line, Maersk & Hamburg Süd,

26 COSCO & OOCL) will receive regulatory approvals and are executed as announced. Simple sum of stand-alone operating capacity as of October, 2017. Source: Drewry (Forecaster 3Q17), MDS Transmodal (October 2017, October 2013)

27

Supply / Demand: Scrapping and postponements help to keep net capacity growth low – Supply / demand gap is closing

Supply / demand gap

Demand Supply

Fleet optimization ongoing – Efficient and young fleet with a low level of investment needed

Young and fuel-efficient fleet

e z si	Hapag-Lloyd			7,250
el s	MSC		6,267
U]1) s e v E	COSCO		6,093
e T [ g	Maersk	5,325
a er v	Top 15	5,323
A	CMA CGM	5,261

Vessel fleet (as of 30 September 2017)

Vessel	Owned3)	Chartered	Current fleet
>14,000 TEU
TEU	284,143	-	284,143
Vessels	17	-	17
10,000 – 14,000 TEU4)
TEU	305,876	61,087	366,963
Vessels	24	6	30
8,000 – 10,000 TEU
TEU	243,614	142,161	385,775
Vessels	28	16	44
6,000 – 8,000 TEU
TEU	108,327	63,933	172,260
Vessels	15	10	25
4,000 – 6,000 TEU
TEU	96,861	114,539	211,400
Vessels	22	22	44
2,300 – 4,000 TEU
TEU	33,800	79,211	113,011
Vessels	11	27	38
<2,300 TEU
TEU	3,918	21,340	25,258
Vessels	2	15	17
Capacity [TEU]	1,076,539	482,271	1,558,810
Vessels	119	96	215

1) Diagram assuming that all currently announced mergers (NYK & MOL & K-Line; Maersk & Hamburg Süd; COSCO & OOCL) will receive regulatory approvals and are executed as announced. Simple sum of stand-alone operating capacity 2) Weighted by carrier capacities 3) Includes finance leased vessels 4) Thereof 4 vessels chartered out

As of 1 April, Alliances have been reshuffled

Atlantic Transpacific Far East 2 2M 43% Ocean 15% Others 10% THE Alliance 32% 2 2M 22% Ocean 40% Others 12% THE Alliance 26% 3 2M 39% Ocean 36% Others 1% THE Alliance 24%

THE Alliance competitive on all trades

Alliance members

Capital increase successfully completed – Key terms of the rights issue

Offer size	 11,717,353 new shares (c. 7.1 % of current share capital), resulting in EUR 351.5 m of gross proceeds
Subscription price	 EUR 30 per share (17.8 % discount to XETRA closing price as of 27 September 2017, 16.8 % discount to TERP)
Use of proceeds	 Repayment of existing indebtedness, with any remainder to be used for general corporate purposes
Listing	 Regulated market of Frankfurt Stock Exchange (Prime Standard) and the regulated market of the Hamburg Stock Exchange
Distribution	 Public offer in Germany and Luxembourg  Offering in the US to QIBs under Rule 144A  Private placement to institutional investors outside the US in reliance on Reg S
Take-up ratio	 96%

Freight rates with continued recovery since historic low in Q2 2016

Comprehensive Index (SCFI)

Shanghai – Europe (SCFI)

9M 2017: Hapag-Lloyd with Group profit of USD 7.7 m

	9M 2017	9M 2016	% change
Revenue	8,167.7	6,364.0	28%
Other operating income	143.4	100.7	42%
Transport expenses	-6,597.5	-5,315.1	24%
Personnel expenses	-577.5	-420.6	37%
Depreciation, amortization & impairment	-509.1	-395.8	29%
Other operating expenses	-363.0	-324.6	12%
Operating result	264.0	8.6	n.m.
Share of profit of equity-acc. investees	34.4	21.8	58%
Other financial result	0.5	-1.6	n.m.
Earnings before interest & tax (EBIT)	298.9	28.8	n.m.
EBITDA	808.0	424.6	90%
Interest result	-271.2	-161.5	68%
Income taxes	-20.0	-16.4	22%.
Group profit / loss	7.7	-149.1	n.m.

Income statement [USD m] Transport expenses [USD m]

	9M 2017	9M 2016	% change
Expenses for raw materials & supplies	948.8	531.4	79%
Cost of purchased services	5,648.7	4,783.7	18%
Thereof Port, canal & terminal costs	2,761.9	2,209.8	25%
Chartering leases and container rentals	805.2	823.8	-2%
Container transport costs	1,857.7	1,568.4	18%
Maintenance/ repair/ other	223.9	181.7	23%
Transport expenses	6,597.5	5,315.1	24%
Transport expenses per TEU [USD / TEU]
	9M 2017	9M 2016	% change
Expenses for raw materials & supplies	135.0	94.1	44%
Cost of purchased services	803.7	846.7	-5%
Thereof Port, canal & terminal costs	392.9	391.1	0%

Container transport costs 264.3 277.6 -5% Maintenance/ repair/ other 31.9 32.2 -1% Transport expenses 938.7 940.7 0%

32

9M 2017: Hapag-Lloyd with equity ratio of 36.5% - reflecting the capital increase as well as the initial inclusion of UASC

	30.09.2017	31.12.2016	30.09.2016
Assets
Non-current assets	15,331.2	10,267.4	10,241.0
of which fixed assets	15,080.4	10,183.3	10,169.0
Current assets	3,355.3	1,698.0	1,586.2
of which cash and cash equivalents	1442.7	602.1	549.3
Total assets	18,686.5	11,965.4	11,827.2
Equity and liabilities
Equity	6,829.0	5,341.7	5,280.1
Borrowed capital	11,857.5	6,623.7	6,547.1
of which non-current liabilities	7,931.7	3,836.7	3,875.9
of which current liabilities	3,925.8	2,787.0	2,671.2
of which financial debt	8,768.0	4,414.9	4,360.9
thereof Non-current financial debt	7,500.3	3,448.4	3,449.9
Current financial debt	1,267.7	966.5	911.0
Total equity and liabilities	18,686.5	11,965.4	11,827.2

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

	30.09.2017	31.12.2016	30.09.2016
Cash and cash equivalents	1,442.6	602.1	549.3
Financial debt	8,768.0	4,414.9	4,360.9
Net debt	1) 7,257.6	1) 3,793.1	3,811.6
Unused credit lines	460.0	200.0	75.0
Liquidity reserve	1,902.7	802.1	624.3
Equity	6,829.0	5,341.7	5,280.1
Gearing (net debt / equity) (%)	106.2%	71.0%	72.2%
Equity ratio (%)	36.5%	44.6%	44.6%

Note: USD figures as stated in Investor Report 9M 2017

33

1) incl. Restricted Cash (USD 19.7 million at 31.12.2016 and USD 67.7 million at 30.09.2017 booked as other assets)

Hapag-Lloyd Investor Relations Tel +49 40 3001-2896 Fax +49 40 3001-72896 ir@hlag.com https://www.hapag-lloyd.com/en/ir.html