Hapag-Lloyd AG — Investor Presentation 2015

Mar 27, 2015

3.Elbe dredging (European Court of Justice etc) 4.Employee information (7.001 Investor Presentation 10.949, 4th region) – Full Year Results 2014

27 March 2015

Executive summary

• Operating performance in 2014 clearly below previous year dissatisfying result caused by persistently strong competition and one-off expenses
• Key highlight in 2014 was the merger of Hapag-Lloyd and CSAV container shipping activities
• "New" Hapag-Lloyd is the #4 global container shipping company
• Net synergies of approx. USD 300 m p.a. integration progressing well
• Strengthened capital structure with strong anchor shareholders
• Hapag-Lloyd has defined clear strategic measures to significantly improve profitability based on this Hapag-Lloyd intends to achieve an EBITDA margin of 10%-12% until 2017
• The start of 2015 has been satisfactory business has developed in accordance with expectations and the results have improved significantly compared to previous year
• For 2015 as a whole, Hapag-Lloyd plans to achieve a clearly positive operating result (EBIT adj.) EBITDA is expected to increase considerably on the basis of first synergy realizations, further cost savings, continuous volume growth and improvement of result quality

• A. Financials 2014
• B. Market Update
• C. Our Way Forward

Hapag-Lloyd revenues increase to EUR 6.8 bn in 2014 – CCS activities consolidated as of 2 December 2014

Transport volume [TTEU]

Freight rate [USD/TEU]

Revenue [EUR m]

1) Incl. CCS (1M) of USD 267 million

4

Comments

• Hapag-Lloyd transport volume rose by +4.7% in 2014 in line with market (excl. CCS)
• Average freight rate was disappointing with 1,434 USD/TEU in 2014 (-3.2% excl. CCS)
• Revenue slightly increased to EUR 6,607 m in 2014 (+0.6% excl. CCS)

Source: Company information

Transport volume [TTEU]

1) Excl. CCS (1M)

5

Source: Company information

Freight rate1) [USD/TEU] vs. bunker price2) [USD/t]

1) Hapag-Lloyd average freight rate per year, excl. CCS (1M) 2) Hapag-Lloyd average consumption price per year, excl. CCS (1M)

Source: Company information

Hapag-Lloyd further optimized its cost base in 2014 – Transport expenses reduced by -32 USD/TEU1)

CCS (1M) HL (12M)

7

Transport expenses [EUR m] Transport expenses per TEU [USD/TEU]

1) Incl. CCS (1M) of USD 231 million

Source: Company information

EBIT adjusted at EUR -112 m in 2014 (incl. CCS for 1 month) – High non-recurring one-off effects due to CSAV transaction

Operational KPIs

	FY 2014	FY 2013	∆
Transport volume [TTEU]	5,907	5,496	411
1) Freight rate [USD/TEU]	1,434	1,482	-48
1) Bunker price [USD/t]	575	613	-38
Exchange rate [EUR/USD]	1.33	1.33	0
Revenue [EUR m]	6,808	6,567	+241
EBITDA [EUR m]	99	389	-290
EBIT adjusted [EUR m]	-112	67	-179
EAT [EUR m]	-604	-97	-506
Investments [EUR m]2)	334	741	-407

EBITDA bridge [EUR m]

EBIT bridge [EUR m]

1) Excl. CCS (1M) 2) Investments in PPE 2) Purchase price allocation (charter adj. only for EBITDA) 3) Transactions and restructuring costs

Source: Company information

Hapag-Lloyd considerably strengthened its capital structure and gained an additional strong anchor shareholder

Strengthened liquidity reserve

Strong shareholder base

Agenda

• A. Financials 2014
• B. Market Update
• C. Our Way Forward

Container shipping has been and continues to be a growth industry – Global order book currently on low levels

Source: IMF (Jan 2015), IHS Global Insight (Jan 2015), MDS Transmodal (various years), Lloyd's List (15/30 Jan 2015), Alphaliner (29 Jan 2015)

Short-term freight rate pressures and volatilities remain in the container shipping industry

Shanghai – Latin America (SCFI)

Comments

• Shanghai Containerized Freight Index (SCFI) only reflects Shanghai outbound rate development
• Freight rates on Asia / Europe trade remain volatile
• Freight rates on Transpacific trades tend to be somehow less volatile
• USEC freight rate increased to about 5,000 USD/FEU due to USWC strikes

Global capacity management

Source: Alphaliner weekly newsletter; MDS Transmodal (various months); Clarksons

Bunker price and EUR/USD rate have significantly decreased – LSF to be used in emission control areas as of Jan 2015

Source: MDS Transmodal January 2015 plus HL internal data, only vessels >399 TEU, Alphaliner

New cooperation in Latin America

• Our increased presence in Latin America since integration of CSAV container shipping activities has resulted in a new cooperation with Hamburg Süd, CMA CGM and CSCL
• MoUs have already been signed implementation between Latin America and Asia will start from July 2015 onwards

Compelling rationale

• New product between Asia and Latin America with reliable weekly services
• Three loops to/from South America West Coast, two loops to/from South America East Coast
• Best transit times to and from main Asian locations
• Extensive port coverage in Mexico (Pacific), SAWC, SAEC
• New 9,300 TEU ships deployed in the trade, overall improved capacity deployment
• Increase of average vessel size to well above 8,000 TEU
• Competitive cost level other carriers will have difficulty matching
• High reefer plug capacity to offer best in class reefer product
• Comprehensive and reliable inland service in Latin America through rail and trucking network

Agenda

• A. Financials 2014
• B. Market Update
• C. Our Way Forward

Short- and mid-term initiatives

1 Project CUATRO Close deal and integrate CSAV business

2 Project OCTAVE Short-term profit improvement in 8 modules

3 Structural Improvements Align board structure and responsibilities

4 Close the Cost Gap Improve profitability in light of new alliances

5 Compete to Win

New commercial approach (multi-year effort)

Significantly improve earnings and achieve an EBITDA margin of 10-12% by 2017

Synergies of approx. USD 300 m p.a.

Optimized and enlarged network

Competitive and flexible fleet

• Average age of the combined fleet roughly 8 years as of 31 December 2014
• 65% of combined capacity younger than 10 years, only 5% older than 20 years
• Average vessel size for "New" Hapag-Lloyd fleet 5,271 TEU compared to 4,717 TEU for Top 20 and 3,077 TEU as industry average
• Ownership structure well balanced: 54% of combined fleet owned and 46% chartered
• Delivery of 5 further 9,300 TEU vessels in H1 2015 specialized for Latin America trade

Integration status

Organization and staffing – New organization implemented, staff selection nearly completed

Office set-up & IT infrastructure – Offices selected, infrastructure set-up progressing

Customer and vendor information – Customers and vendors informed

Training – Global training in progress and on track

Voyages cut-over – Ramp-up of bookings according to schedule, first services cut over

Integration monitoring – Integration KPIs continuously monitored, integration on track

Hapag-Lloyd improvement areas
Procurement &	Inland Pricing & Steering
Inland	Bunker Procurement
Fleet & Network	Fleet Renewal	Targeted cost
	Fleet Refurbishment	savings: Low three
	Service Structure	digit USD million figure
Sales & Product Portfolio	Utilization	for 2015 already
	Special Cargo
	Spot Market

Vessel fleet structure as of 31 December 2014

		Owned1)	Chartered	Current fleet	Orderbook		Fleet ownership [%]
	Capacity [TEU]	131,674		131,674
>10,000 TEU	Vessels	10		10
	Capacity [TEU]	197,114	68,036	265,150	46,500	45%	chartered 46% 55%
8,000 – 10,000 TEU	Vessels	23	8	31	5	54% owned
	Capacity [TEU]	49,743	66,240	115,983
6,000 – 8,000 TEU	Vessels	7	10	17
	Capacity [TEU]	105,238	257,525	362,763	Orderbook: 3 deliveries in		Average vessel size [TEU]4)
4,000 – 6,000 TEU	Vessels Fleet renewal:	23	54	77	Q1, remaining 2 in Q2 2015	+554	+1,640
	16 vessels Capacity [TEU] ("Old Ladies")	38,843	54,624	93,467		5,271	4,717
2,300 – 4,000 TEU	reclassified as Vessels held for sale	13	19	32
	Capacity [TEU]	12,226	27,548	39,774			3,077
<2,300 TEU	Vessels	6	18	24
	Capacity [TEU]	534,8382)	473,9733)	1,008,811	46,500
Total	Vessels	822)	1093)	191	5	Hapag Lloyd	Top 20 World Fleet

23 1) Incl. 5 financial leases 2) Incl. 1 chartered-out 3) Incl. 2 chartered-out 4) MDS Transmodal January 2015 Source: Company information

Transport volume by trade, 31 Dec 2014 Fleet considerations

• "New" Hapag-Lloyd has a leading presence within the Latin American routes
• To retain / enhance this position, "New" HL considers to order or charter new ships

• Decision is planned for Q2 2014

• The new ships would be deployed primarily on Latin American routes

• New ships would optimize network / product
• − Bundle services / redesign cooperation
• − Participate in reefer growth
• − Generate considerable slot cost advantages
• Best ship design for the trade intended
• − Optimized hull shape (less draft)
• − Fuel efficient engine room setup
• − ≥2,000 reefer plugs anticipated

Hapag-Lloyd expects a significant improvement in profitability in 2015

Guidance for 2015		Comments
Transport volume	Increasing moderately	 CCS for 2014 –	Guidance for 2015 based on pro-forma inclusion of effects not taken into account in the guidance	however, one-off volume and rate
Freight rate	Decreasing moderately	• CCS transport volume in 2014 at 1,924 TTEU • CCS avg. freight rate 2014 at 1,174 USD/TEU  In the consolidated financial statements CCS only included from 2 December 2014 (i.e. one month)
EBITDA	Clearly increasing		Sensitivities for 2015
Operating result1)	Clearly positive	Transport volume Freight rate	+/- 100 TTEU +/- 50 USD/TEU	+/- USD <0.1 bn +/- USD ~0.4 bn
Liquidity		Bunker price	+/- 100 USD/t	+/- USD ~0.3 bn
reserve	Remaining adequate	EUR / USD	+/- 0.1 EUR/USD	+/- USD <0.1 bn

CCS = CSAV container shipping activities

1) EBIT adjusted

25

Source: Company information

	2014	2013	∆
Transport volume [TTEU]	5,907	5,496	411
Freight rate without CCS activitites [USD/TEU]	1,434	1,482	-48
Revenue	6,808	6,567	240
Other operating income	117	156	-40
Transport expenses	6,060	5,773	287
Personnel expenses	403	365	38
Depreciation, amortisation and impairment of intangible assets and property, plant and equipment	482	325	156
Other operating expenses	393	252	142
Operating result	-414	8	-422
Share of profit of equity-accounted investeees	34	37	-3
Other financial result	-3	19	-22
Earnings before interest and tax (EBIT)	-383	64	-447
Interest result	-210	-154	-56
Earnings before income taxes	-593	-90	-503
Income taxes	11	8	4
Group profit/loss	-604	-97	-506

Income statement Transport expenses

	2014	2013	∆
Transport expenses	6,060	5,773	287
Cost of raw materials, supplies and purchased goods	1,362	1,437	-74
Cost of purchased services	4,698	4,337	361
Thereof:
Port and terminal costs	2,030	1,831	199
Chartering, leases and container rentals	694	653	40
Container transport costs	1,841	1,691	150
Maintenance / repair / other	133	161	-28

EBIT bridge

	2014	2013	∆
Earnings before interest and tax (EBIT)	-383	64	-447
Purchase price allocation	13	23	-10
Transaction and restructuring costs	107	0	107
Impairments	127	0	127
Individual items One-off effects	23	0	23
Sale of Montreal Gateway Terminals Ltd. Partnership, Montreal	0	-19	19
Underlying EBIT	-112	67	-179

1) CSAV container shipping activities are included in the 2014 figures from the date of consolidation (2 December 2014) onwards

Source: Company information

	31.12.2014	31.12.2013	∆		31.12.2014	31.12.2013	∆
Goodwill	1,375.6	664.6	711.0	Equity	4,169.6	2,915.1	1,254.5
Other intangible assets	1,309.7	529.7	780.0
Property, plant and equipment	5,176.0	4,067.6	1,108.4	Provisions	807.3	279.8	527.5
Investments in equity-accounted investees	384.9	332.8	52.1	Financial debt	3,717.1	2,935.0	782.1
Inventories	152.1	168.9	-16.8
Trade acocunts receivables	716.0	473.3	242.7	Derivative financial instruments	23.8	6.7	17.1
Other assets	263.1	148.5	114.6	Trade accounts payable	152.1	168.9	-16.8
Derviative financial instruments	19.6	99.6	-80.0
Cash and cash equivalents	711.4	464.8	246.6	Other liabilities	157.8	112.9	44.9
Assets	10,108.4	6,949.8	3,158.6	Equity and liabilities	10,108.4	6,949.8	3,158.6

Assets Equity and liabilities

31.12.2014	31.12.2013	∆		31.12.2014	31.12.2013	∆
			Equity ratio	41%	42%	-1 ppt
			Rate USD/EUR	1.22	1.38	-0.16

Consolidated statement of financial position CCS [EUR m]

	Dec 2, 2014
Other intangible assets	745
Property, plant and equipment	733
Investments in equity-accounted investees	50
Inventories	37
Trade accounts receivable	218
Other assets	51
Cash and cash equivalents	70
Assets	1,904
	621
Equity Provisions	337
Financial debt	536
Trade accounts payable	381
Other liabilities	29

	USDm	EURm
Purchase price	1,531	1,227
Equity		621
Goodwill	757	607

COMMENTS

• First time consolidation figures at fair value
• Includes purchase price allocation

Purchase price allocation [USD m]

	Dec 2, 2014
Purchase price	1,531
Equity acquisition (at book value)	890
Elimination of Goodwill and others positions	-807
Net equity acquired	83
Preliminary difference	1,448
Intangible assets
Brand	41
Customerbase	882
Container advantageous lease contracts	4
Container sub-lease-out advantageous contracts	3
Software	6
Share of profit of equity-accounted investees (CNP)	51
Provisions
Vessels charter contracts	-181
Container disadvantageous lease contracts	-107
Contingent liabilities	-9
Sum of adjustments	690
Acquired net assets (at fair value)	774
Goodwill	757

COMMENTS

• Assets are regularily depreciated
• The purchase price allocation identified mainly intangible assets as shown in the table
• Vessels and containers were already accounted for at fair value
• Provisions refer to disadvantageous contracts; the future release has a positive impact on EBIT (less lease expenses)
• Goodwill ist tested anually for impairments

Cash flow 2014 [EUR m]

Hapag-Lloyd is one of the world's leading container shipping companies

1) Pro-forma inclusion of CCS in 2014 2) Excl. CCS

Hapag-Lloyd at a glance

• Pure play container shipping company
• Headquartered in Hamburg, Germany
• Founding member of Grand and G6 Alliance
• 191 container ships with TEU 1 million
• Transport volume of 7.7 million TEU in 20141)
• 588 sales offices in over 113 countries
• Approx. 19,100 customers around the world2)
• Employing 10,949 staff worldwide

Top #4 in reefer equipment capacity

Top market share in Latin America

Top market share in Transatlantic

Growth of above 5% projected for the coming years

Global container trade [TEU m]

2019e 2018e 2017e 2013 2012 2011 2016e 2015e 2014 2007 2006 2005 2001 2000 2010 2009 2008 2004 2003 2002 *Compound Annual Growth Rate (e)

Source: IHS Global Insight (January 2015)

Annual net capacity development [TEU m]

1) Orderbook not yet complete, Forecasts of delayed deliveries or scrappings not included

36

Source: MDS Transmodal February 2015 and previous years , only vessels >399 TEU

Example

Nominal vs. effective capacity Example

Existing nominal capacity

• Newbuildings to be delivered this year

– Scrappings

• = New nominal capacity
• Requirements for long-distances services
• Operational constraints
• Infrastructure & productivity constraints

– Slow steaming

= Effective capacity

Imbalances: Hapag-Lloyd outperforms the market

1) This ratio reflects the imbalance in the market (industry average) vs. Hapag-Lloyd imbalance of transport volumes (the higher the ratio, the more balanced in both directions). Ratio has been rounded

Source: IHS Global Insight December 2014; Hapag-Lloyd FY 2014; market data adapted to Hapag-Lloyd trade lane definition

Long-standing and diversified customer base of blue chip customers and a diversified base of goods transported

Balanced portfolio of goods transported … … in a diversified customer portfolio1)

Source: Company information

Highly diversified customer base1) Strong relationship with blue chip customers

• Diversified exposure
• Freight forwarders secure volumes in both directions, optimizing trade flows
• Direct customers better visibility on future volumes

1) Based on FY 2014 volumes 2) Others: FAK = Freight of all kinds

Alliances allow Hapag-Lloyd to leverage its fleet, increase utilization and ensure a worldwide presence

The average freight rates decreased over all trades

41 Source: Company information 1) Excl. CCS (1M)

COMMENTS

• At 1,434 USD/TEU1) HL average freight rate in 2014 remained 48 USD/TEU below 2013 (1,482 USD/TEU)
• Main contributors to overall freight rate decrease are high volume trades Far East (-6.1%) and Atlantic (-2.7%)
• Highest year-on-year freight rate decrease on Australasia trade (-6.7%)

Change in regulation

• As of 2015, stricter regulations apply in designated SECAs – vessels must use higher-quality fuels with sulphur content of no more than 0.1% (previous limit: 1.0%)
• The change affects all services covering North America and Northern Europe
• LSF costs more than the fuel previously used and will lead to a relative increase in bunker costs as share of low sulphur fuel of total fuel consumption increases
• Hapag-Lloyd introduced a LSF additional to pass on increased costs to customers

Sulphur Emission Control Areas (SECAs)

Blue line indicates where vessels need to start switching to LSF before entering the SECAs

Decreasing bunker consumption due to economies of scale – Bunker consumption per TEU decreased by further 4.5%

1) Average nominal deployed capacity in TEU (excl. CCS) 2) Transport volume (5,757 TTEU excl. CCS) 3) Excl. CCS

COMMENTS

• Over the last few years significant decreases in bunker consumption per slot due to economies of scale stemming from larger vessels (increased average vessel size)
• Additionally, reduced bunker consumption due to the introduction of slow steaming in 2009
• Bunker consumption per TEU decreased by 4.5% in FY 2014 vs. FY 2013

	EUR Bond 2019	EUR Bond 2018	USD Bond 2017
Issuer	Hapag-Lloyd AG	Hapag-Lloyd AG	Hapag-Lloyd AG
Volume	EUR 250 m	EUR 400 m	USD 250 m
Minimum order	100,000 EUR	100,000 EUR	150,000 USD
Issue date	November 20, 2014	September 20, 2013	October 01, 2010
Maturity date	October 15, 2019	October 01, 2018	October 15, 2017
Redemption prices	as of Oct 15, 2016: 103.750% as of Oct 15, 2017: 101.875% as of Oct 15, 2018: 100%	as of Oct 01, 2015: 103.875% as of Oct 01, 2016: 101.938% as of Oct 01, 2017: 100%	as of Oct 15, 2014: 104.8750% as of Oct 15, 2015: 102.4375% as of Oct 15, 2016: 100%
Coupon	7.50%	7.75%	9.75%
Coupon payment	April 15 and October 15	January 15 and July 15	April 15 and October 15
ISIN	XS1144214993	XS0974356262	USD33048AA36
WKN	A13SNX	A1X3QY	A1E8QB
Listing	Open market of the LxSE	Open market of the LxSE	Open market of the LxSE
Trustee	Deutsche Trustee Company Limited	Deutsche Trustee Company Limited	Deutsche Bank AG, London Branch

HL Bonds continously trade above par

Source: Citigroup, 25 March 2015

Strong and highly experienced management team and committed shareholder base

A global market leader with strong strategic alliances and a global footprint – fourth largest container shipping company worldwide

Well balanced market positions in high-volume trades – more resilient business model

Flexible and competitive fleet structure of homogeneous design

Long-standing customer relationships with a diversified blue-chip customer base

Industry-leading freight information system underpinning operational excellence and yield management

Henrik Schilling

47

Senior Director Investor Relations

Tel +49 40 3001-2896

Fax +49 40 3001-72896

Henrik.Schilling@hlag.com

http://www.hapag-lloyd.com/en/investor_relations/overview.html

STRICTLY CONFIDENTIAL

This presentation is provided to you on a confidential basis. Delivery of this information to any other person, the use of any third-party data or any reproduction of this information, in whole or in part, without the prior written consent of Hapag-Lloyd is prohibited.

This presentation contains forward looking statements within the meaning of the 'safe harbor' provision of the US securities laws. These statements are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but not limited to, future global economic conditions, market conditions affecting the container shipping industry, intense competition in the markets in which we operate, potential environmental liability and capital costs of compliance with applicable laws, regulations and standards in the markets in which we operate, diverse political, legal, economic and other conditions affecting the markets in which we operate, our ability to successfully integrate business acquisitions and our ability to service our debt requirements). Many of these factors are beyond our control.

This presentation is intended to provide a general overview of Hapag-Lloyd's business and does not purport to deal with all aspects and details regarding Hapag-Lloyd. Accordingly, neither Hapag-Lloyd nor any of its directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance should be placed on, the fairness, accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither Hapag-Lloyd nor any of its directors, officers, employees or advisors nor any other person shall have any liability whatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith.

The material contained in this presentation reflects current legislation and the business and financial affairs of Hapag-Lloyd which are subject to change and audit, and is subject to the provisions contained within legislation.

The distribution of this presentation in certain jurisdictions may be restricted by law. Persons into whose possession this presentation comes are required to inform themselves about and to observe any such restrictions. In particular, this presentation may not be distributed into the United States, Australia, Japan or Canada.

This presentation constitutes neither an offer to sell nor a solicitation to buy any securities in the United States, Germany or any other jurisdiction. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. In particular, this presentation does not constitute an offer to sell or a solicitation of an offer to buy securities of Hapag-Lloyd in the United States. Securities of Hapag-Lloyd may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Hapag-Lloyd does not intend to conduct a public offering or any placement of securities in the United States.