Hapag-Lloyd AG — Investor Presentation 2019

Mar 22, 2019

Investor Presentation Full Year 2018 Results Hamburg, 22 March 2019

Opening Remarks

1	Highlights	 Full run rate of UASC synergies in the amount of USD 435 m achieved ahead of time in 2018  "Strategy 2023" launched at the Capital Markets Day in November 2018
2	Market Update	 Stable container demand despite recent reduction in trade projections and geopolitical risks  Sector fundamentals remain favorable in the mid-term
3	Financials	 Clearly increased EBITDA of USD 1,345 m in 2018 (USD 1,199 m in 2017)  Strong free cash flow of USD 1,145 m in 2018 and reduced Net Debt / EBITDA of 4.6x
4	Way Forward	 Continue to increase profitability and further deleverage our company  Deliver on our financial and non-financial targets of our new mid-term strategy

The first half of 2018 was affected by a tough market environment and a steep increase in bunker prices – but H2 2018 gradually improved

Synergy target of USD 435 million achieved ahead of time in 2018

Synergy potential

Visibility of synergies in P&L in FY 2018 is limited due to counter effects in other cost items

We have defined our Strategy 2023 and will deliver on our 3 overarching goals

Since the Capital Markets Day in November 2018, we have made further progress on our initiatives of Strategy 2023

Profitability	Number one for quality	Global Player
Terminal Partnering	Digitization	Attractive Markets
Successful pilots in i.a. Singapore, Jebel Ali & Colombo Closer cooperation allows faster and	Volumes booked via the Web Channel have reached 7% of total bookings	New Caribbean Express Service (CES) started in January 2019
more efficient handling of ships time and cost savings were identified through enhanced data sharing	We are continuously developing our Web Channel to further improve user experience and add features	introduced to further strengthen and optimize our presence in the Caribbean and Central America with special focus
Procurement	Quality Service Center	on serving the reefer segment
Following the successful pilot and first wave in Asia and Europe we now enter the second wave in all Regions additionally to the hinterland we now also	Establishment of the Quality Service Center Middle East in Mumbai in December 2018	End of 2018, we have introduced the East Africa Service 2 (EAS2) and the Dakar Express (DEX) which further enhance our product in East and West
focus on Terminal services	Expansion of the Quality Service	Africa
Container Steering	Center North America in Georgia
We have prioritized 9 initiatives to reduce

empty container moves

Continously improving volumes booked via WebChannel, since launch in August 2018

Financial Highlights FY 2018

Transport volume	Transport expenses per TEU	Freight rate
+21.1%	+1.4%	-1.5%
FY 2018: TEU 11.9 m	FY 2018: 935 USD/TEU	FY 2018: 1,044 USD/TEU
EBIT	EBITDA	Group profit
USD 524 m	USD 1,345 m	USD 54 m
3.8% EBIT margin	9.9% EBITDA margin	3.7% ROIC
Equity USD 7.2 bn Equity ratio: 40.9%	Liquidity reserve USD 1.3 bn	Net debt USD 6.1 bn Gearing: 85.5%

9

Industry profitability took a slump in H1 2018, but came back in H2 – Hapag-Lloyd is one of the most profitable carriers

2 Market Update

10

Despite increasing geopolitical risks, container shipping volume growth expectation remains on a healthy level…

Real GDP Growth vs. Global Container Volume Growth [%]

2 Market Update

…which, combined with the historically low orderbook and reasonable new orders…

2008 18% 2011 61% 2007 2010 2015 50% 38% 27% 2009 5.0 28% 2013 2016 21% 3.3 2012 21% 2014 3.4 6.0 19% 16% 13% 2017 2.5 12% 3.2 2018 6.5 3.9 4.3 3.6 3.8 2.8 [TEUm, %] Orderbook Vessels > 13,999 TEU Share of World Fleet

Orderbook-to-fleet Newly placed orders

[TEUm, %]

Q4 2011

Q4 2012

Q4 2014

Q4 2015

Q4 2013

Q4 2018

Q4 2017

Q4 2016

2 Market Update

…will lead to a further improving supply / demand balance in the years to come

Scheduled vessel deliveries

Scrapping

Supply / Demand Balance

13

Clearly increased EBITDA of USD 1,345 m and positive Group Profit in FY 2018, despite a challenging H1 2018

Operational KPIs

	Q4 2018	Q4 2017	YoY	FY 2018	FY 2017	YoY
Transport volume [TTEU]	2,974	2,774	+7%	11,874	9,803	+21%
Freight rate1) [USD/TEU]	1,079	1,038	+4%	1,044	1,060	-1%
Bunker [USD/mt]	467	338	+38%	421	318	+32%
Exchange rate [USD/EUR]	1.14	1.18	n.m.	1.18	1.13	n.m.
Revenue [USD m]	3,534	3,119	+13%	13,605	11,286	+21%
EBITDA2) [USD m]	372	390	-4%	1,345	1,199	+12%
EBITDA margin2)	10.5%	12.5%	-2.0ppt	9.9%	10.6%	-0.7ppt
EBIT2) [USD m]	164	167	-2%	524	467	+12%
EBIT margin2)	4.6%	5.3%	-0.7ppt	3.8%	4.1%	-0.3ppt
Group profit2) [USD m]	39	27	+45%	54	36	+51%

Note: 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. USD figures as stated in the Investor Report FY 2018. Rounding differences may occur. 1) For 2018, local revenues were included in the calculation of freight rates. Previous year's figures adjusted accordingly. 2) Due to retrospective application of the provisions for designated options, previous year's figures have been adjusted.

14

Continuously strong transport volume growth of 21.1% YoY due to UASC merger – pro-forma transport volume grew by 5.9% YoY

Note: Figures as stated in the Investor Report FY 2018. Rounding differences may occur. 1) Assuming UASC Group has been included since 1 January 2017

15

On a pro-forma basis, freight rates have increased by 2.1% YoY, but average bunker consumption price increased sharply by 32.4% YoY

Freight rate [USD/TEU] vs. Bunker price development [USD/mt]

Note: Due to the inclusion of UASC in the Hapag-Lloyd Group from the first-time consolidation date of 24 May 2017, figures provided can only be compared with those of the previous year to a limited extent. The figures for the first quarter of 2017 relate to Hapag-Lloyd only and do not include the UASC Group. For the financial year 2018, local revenues were included in the calculation of freight rates. The previous year's figures have been adjusted accordingly. Rounding differences may occur. 1) Assuming UASC Group has been included since 1 January 2017

16

Higher expenses for raw materials and supplies were largely offset by cost-cutting programs and synergies from the UASC integration

Transport expenses per TEU [USD/TEU]

Note: 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. Rounding differences may occur.

1) Cost of purchased services FY 2018: 786 USD/TEU

17

Strong free cash flow of USD 1,145 m in 2018 driven by a high cash conversion ratio of ~94% and limited investment needs

Cash flow FY 2018 [USD m]

18

Stable equity base, solid liquidity reserve and reduced net debt – Net debt / EBITDA reduced to 4.6x as at 31 December 2018

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

Note: 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.

1) Includes Restricted Cash booked as other assets: USD 58.6 m as of 31 December 2017 & USD 7.4 m as of 31 December 2018

19

Implementation of IFRS 16 – indicative figures for 2018

Key KPIs for 2018 incl. IFRS 16
	FY 2018	IFRS 16 impact	FY 2018 Incl. IFRS 16
EBITDA [USD bn]	1.35	0.37	1.72
EBITDA margin	9.9%	2.7%	12.6%
D&A [USD bn]	-0.82	-0.35	-1.17
EBIT [USD bn]	0.52	0.02	0.54
EBIT margin	3.8%	0.1%	3.9%
Interest result [USD bn]	-0.43	-0.06	-0.49
Group profit / loss [USD bn]	0.05	-0.04	0.01
Non-current assets 1) [USD bn]	14.7	1.0	15.7
1) [USD bn] Net debt	6.1	1.0	7.1

As of 1 January 2019, Hapag-Lloyd will publish financial figures including IFRS 16. Prior year figures will not be restated or adjusted. FY 2018 (incl. IFRS 16) figures as shown in this presentation are unaudited and based on internal assumptions only.

Under the new accounting standard, expenses related to operating leases under IAS 17 are no longer entirely included in EBITDA. Therefore, EBITDA would have increased significantly.

• EBIT would have increased only marginally due to higher depreciation.
• EAT initially would have decreased slightly due to frontloading effect.
• Approx. 20 % of Hapag-Lloyds vessel lease commitments mature within 12 months – lowering the IFRS 16 impact – and are therefore not included on the balance sheet.

Note: 2018 figures incl. IFRS 16 are indicative. They are unaudited and based on internal assumptions only. Rounding differences may occur. 1) Based on opening balance as of 1 January 2019 at the time of the initial application of IFRS 16.

Clearly structured

Driver based

Transparent

We will implement a new P&L structure from Q1 2019 onwards which will be more transparent and will allow a more driver based analysis

• The new P&L separates costs into finished and unfinished voyages (pending)
• Hence the analysis of unit cost development is easier because the pending costs are not directly linked to the reported transport volume
• Operational and financial valuation effects will be shown separately and do not distort the unit cost development per single cost category
• Consequently better visibility of operational performance

New P&L Structure as of Q1 2019

4 Way Forward

Outlook for 2019 including IFRS 16

	FY 2018	Outlook 2019 (incl. IFRS 16)		Sensitivities for 20191)
Transport volume	11,874 TTEU	Increasing slightly	+/- 100 TTEU	+/- USD <0.1 bn
Average freight rate	1,044 USD/TEU	Increasing slightly	+/- 50 USD/TEU	+/- USD ~0.6 bn
Average bunker price	421 USD/mt	Increasing moderately	+/- 50 USD/mt	+/- USD ~0.2 bn
EBITDA	EUR 1,138 m	EUR 1.6 – 2.0 bn	Thereof	EUR 370 – 470 m
EBIT	EUR 443 m	EUR 0.5 – 0.9 bn	IFRS 16 Impact	EUR 10 – 50 m

4 Way Forward

Major targets for 2019 and beyond:

Continue to increase profitability and further deleverage our company

Prepare for IMO 2020

Continue to implement our "Strategy 2023" and create more value for our customers and shareholders as we strive to become number one for quality

Further develop and offer more digitalized solutions to the customer

Hapag-Lloyd with positive EBITDA of USD 1,345 m in FY 2018

	FY 2018	FY 2017	% change
Revenue	13,605.1	11,286.2	21%
Other operating income	136.0	149.9	-9%
Transport expenses	-11,102.1	-9,038.4	23%
Personnel expenses	-779.1	-770.8	1%
Depreciation, amortization & impairment	-821.2	-732.0	12%
Other operating expenses	-566.4	-493.2	15%
Operating result	472.3	401.7	18%
Share of profit of equity-acc. investees	36.3	43.1	-16%
Other financial result	14.9	22.0	-32%
Earnings before interest & tax (EBIT)	523.5	466.8	12%
EBITDA	1,344.7	1,198.8	12%
Interest result	-431.5	-403.5	7%
Income taxes	-37.7	-27.3	38%
Group profit / loss	54.3	36.0	51%

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

	FY 2018	FY 2017	% change
Expenses for raw materials & supplies	2,001.6	1,338.9	49%
Cost of purchased services	9,100.5	7,699.5	18%
Thereof Port, canal & terminal costs	4,712.1	3,929.5	20%
Chartering leases and container rentals	1,227.1	944.2	30%
Container transport costs	2,930.6	2,530.0	16%
Maintenance/ repair/ other	230.7	295.8	-22%
Transport expenses	11,102.1	9,038.4	23%
Transport expenses per TEU [USD m]
	FY 2018	FY 2017	% change
Expenses for raw materials & supplies	168.6	136.6	23%
Cost of purchased services	766.4	786.2	-2%
Thereof Port, canal & terminal costs	396.8	400.9	-1%
Chartering leases and container rentals	103.3	96.3	7%
Container transport costs	246.8	258.1	-4%
Maintenance/ repair/ other	19.4	30.2	-36%
Transport expenses	935.0	922.0	1%

24 Note: The previous year's figures have been adjusted due to the retrospective application of the rules for designation of option contracts. This improved the previous year's transport expenses by USD 1.1 million.

Hapag-Lloyd with a stable equity ratio of 40.9% and a reduced gearing of 85.5%

	31.12.2018	31.12.2017
Assets
Non-current assets	14,709.1	15,146.1
of which fixed assets	14,645.7	15,071.1
Current assets	2,812.6	2,630.8
of which cash and cash equivalents	752.4	725.2
Total assets	17,521.7	17,776.9
Equity and liabilities
Equity	7,167.5	7,263.3
Borrowed capital	10,354.2	10,513.6
of which non-current liabilities	6,487.4	7,197.8
of which current liabilities	3,866.8	3,315.8
of which financial debt	6,891.1	7,595.5
thereof Non-current financial debt	6,070.8	6,750.6
Current financial debt	820.3	844.9
Total equity and liabilities	17,521.7	17,776.9

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

	31.12.2018	31.12.2017
Cash and cash equivalents	752.4	725.2
Financial debt	6,891.1	7,595.5
Restricted Cash	7.4	58.6
Net debt	6,131.3	6,811.7
Unused credit lines	545.0	545.0
Liquidity reserve	1,297.4	1,270.2
Equity	7,167.5	7,263.3
Gearing (net debt / equity) (%)	85.5%	93.8%
Equity ratio (%)	40.9%	40.9%

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

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

Reduced financing costs as well as Capital increase II improved maturity structure of financial liabilities

Financial Debt Profile as per 31 December 20181), [USDm]

1) As of January 2018 financial debt profile has been changed to the statement of repayment amounts. Deviation from the total financial debt as shown in the balance sheet as per 31.12.2018 consist of transaction costs and accrued interest 2) ABS program prolonged until 2020 3) Partial voluntary redemption of EUR bond with contractual maturity in 2022 in the amount of EUR 170 million has been executed in February 2019

Hapag-Lloyd's new P&L structure from Q1 2019 onwards – Transport expenses

New P&L Structure

Hapag-Lloyd has a clearly defined policy to create shareholder value…

Financial Targets to be achieved until 2023

Profitability	ROIC (throughout the cycle) > WACC [This implies an EBITDA-margin of ~ 12%]
Deleveraging	Net Debt / EBITDA ≤ 3.0x
Equity	Equity ratio > 45%
Liquidity	Adequate liquidity reserve of ~ USD 1.1 bn

…as well as customer value

Non-Financial Targets to be achieved until 2023

Quality	Achieve best in class Net Promoter Score (NPS)
	Measure and improve On Time Delivery
Superior landside capabilities	Increase share of door-to-door business to over 40% of total by 2023
Attractive Markets	Grow volume in selected attractive markets and achieve a market share of ~10% (excl. Intra Asia) in reefer market by 2023
Environmental	Comply with or exceed all IMO environmental regulations
Web Channel	Grow volume booked via Web Channel to 15% by 2023

Share price development

Share trading since November 2015

Stock Exchange	Frankfurt Stock Exchange / Hamburg Stock Exchange
Market segment / Index	Regulated market (Prime Standard) / SDAX
ISIN / WKN	DE000HLAG475 / HLAG47
Ticker Symbol	HLAG
Primary listing	6 November 2015
Number of shares	175,760,293

Bond trading

Bonds trading

Moody's has recently upgraded Hapag-Lloyd's corporate family rating from B2 to B1 / Stable – S&P rates Hapag-Lloyd at B+ / Stable

	Corporate Family Rating
	Aaa	Aaa
e	Aa1	Aa1
d a	Aa2	Aa2
r G	Aa3	Aa3
nt	A1	A1
e m	A2	A2
st e	A3	A3
v n	Baa1	Baa1
I	Baa2	Baa2
	Baa3	Baa3
	Ba1	Ba1
e	Ba2	Ba2
d a r	Ba3	Ba3
G	B1	B1
nt e	B2	B2
m	B3	B3
st e v	Caa1	Caa1
n	Caa2	Caa2
n-I o	Caa3	Caa3
N	Ca	Ca
	C	C

Bond Rating

Stable outlook reflects Moody's expectation of a steady performance due to the company's:

• Strong market position
• Good deleveraging track record
• Experienced management team

Key findings

• Strengthened business profile due to UASC merger (Top 5 position)
• Synergies help to offset cost pressures
• Young and fuel efficient fleet leading to a moderate CAPEX in the next few years that supports the adequate liquidity profile
• Committed majority shareholders with a solid track record of support
• However, the container shipping industry remains a volatile business
• Challenging economic environment and rising geopolitical risks

Financial Calendar 2019

25 February 2019	Preliminary Financials 2018
22 March 2019	Annual Report 2018
09 May 2019	Quarterly Financial Report Q1 2019
12 June 2019	Annual General Meeting 2019
07 August 2019	Half-year Financial Report 2019
14 November 2019	Quarterly Financial Report 9M 2019

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.

Hapag-Lloyd Investor Relations Ballindamm 25 20095 Hamburg Tel: +49(40) 3001-2896 ir@hlag.com https://www.hapag-lloyd.com/en/ir.html