Wallenius Wilhelmsen

Investor Presentation • Apr 1, 2020

Investor presentation

Global LV sales expected to drop 12%, downgrades across all major markets

COVID-19 status update Auto

IHS Markit assume 2020 global LV sales set at 78.8m for 2020, down 12% with downgrades across all major regions, and risk of further downgrade

LV Sales, million units

LV deep-sea volume, million units

Supply

Temporary plant closures in all major regions e.g. Europe, NA, Korea and Japan, while Chinese operations appear to be recovering

Deepsea trade ?

IHS Markit assume deepsea volume to see decline from 14.9m in 2019 to 13.1m in 2020, equal to a drop of 12%, with risk of further downgrade

Demand

Large uncertainty to how fast consumers will turn back to dealers, governmental stimulus such as tax brakes might contribute to rebound

Source: IHS Markit

Global H&H sales are expected to slow down amid the Covid-19 outbreak

COVID-19 status update H&H

Government policies

Mixed government responses, but H&H deemed «essential» in several key markets and exempt from shutdowns due to the coronavirus outbreak

Production suspension

Temporary plant closures in a number of affected regions e.g. Europe and Brazil, while Chinese operations appear to be recovering

Guidance withdrawals ?

OEMs are withdrawing FY2020 guidance due to the uncertainty around the ultimate magnitude of COVID-19 on financial and operational results

Demand implications

Reduced capex spend and postponed investment decisions due to current global economic conditions and an uncertain outlook

Source: 1) Caterpillar | 3 month rolling retail sales (Units last 3 months y-o-y) 2) Tractor sales and registrations in key markets | US Large Tractors (2WD 100+HP & 4WD), Australia Large tractor (100+HP), Brazil (All), Germany (70KW+), UK (50+HP) 3) FactSet data and Analytics (30.03.20) | OEM Revenue Consensus Estimate (y-o-y). Construction: Volvo, Caterpillar, CNH, Komatsu, Hitachi, Terex. Mining: Sandvik, Caterpillar, Hitachi, Epiroc. Agriculture: AGCO, CNH, Deere. Sales in construction/mining/agriculture equipment divisions only

Operations in Covid-19 epicentres are partially disrupted

• Adjusting trading patterns and schedules in response to fluctuation in demand in the ocean business
• Terminals, though in many places congested, at this time remain open and operating
• Countries with strict lockdown rules, such as South Africa and India, forces closure of landbased sites
• Some sites in US and Mexico temporarily closed or disrupted due to little or no activity at some plants
• European sites remain open, but with some operational disruptions
• Other sites in Asia and Oceania are mostly open, but with some disruptions, and some closures

Operational impact Overview of WalWil locations and status as of March 31st

Ocean segment drivers and preventive measures

Item	Key characteristics	Measures to adjust costs
Revenue	▪ Auto contract duration typically 1-3 years, and 3-5 years for H&H ▪ Rates are fixed for the contract period, but no volume minimum ▪ Contracts representing 20% of revenue up for renewal in 2020
Variable cost	▪ Approximately 70% of total costs are variable in ocean segment ▪ Variable costs consist of cargo, bunker and voyage expenses	▪ Adjust speed, adjust sailing schedules and idling of vessels ▪ Tighter bunker inventory management
Fixed cost	▪ Approximately 30% of total costs are fixed in ocean segment ▪ Ship operating and charter expenses considered short term fixed, and will move in steps, dependent on number of vessels operated	▪ Redelivery of chartered vessels: Average charter hire saved per day for redelivery candidates in range USD 18 000 – 20 000 ▪ Cold lay-up for 10 vessels (OPEX reduction per vessel per day in lay up of USD 3000 – 4000) and defer drydocking ▪ Early recycling of up to four vessels, estimated positive cash impact of about USD 4 – 7 million per vessel
CAPEX	▪ CAPEX primarily related to planned dry-dockings, including ballast water treatment systems installations ▪ Scrubber installation program for 16 vessels ▪ Two newbuildings expected in Q2 2020 and late 2020	▪ Reduce capex to critical maintenance and dockings ▪ Cancellation of 4 scrubber installations, cash impact of USD 20m in total (of which USD 5 million was estimated for 2020)

Landbased and group drivers and preventive measures

Item	Key characteristics	Measures to adjust costs
Revenue	▪ Inland distribution and technical services typically depend on factory throughput, and terminals on ocean volumes ▪ The anti-cyclical storage business may experience higher volumes
Variable and fixed cost	▪ Approximately 75% of total costs are variable in landbased segment ▪ Approximately 25% of total costs are fixed in landbased segment	▪ Adjusting variable costs in line with customer activity and volumes
CAPEX	▪ Maintenance CAPEX related to equipment, sites and buildings ▪ Growth CAPEX related to expansions of existing sites and new site developments	▪ Reduce CAPEX to critical maintenance, delay growth CAPEX
	Other measures taken on group-wide level

• SG&A: Limit/ban travel and entertainment, pause/cancel projects, postpone/cancel salary increase
• Dividend: Dividend cancelled

Group

fixed cost

Limited capital expenditures going forward

• CAPEX reduced to a minimum, prioritizing safety and maintenance critical expenditures
• Landbased CAPEX estimated at ~USD 10m for rest of year mainly related to required maintenance A
• Ocean CAPEX rest of year primarily related to:
• Drydocking and ballast-water treatment systems estimated to ~USD 40m B
• Scrubber installations estimated to about USD 40m in 2020, for which we have committed financing of USD ~15m C
• Two newbuildings remaining, with final instalments amounting to ~USD 40m per vessel. Financing of ~USD 50m per vessel will be drawn after delivery. Estimated delivery for the two newbuildings in May 2020 and around year-end 2020 D

Comments Overview of main capital expenditures 2020 (USDm)

Very little refinancing requirements near-term and a solid liquidity position

A strong balance sheet coupled with distant debt maturities gives confidence in a global trough

Covenants are measured on business unit level rather than group level

Preparing for post Covid-19 rebound

H&H shipments in WW Ocean Auto shipments in WW Ocean^{1 2}

RoRo shipping saw a significant rebound in the aftermath of the 2008/2009 financial crisis

Source: 1) IHS Markit | World (major exporters) LV Deepsea exports (Value > 8 kUSD). 2) IHS Markit | World (major exporters) construction & rolling mining equipment and agriculture equipment exports (Avg. equipment value >20 kUSD). WW H&H shipments do not include Commercial vehicles such as Buses & Trucks

Q&A