OUTLOOK , RAISED FOR 2016 DFDS GROUP Q1 2016 p u d 12 May 2016
Contents • Overview • Q1 numbers • Financial leverage • Channel • Outlook 2016 • Strategy, goals and priorities The statements about the future in this announcement contain risks and uncertainties. This entails that actual developments may diverge considerably from the statements about the future. 2 2
Earnings improved throughout route network • The route network’s volume and unit revenue growth exceeded expectations in Q1: EBITDA before special items • Freight overflow to routes from Polish-Russian border dispute DKK bn • Channel volume growth stronger than foreseen 2.50 New outlook • 5% freight volume growth in network excluding Channel 2.25 • Higher average unit revenues 2.00 1.75 • In addition, Shipping Division’s Q1 earnings boosted by early Easter and reduced bunker costs - performance in all business units 1.50 improved 1.25 1.00 • Logistics Division’s Q1 earnings above expectations and LY in Nordic 0.75 and Continent – UK & Ireland improved vs LY in local currency 0.50 • Continued earnings support from improvement and efficiency projects 0.25 0.00 2013 2014 2015 LTM Q1 Outlook • ROIC LTM* Q1 increased to 15.3% (FY 2015: 13.7%) before special 2016 2016 items • EBITDA outlook raised to DKK 2,300-2,500m (DKK 2,100-2,300m) 3 3 *Last twelve months
Q1 2016 – EBITDA up by 77% to DKK 405m EBITDA before special items, Q1 DKK m • Three primary drivers of the EBITDA Margin: 12.6% increase: 450 350 • Baltic Sea boosted by an overflow of trucks from border dispute between Poland and Margin: 10.3% 250 367 Russia, benefits from scrubbers and conversion of Russian route to a slot charter 189 150 • North Sea saw continued volume growth on 50 54 52 UK-Continent routes supported by increased -13 -16 -50 capacity. Unit revenues increased Q1 2015 Q1 2016 Logistics Division Shipping Division Non-allocated • Channel improved result despite extra costs for capacity increase. 36% higher volume for EBITDA before special items per quarter DKK m both freight and passengers 900 800 700 • Key logistics activities in Scandinavia, 600 Continent and UK increased earnings - some 500 400 weakness in Norway, Northern Ireland and 300 200 Italy 100 4 0 Q1 Q2 Q3 Q4 4 2014 2015 2016
Baltic Sea and North Sea main EBIT drivers Q1 2016: DFDS Group EBIT development vs LY • North Sea +41m: Highest volume and RPM 200 growth achieved on NS South routes 180 supported by increased capacity. Positive 13 2 -1 2 -4 impact on Vlaardingen port terminal. 160 23 Benefits from scrubber installations, largest on NS North & Esb-Imm routes 140 • Baltic Sea +64m: Overflow of trucks from 120 DKK m 64 border dispute boosted both volumes and 100 RPM. Benefits achieved from scrubber 181 installations. Russian route converted to 80 slot charter 41 60 • Channel +23m: Dover-Calais improved result despite extra costs for capacity 40 14 increase. Growth in passengers on Dover- 20 Dunkirk 27 0 • Passenger +14m: Positive impact from Easter and lower bunker cost 5 5
Q1 2016 in numbers Change Change DKK m 1 Q1 16 Q1 15 vs LY % • Reported revenue growth of 6% and 9% excluding revenue from bunker surcharges REVENUE 3,088 2,926 162 6% EBITDA BEFORE SI 405 228 177 77% • Operating costs reduced by lower bunker margin, % 13.1 7.8 5.3 n.a. P/L associates -1 -3 2 -77% costs and EBITDA-margin increased to 13.1% Gain/loss asset sales 1 0 1 385% Depreciations -224 -198 -26 13% • Increase in depreciations mainly due to EBIT BEFORE SI 181 27 153 564% addition of ferries on the Channel and full- margin, % 5.8 0.9 4.9 n.a. year impact of scrubber installations Special Items 0 -2 3 n.a. EBIT 181 25 156 628% • Net finance cost reduced by net positive Finance -24 -41 17 -42% currency adjustment and one-offs included in PBT BEFORE SI 157 -13 170 n.a. Other items PBT 157 -16 173 n.a. EMPLOYEES avg., no. 6,791 6,322 469 7% • Positive profit before tax in Q1! INVESTED CAPITAL 9,083 8,674 409 5% ROIC LTM ex. SI, % 15.3 9.0 6.3 n.a. • Increase in invested capital mainly driven by NIBD 2,952 2,694 258 10% capitalisation of two chartered Channel NIBD/EBITDA, times 1.3 1.7 -0.4 n.a. ferries SOLVENCY, % 46 49 -3 n.a. 6 SI: Special items. PBT: Profit before tax. NIBD: Net interest-bearing debt. 6 1: Roundings may cause variances in sums
Leverage increased by Channel ferries & share buyback • The NIBD/EBITDA multiple increased to 1.3 at the end of Q1 NIBD/EBITDA • NIBD increased from DKK 1.8bn at year-end 2016 Target leverage 2.0 to DKK 3.0bn at the end of Q1 2016 due to the capitalisation of two Channel ferries and 1.8 1.8 1.8 completion of the DKK 400m share buyback end of 1.7 1.6 February 1.4 1.3 Times • The Channel ferries have been treated as finance 1.2 leases following delivery in February 1.0 0.8 0.9 • 54% of current DKK 250m share buyback completed 0.6 0.4 • Dividend of DKK 3.00 paid in April. DKK 2.00 0.2 planned to be paid in August 0.0 2012 2013 2014 2015 Q1 2016 LTM • Total distribution to shareholders of DKK 950m in 2016 LTM: Last twelve months 7 7
Capacity increase on Dover-Calais completed Channel freight volume growth YOY, 2015-2016 • 3-ferry operational set-up in place on Dover- 15% Calais since end of February 10% • High volume growth also expected for DFDS in Q2 as only one ferry was operated on Dover- 5% Calais in most of Q2 2015 0% • Total freight market volumes were up by 1.5% -5% in Q1 2016, including a drop of 2.2% in March due to the early Easter -10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar • Market has recovered since the turbulence in Q3/Oct 2015, although the growth rate has Channel car volume growth YOY, 2015-2016 decreased 15% 10% • Total car market volumes were up by 4.5% in Q1 2016, including an increase of 12.9% in 5% March due to the early Easter 0% • Following the disrupted high season and the -5% Paris attacks in mid-November, the car market has been recovering -10% 8 -15% 8 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
EBITDA outlook for 2016 raised to DKK 2.3-2.5bn • Moderate economic growth in Europe continuing in 2016 as expected NEW OUTLOOK 2016 • Freight and passenger volumes are consequently growing – growth trends on the Baltic Sea, the • Revenue growth of around 6%, English Channel and parts of the North Sea excluding revenue from bunker somewhat above expectations surcharges • Revenue growth outlook maintained at around • EBITDA of DKK 2.3-2.5bn 6% (prev. DKK 2.1-2.3bn) • Revenue growth, excluding bunker surcharges, • Shipping Division: DKK 2,150-2,325m • Logistics Division: DKK 250-275m above expectations in Shipping is offset by lower • Non-allocated items: DKK -100m fuel surcharges and impact from GBP depreciation in Logistics • Investments of DKK 1.6bn • Total investments of DKK 1.6bn unchanged • Delivery of Channel ferries ‘non -cash ’ until such time that Eurotunnel may decide to exercise their put option for the ferries 9 9
2016 outlook: update of major performance drivers Certain/Likely Expected Uncertain Macro drivers • Capacity expansion: • Freight shipping • Channel competitor • UK economy – Channel, North Sea - volume growth raised dynamics after slowdown? implemented to 15-20% (8-10%) deployment of upgraded ferries • Brexit referendum • Capacity reduction: • Passenger volume Baltic Sea – extra ship growth raised to 15- • Competitor actions • Swedish economy – added due to 20% (6-8%) pick up? customer demand • Impact of stock • Competitive pricing market setback on • Norwegian economy • Revenue increase environment – some general economy – – slowdown? from new logistics easing none so far contracts – drop in Russian market • fuel surcharges, GBP • Bunker cost savings • Possible impacts from demand set to remain depreciation, slower in Passenger migration and ‘zero’ ramp-up on one terrorist attacks contract • Logistics earnings • Changes in oil price boost from new and exchange rates – contracts oil price rising, GBP weakened 10 10
Strategy, goals and priorities People: succession planning, talent DFDS’ strategy drivers: programme, transformation office • The DFDS Way: Continuous improvement of customer focus and efficiency The DFDS Way: further development of operating model • Route network expansion to leverage operating model Tonnage: strategy development and renewal decisions • Integrated route and logistics operations to fill ships Digital: business model development and • Reliable partner: Financial strength and implementation of next initiatives performance Market coverage: gain synergies from • ROIC target of 10% across business cycle expansion of route network and logistics activities through acquisitions Financial performance: continue from Customer Contin inuous Leveragin ing Performance e Best practic ice driven en improv ovemen ent scale culture new higher level 11 11
AIMING HIGHER IN 2016 Q&A . 12
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