Q3 Presentation November 8 th 2017 Craig Jasienski, President & CEO Rebekka Glasser Herlofsen, CFO
Agenda Business Update Financial Performance Market and Business Outlook Summary and Q&A 2
BUSINESS UPDATE by Craig Jasienski 3
Business Update Financial Performance Market and Business Outlook Summary and Q&A Business update Q3 at a glance… The positive development for Volume & Cargo mix continues Still some overcapacity and pressure on ocean rates Good contract coverage next few years, especially H&H Realization of synergies well on the way The positive development for landbased continues 4
Business Update Financial Performance Market and Business Outlook Summary and Q&A The positive development for Volume & Cargo mix ix contin inues Volume 1) and cargo mix 2) development Co Comments Million CBM and % Total prorated volumes Cargo mix (previous) Cargo mix • Volumes down 5% q-o-q, largely driven by Million CBM seasonality. Decline in volumes across all % 19,5 20 19,4 +10% -5% 35 foundation trades with the exception of 18,7 18,2 18,2 18,0 17,6 volumes from Asia to South America 16,7 16,7 30 16,1 15,8 15,5 15,2 26,0% 25,8% • Positive development for cargo mix with a 25,6% 25,2% 25,3% 25,3% 25,2% 15 24,9% 24,4% 24,0% 25 22,6% 22,2% H&H share of 26% in the third quarter, up 20,4% 20 from 25.8% in the second quarter (which 10 included large spot shipments ex-China) 15 • Volumes up 10% y-o-y primarily driven by 10 5 higher volumes transported in foundation trades, in particular export from Asia to North 5 America and export out of Europe to Asia 0 0 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 1) Prorated volume 5 2) Calculated based on unprorated volumes. Updated figures based on aligned cargo type definition and reporting across all Ocean units
Business Update Financial Performance Market and Business Outlook Summary and Q&A Seasonal reduction in in volu lumes, but posit itive development from same perio iod la last year for all ll foundation trades EU - ASIA Asia - EU Atlantic Shuttle +11% -6% +2% -11% +4% -1% 3.2 3.2 3.0 2.9 2.7 2.8 2.9 2.9 2.8 Q3 ’16 Q2 ’17 Q3 ’17 Q3 ’16 Q2 ’17 Q3 ’17 Q3 ’16 Q2 ’17 Q3 ’17 Asia - NA EU/NA – Oceania 1) +23% -8% +6% -5% 3.4 3.2 2.6 2.0 1.9 1.8 Asia - SAWC +18% +8% Q3 ’16 Q2 ’17 Q3 ’17 1.1 1.1 1.0 Q3 ’16 Q2 ’17 Q3 ’17 WWL trade routes EUKOR trade routes Q3 ’16 Q2 ’17 Q3 ’17 ARC trade routes Note: Prorated volumes on operational trade basis in CBM 6 1) Including Cape sailings (South Africa)
Business Update Financial Performance Market and Business Outlook Summary and Q&A Positive development in in net freig ight/CBM due to trade/cargo mix ix Net freight / CBM development 1) Comments Co Indexed to 100 per Q2 2014 • Net freight / CBM increased with 0.8% in the 105 third quarter compared with the last quarter • The positive development was mainly driven 100 by improved cargo mix and increased H&H shipments, but trade mix also contributed 95 positively • No material rate changes in the third quarter 90 • There is still significant pressure on rates in several tenders due to tough competition and customers’ procurement focus 85 80 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Note: Unprorated volumes excluding US flag operations 7 1) Net freight = Revenues adjusted for surcharge elements such as BAF, SRC, THC etc
Business Update Financial Performance Market and Business Outlook Summary and Q&A Good contract coverage for H&H for the next xt few years Contract coverage for “top 10” H&H customers 1 Percent of volumes 100 75 WWL + EUKOR 50 25 0 2 017 2 018 2 019 2 020 1) Based on 2017 budgeted volumes for WWL Ocean and EUKOR 8
Business Update Financial Performance Market and Business Outlook Summary and Q&A Realization of synergies well on the way… Confirmed and realized synergy development Comments Co USD million • About two thirds of the targeted annualized 100 synergies have been confirmed, through actions related to mainly the organizational restructuring and procurement 65 • More than USD 10 million already realized in Q3 55 (annualized effect of around USD 50 million) • The remainder of confirmed synergies gradually taking effect over the next 3-6 months • Realization of remaining synergies on fleet 0 0 0 0 0 0 optimization, ship management and IT carry a Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 longer lead time and next wave of synergies will take some time IT Fleet Optimization Ship Management Procurement GSA Savings • USD 100 million synergy target within 2019 remains 9
Business Update Financial Performance Market and Business Outlook Summary and Q&A The positive development for landbased continues… • Continued strong volumes for technical services in North America , but less value-adding services coupled with congestion at certain plant locations pulled results down slightly. In line with slowing US auto sales, the build-up of auto inventories in the US continued in Q3 2017. • Terminals experienced a slight fall back in results in line with overall decline in ocean volumes, especially for Zeebrugge and Port Hueneme, while other terminals showed stable performance • On the business development side the network was expanded with one new yard management contract in Europe • Interesting pipeline of investment and M&A opportunities for landbased 10
Financial Performance by Rebekka Glasser Herlofsen 11
Business Update Financial Performance Market and Business Outlook Summary and Q&A Consolid idated result lts – thir ird quarter 2017 Co Comments Q3 2017 Q2 2017 Q3 2016 (proforma) 1) • Adjusted EBITDA was USD 193 million Total income 962 912 869 in the third quarter, up 2% q-o-q Operating expenses (774) (806) (726) • Extraordinary items include EBITDA 188 106 143 • USD 4.5 million gain on fixed assets sale • USD 1.5 million in loss on previously held EBITDA adjusted 193 188 143 equity interests in joint ventures (ref Depreciation (84) (83) (82) merger) • USD 8 million loss related to sale a lease EBIT 104 23 61 back transaction Financial income/(expense) (21) (41) n/a • Net financial expenses in the third Profit/(loss) before tax 83 (17) n/a quarter was positively impacted by unrealized gains from interest hedges Tax income/(expense) (28) (3) n/a and positive movements in currency Profit/(loss) for the period 55 (20) 40 EPS 0.12 (0.06) n/a 12 1) Comparable numbers are pro forma numbers as if the transaction had taken place back in time
Business Update Financial Performance Market and Business Outlook Summary and Q&A Ocean segment – thir ird quarter 2017 Total income and EBITDA ocean segment 1, 2 Comments Co USD million • Ocean income was USD 775 million, down 3% Total income EBITDA compared with previous quarter Extraordinary items • EBITDA adjusted for extraordinary items improved +36% +5% +10% -3% 5% q-o-q and 36% y-o-y 170 798 166 775 162 • Improved results q-o-q driven by cargo and 744 719 707 trade mix, project cargo shipments in the 125 123 Atlantic occupying empty space coupled with 135 increased realization of synergies which more 145 162 than offset seasonally lower volumes • Improved results y-o-y driven by volume growth of 10%, cargo and trade mix, project 31 17 8 cargo shipments in Atlantic and synergy Q3’16 Q4’16 Q1’17 Q2 ’17 Q3 ’17 Q3’16 Q4’16 Q1’17 Q2’17 Q3 ’17 realization 1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time 13
Business Update Financial Performance Market and Business Outlook Summary and Q&A Landbased segment – thir ird quarter 2017 Total income and EBITDA landbased segment 1,2) Co Comments USD million • Adjusted income was USD 199, up 4% q-o-q Total income EBITDA • Adjusted EBITDA was USD 24 million, down 9% Extraordinary items q-o-q, but up 19% y-o-y +12% +3% • For Technical services, the reduction in EBITDA was 199 +19% -9% 192 186 184 driven by less value-adding services content 24 177 27 coupled with congestion at certain plant locations 22 21 20 • Terminals experienced a slight fall back in results in line with overall decline in ocean volumes, 203 29 26 especially for Zeebrugge and Port Hueneme, while other terminals performed in line with the 1 performance in the previous quarter -5 -5 Q3’16 Q4’16 Q1’17 Q2 ’17 Q3 ’17 Q3’16 Q4’16 Q1’17 Q2 ’17 Q3 ’17 1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time 14
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