Ferry Routes & Logistics
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Change the color of the angle, choose between the four colors FERRY ROUTES & LOGISTICS DFDS Group Overview in the top menu Enter the date in the field September 2018 WHAT WE DO . 2 We move freight and passengers on 23 ferry routes in Europe and Turkey 3 It’s all about the routes – and their location 4 Routes are part of Europe’s and Turkey’s infrastructure And part of business supply chains 5 We mainly move fast moving freight for delivery same day, next day or day after (A,B,C) 85% of carried volumes are trailers 6 Our key freight customers are forwarders and hauliers Manufacturers of heavy goods are also important customers 7 On 9 routes we move freight and passengers together 8 People travelling by car are our key customers as is cruise passengers Both for holiday and transport purposes 9 We also provide transport and logistics solutions to a wide range of businesses 10 Freight, logistics & pax – northern Europe & Mediterranean Freight routes Logistics solutions Passenger routes ▪ Trailers, unaccompanied ▪ Door-door full & ▪ Overnight Key & accompanied part loads services ▪ Day ▪ Industry solutions ▪ Contract logistics ▪ Transport/holiday ▪ Port terminals ▪ Cruise ferry Freight Share of Group 45% 20% revenue 80% freight 20% pax 11 Roll on, roll off • Ro-ro/ro-pax shipping: roll on, roll off of freight units and passenger cars • Routes carry both unaccompanied and accompanied trailers • Other types of cargo, e.g. heavy industrial goods and containers, are placed on carrying equipment (mafis) and tugged on to the ship 12 Change the color of the angle, choose between the four colors FERRY TYPES Day ferry (ro-pax), Channel in the top menu Enter the date in the field Freight ferry (ro-ro) Cruise ferry Combined freight and passenger ferry (ro-pax) STRUCTURE & PERFORMANCE . 14 DFDS structure, ownership and earnings split DFDS Group DKK bn Revenue 2017-18 Q2 LTM per division People & Ships Finance 16 14 12 Shipping Division Logistics Division 10 10.2 Shipping Division 8 Logistics Division 6 • 23 ferry routes - freight • Door-door transport Eliminations and other and passengers • Contract logistics 4 5.3 • 45 ferries • 5,600 trailers and 2 • 7 port terminals 3,500 containers 0 • 2 sideport ships and -2 VSA/SCA* EBITDA 2017-18 Q2 LTM per division DKK bn DFDS facts Shareholder structure 3.5 3.0 2.5 • • Lauritzen: 42% Founded in 1866 2.0 Shipping Division 25.0% margin Logistics Division • Activities in 20 • Free float: 56% 1.5 2.6 Non-allocated items European countries and • Nasdaq Copenhagen 1.0 Turkey • Foreign ownership 0.5 5.9% margin • 8,000 employees share: ~30% 0.0 0.3 -0.5 15 *Vessel sharing agreements/slot charter agreements on container ships DFDS key figures – impact from UNRR acquisition in 2018 DKK bn Revenue Inv cap, DKK bn Invested capital & ROIC before special items ROIC, % 15 18 20 16 18 12 14 16 14 12 9 12 10 10 6 8 8 6 6 3 4 4 2 2 0 0 0 2014 2015 2016 2017 2018 Q2 LTM 2014 2015 2016 2017 2018 Q2 LTM Shipping Division Logistics Division EBITDA & margin before special items Operating cash flow & NIBD/EBITDA DKK bn Margin, % NIBD/EBITDA DKK bn 3.0 20 3.5 3.0 18 2.5 3.0 2.5 16 2.0 2.5 2.0 14 2.0 1.5 1.5 12 1.5 1.0 10 1.0 1.0 0.5 8 0.5 0.5 0.0 6 16 0.0 0.0 2014 2015 2016 2017 2018 Q2 LTM 2014 2015 2016 2017 2018 Q2 LTM SHIPPING Q2 LTM 2018: Shipping Division Business units & ROIC, Q2 LTM 2018 Revenue North Sea Baltic Sea Channel Mediterranean North Sea Baltic Channel Mediterranean Passenger Passenger Sea EBIT 16% 31% 20% 2% 20% 0% 20% 40% 60% 80% 100% . 17 LOGISTICS Q2 LTM 2018 Logistics Division Business units & ROIC, Q2 LTM 2018 Revenue Nordic Continent UK & Ireland Nordic Continent UK & Ireland EBIT 24% 14% 7% 0% 50% 100% . 18 BREXIT . 19 Some slowdown in UK-EU trade growth in 2018 • EU growth scenario continues EU-UK trade of goods – volume growth to mitigate uncertainty related 10% to Brexit 8% • Lift in UK export growth to EU post Brexit vote leveling off 6% but still above pre-Brexit level 4% Brexit vote • Volume growth divergence between North Sea and 2% Channel is continuing in 2018 due in part to shortage of 0% drivers -2% -4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 Exports Imports 20 20 DFDS is planning for two scenarios Hard Brexit Transition period Brexit March 19, 2019 December 31, 2020 • UK departs the EU at 11pm UK time • Transition period to allow UK to get most in place and allow businesses • UK gives up full access to the single and others to prepare for the new market and full access of the custom post-Brexit rules between the UK union with the EU and the EU (31 Dec, 2020) • Likely fall back on World Trade • Free movement will continue during Organisation (WTO) rules for trade the transition with its former EU partners “UK could stay in EU customs union for years after Brexit transition” - https://www.politico.eu quoting senior U.K. and EU officials 21 Actions to mitigate possible Brexit impacts • Key risk is development of UK GDP growth as trading volumes are linked to Possible hard Brexit impacts GDP • Cumbersome customs process • Congestion in ports • • Reduction in trade volumes UK supply chains closely integrated with • Increase in unaccompanied trailer volumes Continental Europe • Freight customers are asking for advice DFDS actions • Cost recovery, pass-through agreements • Import customers are considering to • Increasing staff with customs clearance increase stocks in UK ahead of March expertise • Offer customs clearance services 2019… • Upgrading IT customs systems • Expanding port terminals in Vlaardingen, • …vice versa for UK exporters Felixstowe and Immingham • Dover/Calais options under review • Offer duty-free sales • Upside from new services – customs clearance, standage and duty-free 22 22 MEDITER RANEAN . 23 Mediterranean expansion through acquisition of U.N. Ro-Ro • Leading freight ferry company with 34% market share of ferry & road market and 60% market share of ferry market • High growth region • Similar unaccompanied ferry business model and fleet create opportunities for synergies • Increased flexibility of fleet deployment in route network as well as synergies in vessel investments • Profitable company with expected EBITDA of around EUR 97m in 2018 24 (1) U.N. Ro-Ro owns 60% of Port of Trieste’s operator (Samer Seaports Company), owns the company that has the concession agreement (2) Pendik port is fully owned 25 Source: U.N. Ro-Ro U.N. Ro-Ro overview Business overview Key figures • Established 1994, #1 freight ferry operator in Vessels 12 (total capacity of 45.4km lanemeters) Turkey in terms of market share, number and Owns Pendik and Trieste Port(1), operates in capacity of vessels Ports Ambarli, Toulon, Mersin and Bari • 5 routes between Turkey and France/Italy with Fleet age 11 years a fleet of 12 modern Ro-Ro vessels Market share 34% between Turkey and EU • U.N. Ro-Ro’s operation is based on an intermodal setup, combining land, sea and P&L (€m) 2014A 2015A 2016A 2017A railways for trucks Total Revenues 195,1 192,8 185,2 224,7 EBITDA 72,9 84,4 81,2 94,3 • The Company caters to the international Margin 37% 44% 44% 42% transport companies, importers and exporters EBIT 31,2 46,2 47,0 66,6 in Turkey Margin 16% 24% 25% 30% ▪ In 2013 the largest customer (EKOL Logistics) started own ro-ro Business is EUR denominated, minimising service and switched all its captive cargo to own ships exposure to the volatility in Turkish Lira ▪ Slight underperformance in 2016 due to two engine break-downs 26 (1) Owns company that has the concession agreement for Trieste port Source: U.N. Ro-Ro Corporate Presentation, Company data and press releases Ferry expected to continue to gain market share vs road Export freight from Turkey to Europe • Truck investment needs for forwarders and hauliers reduced by using Units '000 unaccompanied ferry solution 300 59% • Ferry also competitive vs driving through 250 57% Balkan region: 55% 200 • Transit time and costs • Border crossings and customs 53% formalities 150 • Security issues 51% • Permit and visa issues 100 • Limited investment in road 49% 50 infrastructure 47% • Congestion - 45% • Ferry’s market share increased from 49% 2013 2014 2015 2016 2017 in 2013 to 55% in 2017 Road Ferry Ferry market share Source: Economist Intelligence Unit (EIU) 2018 27 EU is important andbalanced EU is trade partner 28 Turkey’s top trade (2017) trade top partners Turkey’s Source: Macro Macro Source: Advisory Partners 2018 (US$bn) 10 20 30 40 0 Germany China Russia US Italy UK UAE France Exports Spain Imports Iran Iraq Switzerland Netherlands South Korea with Turkey India Belgium Poland Romania Japan share market trade Turkish 0.6% 5.0% 9.3% Israel Turkey - inflation and exchange rate development of TRY • TRY-depreciation is linked to high TRY/DKK inflation rates in Turkey: 2.55 2016 2017 2018 • 2016: 8% 2.35 • 2017: 11% • 2018 ytd: 16% 2.15 • Turkey’s real GDP was up 7% in Q1 1.95 1.75 • FY GDP forecast at around 4% before -15% TRY dropped in August 1.55 1.35 -18% 1.15 -42% 0.95 0.75 01/2016 02/2016 03/2016 04/2016 05/2016 06/2016 07/2016 08/2016 09/2016 10/2016 11/2016 12/2016 01/2017 02/2017 03/2017 04/2017 05/2017 06/2017 07/2017 08/2017 09/2017 10/2017 11/2017 12/2017 01/2018 02/2018 03/2018 04/2018 05/2018 06/2018 07/2018 08/2018 29 Turkey – impact of TRY depreciation on DFDS finance items • Finance items impacted by ‘one-off’ currency TRY/DKK loss on debtors 1.45 1.40 • Mediterranean’s prices are set in EUR to 1.35 protect revenue development 1.30 • Invoicing in TRY implies, however, currency risk 1.25 in 60 day payment period for debtors 1.20 1.15 -7% • TRY