Dfds Logistics
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1 DFDS MAINTAINED STRONG POSITION DESPITE HEADWIND DEBT INVESTOR PRESENTATION March 2013 DFDS Copenhagen DFDS ORGANISATION & SHAREHOLDERS DFDS GROUP People & Ships Finance SHIPPING DIVISION LOGISTICS DIVISION Revenue 2012: Revenue 2012: DKK 8.0bn DKK 4.3bn The Logistics Division is a Top 3 customer of the Shipping Division Shareholder structure: . Lauritzen Foundation: 36,3% . A. P. Moller - Maersk: 31,4% . Other: 32,3% Board members (elected): .Bent Østergaard (Ch), Vagn Sørensen (VCh), Claus Hemmingsen (VCh), Anders Moberg, Ingar Skaug, Jill Lauritzen Melby, Lene Skole 2 DFDS OVERVIEW • Northern Europe’s leading integrated shipping & logistics company Consolidator Cash flow & capital 10% ROIC target structure •Lead further •Strong cash flow •Set-backs on North Sea consolidation of sector generation and Channel in Northern Europe •Capex expected in •Turnaround of Logistics •Transformational 2013, DKK 950m and Passenger achieved acquisition of •Strong capital structure, •Structural solutions Norfolkline in 2010 NIBD/EBITDA of 1.8 •Delivery on project •Synergies delivered targets 3 3 DFDS OVERVIEW DFDS’ services are provided by 5,900 employees in 20 European countries Shipping Freight Road & Rail Contract Passenger Services Freight Services Logistics Services •Trailers •Full & part loads •Management •Cruise ferry unaccompanied •Groupage contracts •Holiday travel •Trailers •Temperature •Acquaculture •Business accompanied controlled •Automotive conferences •Industry solutions •Rail •Retail •Car travel •Containers •Intermodal •Warehousing •Project cargo •Warehousing •Port terminals Transport services provided by road & rail and contract logistics All passenger routes use shipping services as part of the customer solution also carry freight 80% of total revenues are generated by freight services 4 4 DFDS’ ROUTE NETWORK DFDS - The shipping & logistics network Employees 5.900 Freight ships 30 Combined freight and passenger ships 16 Passenger ships 5 Routes 30 Logistics offices 20 5 DFDS IN A FIVE YEAR PERSPECTIVE Incl. Internal sales Invested capital & ROIC 11 10 10 9 9 8 8 7 7 6 6 5 5 4 % ROIC, 4 3 3 2 2 Inv cap, avg., DKK bn DKKavg.,cap,Inv 1 1 0 0 2009 2010 2011 2012 FC 2013 10 April 2013 6 DFDS’ FOUR STRATEGIC PRINCIPLES 1 EXPAND THE NETWORK • More services to customers • More scale and leverage of operating model 4 FOCUS 2 INTEGRATED SOLUTIONS • Constant focus on quality and efficiency • Combine freight and passengers • Efficiency and improvement projects • Supply chain solutions across divisions/BU 3 SECURE VOLUMES • Increased cargo control through owned transport/logistics operations • Strategic port access 2013 Strategic Priorities Financial goals • Efficiency & contingency planning • ROIC of 10% • Growth • WACC 2012 Actual: 6% 7 FERRY SHIPPING IS A LOW VOLATILITY SEGMENT Shipping segments Deep sea (global) Short sea (regional, N. Europe) Container Tank Dry bulk Car Ferry Container Feeder carriers Company Maersk Odfjell CMB Grimaldi DFDS Container- Team examples Line Frontline Norden WWL Stena Line ships Lines NOL Samskip Unifeeder Ferry shipping characteristics Rate index: Baltic dry index & Ro-ro T/C rate . Liner shipping with fixed schedules 300 . Tonnage typically designed for specific markets in a region 250 . High level of vessel ownership by operators, especially Baltic dry 200 passenger ships index . Capacity utilization, ie. volumes, is main profit driver as 150 opposed to fixture and freight rates Ro-ro T/C rate, 2,250- . Exposure to spot trading only on excess tonnage, usually for 100 2,750 shorter periods . Low level of volatility compared to bulk and tank as vessels 50 are non-standard and seldom are built on speculation as opposed to container, tank and bulk segments 0 8 8 FLEET OVERVIEW . DFDS strategy to have a 50/50 ownership/charter ratio of ro/ro Distribution of gross tons by ships, end 2012 vessels to secure flexibility in different economic climates Passenger 12% – Currently higher ownership ratio limits vessel investments from Container & 2013 Sideport 3% . No commitments for new tonnage beyond 2012 Ro-Ro . Optimisation of tonnage on the Channel may require investments 49% Ro-Pax 36% Fleet overview and key figures, end 2012 # of ships* Ownership share, % Average age, years (owned ships) Ro-Ro 24 58% 11 Ro-Pax 16 63% 13 Container & 6 50% 13 sideport Passenger 5 100% 25 * Including two new builds delivered during 2013 10 April 2013 DFDS Copenhagen 9 DFDS’ POSITION IN TRANSPORT UNIVERSE Forwarding segments (freight) Intercontinental Regional (overland) Air freight Sea freight Contract Groupage Full/part Contract logistics loads logistics Company DSV DSV DHL DSV DSV DSV examples K&N K&N K&N K&N DFDS DFDS LKW Walther K&N . DFDS is focused on Full/part loads as Groupage DFDS’ forwarding activities are linked to operations to a higher degree requires inland terminal regional nework of ferry routes infrastructure . DFDS’ Contract logistics operations and competencies are partly linked to provision of shipping logistics services for manufacturers of heavy industrial goods 10 10 Change P&L 2012 DKKm 2012 2011 % Change • EBITDA of DKK 1,092m before special REVENUE 11.700 11.625 0,6 75 items, 27% down from record year 2011 EBITDA BEFORE SPECIAL ITEMS 1.092 1.495 -27,0 -403 • Profit impacted by: margin, % 9,3 12,9 n.a. -4 • Recession which created adverse Depreciations -679 -686 -1,0 7 trading conditions and lowered demand EBIT BEFORE SPECIAL ITEMS 422 835 -49,5 -413 in main markets margin, % 3,6 7,2 n.a. -4 • Structural overcapacity in two business Special Items -124 91 -236,3 -215 areas, North Sea/Channel EBIT 298 925 -67,8 -627 • Revenue up by 1% to DKK 11.7bn driven Finance -146 -184 -20,7 38 by expansion of network PRE-TAX PROFIT BEFORE SPECIAL ITEMS 276 651 -57,6 -375 • Cash flow was strong in 2012 – dividend PRE-TAX PROFIT 152 742 -79,5 -590 proposed maintained at DKK 14 per share, 140% of net profit Tax -4 -8 n.a. 4 NET PROFIT 148 734 -79,8 -586 • DFDS is well positioned strategically and EMPLOYEES avg., no. 5.239 5.096 2,8 143 financially to continue growth strategy SOLVENCY, % 56,7 54,4 4,2 2,3 FREE CASH FLOW 1.144 1.639 -30,2 -495 • Strong financial performance: NET INTEREST-BEARING DEBT 1.929 2.555 -24,5 -626 • Free cash flow of DKK 1.144bn NIBD/EBITDA, times 1,8 1,7 3,4 0,1 • NIBD reduced by 24,5% ROIC excl. special items, % 4,5 8,1 -44,4 -3,6 • NIBD/EBITDA leverage of 1.8x 11 11 CAPITAL AND CASH FLOW • Total assets reduced by 3,9% to DKK 12.3bn • Positive cash flow of DKK 239m from investments • DKK 322m gross investment in assets, including DKK 175m for docking and maintenance of ships • Sale of other assets, DKK 8m • Cash flow used to reduce debt and payment of net finance cost and dividend • Increased cash flow yield in 2012 (16% of market value including special items) 12 12 GUIDANCE 2013 – MARKET OUTLOOK • We foresee that market demand in the Baltic regions will remain stable DKK m Expectations 2013 2012 • Continued weakness is expected in North Sea regions, Scandinavia-UK & UK-Continent Revenue +5% 11,700 • Passenger markets are expected to be flat in EBITDA before 1,050-1,250 1,092 most areas special items Shipping Division: 1,000- Shipping Division: 992 1,200 • Base case macro outlook is flat with both Logistics Division: 150 Logistics Division: 140 upside and downside risks Non-allocated: -100 Non-allocated: -40 Depreciation Level with 2012 -679 • Net investments of DKK 950m: Finance cost, net Level with 2012 -146 • ARK ships: DKK 560m Special items 0 -124 • Scrubbers: DKK 100m Investments -950 +239 • Maintenance: DKK 275m 13 13 MARKET TRENDS & OUR PRIORITIES 2013 • We foresee that market demand in the Baltic regions will remain stable Strategic priorities 2013 • Continued weakness is expected in North Sea regions, Scandinavia-UK & UK-Continent 1. Customer focus 2. Improve profitability through • Passenger markets are expected to be flat in more efficient operations most areas 3. Strengthen & expand network • Base case macro outlook is flat with both upside and downside risks 14 14 CUSTOMER FOCUS AND EFFICIENCY CUSTOMER FOCUS INITIATIVE MORE EFFICIENT OPERATIONS • Top line initiative CFI started the pilot roll • Efficiency and improvement projects part of out June 2012 strategy and culture • As of February 2013, 10 locations have • Light Capital – working capital reduction been covered • One Finance – streamlining of finance • Third wave will kick off in March covering organization another 6 units • Alignment of IT systems • All operations included by Q2 2014 • Contingency measures, adapting to lower growth • Specialized training of Unit/ Sales Managers and Sales Staff to commence Q2 • Regular customer surveys to monitor Customer Satisfaction Scores and Net Promotor Scores per unit • Impact visible in pilot units 15 15 CHANNEL UPDATE • Channel now operates four routes: • Dover-Dunkirk Channel actions • Dover-Calais • Newhaven-Dieppe • Portsmouth-Le Havre 1. New tonnage performing well • Significant EBIT loss in 2012 on Dover-Calais 2. UK (global) passenger • Channel’s EBIT include a net impact of DKK -15m sales organisation related to addition of routes from LD Lines restructured 3. New organization onboard • Preliminary Competition Commission findings conclude that Eurotunnel should divest vessels with increased MyFerryLink customer focus 4. Concerted freight sales • Final ruling on 14 April from Competition Commission across DFDS BUs • Continued focus on Channel performance 16 16 FREIGHT SWEDEN-UK Sweden-UK actions • Ro-ro freight market Sweden-UK dropped by 1. Tonnage reshuffle around 6% in 2012 optimised cost & capacity • New competitor added 30% to capacity in structure January 2012 2. Meeting competition – superior schedule & • Schedule with high frequency and customer systems service have proven resilient and competitive… 3. Improving port terminal • ….but lower volume & yield resulted in EBIT efficiency of Älvsborg for impact of up to DKK -100m customers 4.