LOGISTICS choose between the four colors FERRY ROUTES - DFDS Group Overview
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
FERRY ROUTES & LOGISTICS DFDS Group Overview September 2018
WHAT WE DO
.
2
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
11Roll 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
12FERRY TYPES
Day ferry (ro-pax), Channel
Freight ferry (ro-ro) Cruise ferry Combined freight and passenger ferry (ro-pax)STRUCTURE &
PERFORMANCE
.
14
14DFDS 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
• 23 ferry routes - freight • Door-door transport 6
Eliminations and other
and passengers • Contract logistics 4
• 45 ferries • 5,600 trailers and 2 5.3
• 7 port terminals 3,500 containers 0
-2
• 2 sideport ships and
VSA/SCA* EBITDA 2017-18 Q2 LTM per division
DKK bn
DFDS facts Shareholder structure 3.5
3.0
2.5
• Founded in 1866 • Lauritzen: 42% 2.0 Shipping Division
• Activities in 20 • Free float: 56% 1.5 2.6 25.0% margin Logistics Division
European countries and • Nasdaq Copenhagen 1.0
Non-allocated items
Turkey • Foreign ownership 0.5
• 8,000 employees share: ~30% 0.0 0.3 5.9% margin
-0.5
15 *Vessel sharing agreements/slot charter agreements on container shipsDFDS 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
DKK bn
EBITDA & margin before special items Margin, % NIBD/EBITDA Operating cash flow & 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
16 0.0 6
0.0 0.0
2014 2015 2016 2017 2018 Q2 LTM
2014 2015 2016 2017 2018 Q2 LTMSHIPPING
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
EBIT
Sea
16% 31% 20% 2% 20%
0% 20% 40% 60% 80% 100%
.
17
17LOGISTICS
Q2 LTM 2018 Logistics Division
Business units & ROIC, Q2 LTM 2018 Revenue
Nordic
Continent
UK & Ireland
EBIT
Nordic Continent UK & Ireland
24% 14% 7%
0% 50% 100%
.
18
18BREXIT
.
19
19Some 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
20DFDS 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
21Actions to mitigate possible Brexit impacts
• Key risk is development of UK GDP
Possible hard Brexit impacts
growth as trading volumes are linked to
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
expertise
increase stocks in UK ahead of March
• 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
22MEDITER
RANEAN
.
23
23Mediterranean 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-RoU.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
capacity of vessels Ports
Owns Pendik and Trieste Port(1), operates in
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
Margin 37% 44% 44% 42%
• The Company caters to the international
EBIT 31,2 46,2 47,0 66,6
transport companies, importers and exporters
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 releasesFerry 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%
150
formalities
• Security issues 51%
• Permit and visa issues 100
49%
• Limited investment in road
infrastructure 50
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
27EU is important and balanced trade partner with Turkey
Turkey’s top trade partners (2017)
Turkish trade market share
9.3%
40
5.0%
30
(US$bn)
20 0.6%
10
0
Romania
France
China
Russia
UAE
Iran
Iraq
Germany
US
UK
India
Poland
Spain
Japan
Italy
Belgium
Israel
Switzerland
Netherlands
South Korea
Source: Macro Advisory Partners 2018 Exports Imports
28Turkey - 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
1.95
• Turkey’s real GDP was up 7% in Q1
1.75
• FY GDP forecast at around 4% before -15%
TRY dropped in August
1.55
1.35
-18%
1.15
0.95
-42%
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
29Turkey – 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 exposure on debtors of around
1.10
DKK 300m
1.05
• ‘One-off’ currency loss in Finance items of 1.00
around DKK 114m incurred until 30 Aug: 0.95
-27%
0.90
• June: DKK 6m
• July: DKK 27m
• August 30: DKK 81m
30Turkish trade historically resilient in face of TRY depreciation
Turkey trading, indexed import/export ro-ro volumes, and exchange rate TRY/EUR
6.00 300
Crisis 4
Depreciation sparked
by conflict with USA
5.17
5.00 240 250
Crisis 2
Crisis 1 Global financial crisis
Banking led crisis
EUR/TRY depreciated 201
starting in Nov 2000 4.12
4.00 7% in 2008 and 13% 200
5.7% drop in GDP in in 2009 181
173
2001 170 168 184
161 161
150 152 151 153
EUR/TRY depreciated 3.34
3.00 162 150
91% in 2001 137 156 156
133 152 3.02
129 146 2.91
108 111 128 2.53
120 123
100 98 117 2.33 2.31
113 115
2.00 111 110 100
2.16
100 1.99
95 1.90
1.77 1.80 1.78 Crisis 3
1.69 1.67
75
Political unrest 2013-14
1.43
1.00 EUR/TRY depreciated 50
1.10
9% in 2013 and 15% in
2014
0.58
0.00 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
31
31 TRY/EUR Exports (in tonnes rebased to 100) Imports (in tonnes rebased to 100)Import ro-ro volumes exceed export volumes
EUR:TL vs. Export-Import Volume Specific to Ro-Ro
6,000,000 6.00
5.17
5,000,000 5.00
4.12
4,000,000 4.00
3.34
3,000,000 3.02 3.00
2.91
2.53
2.33 2.31
2.16
2,000,000 1.99 2.00
1.90
1.77 1.80 1.78
1.69 1.67
1.43
1.10
1,000,000 1.00
0.58
0 0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Exports (in tonnes) Imports (in tonnes) EUR:TL
32 Source: Drewry Shipping Consultants LTDTurkey – impact of TRY depreciation on trading
• Export volumes increased 17% Jan-May 2018
while import volumes were up 3% Turkey-Europe cargo split
0% 5% 10% 15% 20% 25% 30% 35%
• Currency depreciation is impacting import Parts
volumes – once TRY is stabilised imports are
expected to resume but likely at a lower level Auto industry
until domestic demand recovers
Textiles
• Export volume growth expected to mitigate
Materials
impact from imbalance/reduced import volumes
Machines
• Also mitigation from import of semi-
manufactured goods used as parts in Turkish Food
manufacturing plants – such imports comprise
Furniture, construction
more than 50% of import volumes carried on
materials
DFDS routes
Empty
• With the current visibility, EBITDA outlook
Exports Imports
unchanged based on the ‘early’ consolidation of
UNRR as of 7 June
Materials: Industrial, chemical, plastic, metal, glass, paper
33KEY FOCUS
AREAS
2018
.
34Key growth and efficiency events shaping 2018 & beyond
Growth from • Special Cargo: operator of flatbed trailers in Europe,
acquisitions consolidated 3 January 2018
• U.N. Ro-Ro: freight ferry routes connecting Europe and Turkey,
completed 7 June 2018
• Integration expected to be completed in 2018
• Financial flexibility maintained to pursue further opportunities
Growth from ferry new • 6 freight ferries (ro-ro), from early 2019
building orders • 2 combined freight and passenger ferries (ro-pax), from 2021
• 1 Channel ferry, 10-year bareboat charter, from 2021
Operational efficiency • Italian logistics activities restructured
• Boost projects for challenged logistics activities
• Corporate functions restructured
• Rosyth-Zeebrugge route closed
• Starlight: On board customer service and revenue project
Digital • Ongoing investment in digital customer solutions
• Realise long-term digital strategy
35Q&A
.
36APPENDICES
.
36
37North Sea
• Only freight ferry routes (ro-ro)
• High share of industrial customers
Sweden-UK/Continent
• Forwarders main customer group
UK-Continent
North Sea Invested
DKK m Revenue EBIT capital ROIC, %
Q2 LTM 2018 3,776 683 4,046 16.4
Q2 LTM 2017 3,546 576 4,222 13.4
Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY
Q2 LTM 2018 13,359 6.7% n.a. n.a.
Q2 LTM 2017 12,517
37
38Baltic Sea
• Freight ferry (ro-ro) and combined freight and passenger ferry routes (ro-pax)
• Forwarders main freight customer group
• Russia to a large degree ‘closed for business’ by sanctions
Baltic Sea Invested
DKK m Revenue EBIT capital ROIC, %
Q2 LTM 2018 1,478 376 1,195 31.4
Q2 LTM 2017 1,432 371 1,275 29.0
Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY
Q2 LTM 2018 4,567 3.5% 209 -1.4%
Q2 LTM 2017 4,414 212
38
39Channel
• Combined freight and passenger ferry routes (ro-pax)
• Forwarders main freight customer group
• Seasonal passenger market, Q3 high season
Channel Invested
DKK m Revenue EBIT capital ROIC, %
Q2 LTM 2018 2,755 382 1,930 19.7
2017* 2,683 353 1,956 18.0
Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY
Q2 LTM 2018 19,987 1.0% 3,865 1.6%
2017* 19,796 3,803
*Q 2 LTM 2017 n.a.available due to change in B U structure
39
40Mediterranean
Mediterranean Invested
• Freight ferry routes connecting Europe and DKK m Revenue EBIT capital ROIC, %
Q2 LTM 2018 251 34 1,539 2.2
Turkey (UNRR acquired 7 June 2018) 2017* 103 9 99 9.3
• Turkish forwarders and hauliers main Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY
customer group Q2 LTM 2018 522 127.9% n.a. n.a.
• Freight ferry route between France and 2017* 229 n.a.
Tunisia *Q 2 LTM 2017 n.a.available due to change in B U structure
40
41Passenger
• Cruise ferry routes, overnight crossings
• Seasonal passenger market, Q3 high season
• Increasing share of overseas passengers
• Also carries freight
Passenger Invested
DKK m Revenue EBIT capital ROIC, %
Q2 LTM 2018 1,707 132 638 20.2
Q2 LTM 2017 1,694 246 610 39.5
Lane metres, '000 ∆ vs LY Pax, '000 ∆ vs LY
Q2 LTM 2018 582 -5.5% 1,361 2.8%
Q2 LTM 2017 616 1,323
41
42KEY NORTHERN EUROPEAN FERRY COMPANIES • Logistics office/warehouse ― Container/sideport route 42 43
IT’S ALL
ABOUT THE
ROUTE
.
43
44FERRY ROUTE CAPACITY DYNAMICS
- stepwise addition of ferries on a route leverages capacity significantly
Minimum required
No. of ships Capacity impact
Route no. of ships for
on route today of entry*
entry
Dover-Calais 8 3 38%
Gothenburg-Immingham 3 2 67%
Fredericia- Copenhagen-
1 1 100%
Klaipeda ddddd
* Assuming entered ships are identical to incumbent ships and same no. of departures per ship
Freight Infrastructure
Ferry route
Port Port
terminal Bridge terminal
• Logistics office/warehouse
Road Road
― Container/sideport
Railroute Rail
Tunnel
44
45Freight ferry capacity (ro-ro) – total down, large ships growing
Global freight ferry (ro-ro) capacity per ship size, lane
• Freight ferry (ro-ro) capacity expected to LM '000 metres
decrease 2% in 2017 driven by smaller 1,000
CAGR: -2.4%
ships 800
600 2501-4000+
• CAGR of -2.4% in global LM capacity CAGR: +5.1%
500-2500
since 2009 due to: 400
• Consolidation of volumes around hubs
200 CAGR: -6.9%
• Increased utilization on large ships
• Large ships with lower unit costs replace 0
2009 2010 2011 2012 2013 2014 2015 2016 2017
smaller ships
• Ongoing scrapping of older and smaller Global no. of freight ferries (ro-ro) per ship size
ships No. of ships
500
CAGR: -5.1%
• Number of ships likewise declining as is 400
CAGR: +4.6%
availability of ferries for potential 300 2501-4000+
‘speculative’ entrants 200 500-2500
100 CAGR: -7.6%
• Order book consists primarily of orders 0
2009 2010 2011 2012 2013 2014 2015 2016 2017
from Cobelfret and DFDS
46
46Ferry capacity (ro-pax) – stable, large ships growing
Global ro-pax capacity per ship size, lane metres
• Ferry (ro-pax) capacity expected to LM '000
remain flat in 2017 as increase in 600 CAGR: -0.2%
capacity of large ships is balanced by 500
CAGR: +4.6%
decrease for smaller ships 400
2501-4000+
300
1000-2500
• CAGR of -0.8% in global LM capacity 200 CAGR: -1.8%
since 2009 due to: 100
• Same drivers as for freight ferries…
0
• …mitigated by a positive impact from ro- 2009 2015 2016 2017
pax ferries with large freight capacity
replacing traditional ferries aimed at Global no. of ferries (ro-pax) per ship size
No. of ships
passenger market 300 CAGR: -0.8%
250
CAGR: +4.8%
• Decline in number of ships exceeds 200
capacity decline due to growth of large 150 2501-4000+
ships 100
CAGR: -1.9% 1000-2500
50
• Order book consists primarily of orders 0
from Stena Line 2009 2015 2016 2017
47
47Orders for own routes set to maintain stable ferry market
• Trend towards larger ships set to Shipping Division: Fleet overview 2016
continue as ferry operators order ships Average
age of
for own route networks Ro-pax Passenger Ownership owned
Total ships Ro-ro ships ships ships share, % ships, yrs
• New build prices at low point Shipping Division 41 23 14 4 - -
North Sea 19 19 - - 68 12
Baltic Sea1 9 2 7 - 67 15
• DFDS requirements for 2018-2022 for Channel 6 - 6 - 67 14
Passenger 4 - - 4 100 27
ongoing renewal, efficiency and capacity France & Med1 3 2 1 - 33 20
growth to accommodate demand: 1
Includes VSAs (vessel sharing agreements) and SCAs (slot charter agreements)
• North Sea/Mediterranean: 6 ro-ros
• Baltic Sea: 2 ro-paxes Dry-cargo1 newbuilding price index
Index
• Channel: 1 day ferry ro-pax 225
• Passenger: decision on 4 ships for either
200
further life extension or purchase and
175
rebuild of secondhand ships (new builds a
possibility beyond 2022) 150
125
• Financing of freight ferries and ro-paxes
can be ownership or BB-charter 100
'88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16
48
48 Source: Clarksons Platou
1 Dry cargo includes containerships, multi purpose vessels, ro-ro and pure car carriersLogistics Division: Growing share of contract logistics
Activity Nordic Continent UK & Ireland
Door-door full & part • Scandinavia- • Continent- • Northern Ireland-UK
loads (trailers, UK/Baltics/Continent Scandinavia/ • Ireland/UK-Spain
containers & rail) UK/Ireland • UK domestic
Contract logistics • Automotive, • Automotive, Germany- • Temperature
Gothenburg UK, Belgium controlled, Scotland,
England
• Retail, Northern
Ireland
Paper shipping logistics • Norway-Continent/UK
49Logistics Division is a key customer of the route network
• Top 3 customer NORDIC
of Shipping
Division UK & IRELAND
• 8% of total
shipping
volumes
• 10-20%
volume target
on individual Logistics
routes CONTINENT
Division Invested
DKK m Revenue EBIT capital ROIC, %
Nordic
Q2 LTM 2018 1,984 87 362 23.8
Q2 LTM 2017 1,699 51 325 15.7
Continent
Q2 LTM 2018 2,287 79 417 14.4
Q2 LTM 2017 1,964 49 342 10.6
UK & Ireland
Q2 LTM 2018 1,208 34 387 7.3
Q2 LTM 2017 1,495 60 420 12.4
49
50
LTM as per Q3 2014HOW WE RUN
DFDS
.
50
513 key strategic demands and supporting initiatives
1. Top line focus 2. Increase 3. Acquisitions
efficiency and and investments
reduce cost base for future
growth
Continuous improvement projects M&A
IT systems development Fleet strategy
Digital
DFDS WAY 2.0
52Continuous improvement projects to increase efficiency • Pricing & yield: improve revenue growth through enhanced capacity utilisation on both freight and passenger routes • Starlight: improve on board experience and performance of the two cruise ferry routes • Carpe Momentum: completion of project to improve on board sales and spend per passenger on Channel routes • Italy profit improvement project, Logistics - COMPLETED 53
3 key strategic demands
3. Acquisitions
1. Top line focus 2. Increase
and investments
efficiency and
for future
reduce cost base
growth
Continuous improvement projects M&A
IT systems development Fleet strategy
Digital
DFDS WAY 2.0
54Our digital vision
A best-in-industry
digital
customer experience
generating tangible business benefits
for customers and DFDS
Support businesses to gain deep
insights into customers’
needs to catalyse business
change for sustained relevance
55Digital capabilities, new business models & technologies
• New digital and IT operating model
launched in 2017
• Time-to-market and scalability being
improved through architectural
changes
• Unified digital customer experience
platform to launch in Q2 2018
• User-experience, innovation and smart
data teams expanded
• Increasing assessment and
experimentation with new business
models and technologies
• Additional digital/IT cost of DKK 100m
expected in 2018 vs 2017
56Creating value from operational and strategic synergies
• Focus on both transformational and Revenue
bolt-on acquisitions 2017, Routes Regions Major activity
DKK bn
Across Northern Europe, Mediterranean
DFDS 14 27 9
(incl. sideport/container)
• Ferry routes: Stena Line 10 23 6 Across Northern Europe
• Expand European network P&O Ferries 8 8 3 UK-Continent
• Overlapping operations Tallink 7 6 1 Baltic Sea North
• Tonnage flexibility Cobelfret 4 7 4 Benelux-UK, Sweden-Belgium
Color Line 4 4 1 Norway-DK/Germany
• Leverage operating model Viking Line 4 3 1 Baltic Sea North
Finnlines 4 8 7 Finland-Continent/UK, Baltic Sea South
Scandlines 4 2 1 Denmark-Germany
• Transport & logistics: Brittany Ferries 3 7 3 UK-France/Spain
• Expand and connect European network ICG 2 4 1 Ireland-UK/Continent
Transfennica n.a. 3 6 Finland-Continent/UK
• Increased value-added services
Eckerö 2 3 1 Baltic Sea North
• Leverage operating model Seatruck n.a. 3 1 Ireland-UK
TT-Line 1 2 1 Sweden-Germany/Poland
Polferries n.a. 2 1 Poland-Sweden
• Transactions 2016-18: Unity Line n.a. 2 1 Poland-Sweden
• Hanko-Paldiski route
• Shetland Transport
• Italcargo
• Alphatrans
• U.N. Ro-Ro
57
57HOW WE
PERFORM
.
57
58ROIC Drive – activity by activity performance benchmark
• Around 90 profit-generating
activities covered by programme
• Simple ROIC scorecard makes
programme accessible for activity Activities performing
managers above 10%
• 3-year high-level rolling business
plans, review meetings with top
management 10% ROIC Activities performing
around 10%
• Internal performance ranking and
benchmarking
• Threshold rate of 10% for Activities performing
investments, including acquisitions below 10%
Key focus areas for ROIC meetings,
business plans, benchmarking
and structural solutions
59
59Steady ROIC improvement
DFDS Group: Return on invested capital (LTM)
%
• Major challenges resolved:
20 19.0
• Gothenburg-Immingham 18.1
19.3
17.8
18
• Russian market sanctions 18.1
17.4 17.6 16.9
• Channel turnaround 16 16.4
15.3
• Closure of 3 routes end 2014 14
13.7
• Successful transition to new
Sulphur rules 12 12.6
10
10.3
• Continuous improvement 9.0
projects, > 3 every year 8 8.0
7.9
7.1
6
5.8
• ROIC Drive programme 5.8
4.5 4.7
4
4.5 4.4
• Tailwind from moderate pick- 2
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
up in EU growth since 2011 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16 16 16 17 17 17 17 18 18
60
60Capital distribution
Capital distribution overview
• Total distribution to shareholders was
DKK m 2015 2016 2017
DKK 1.7bn in 2017 equal to 9.2% yield on
Actual Actual Actual
equity market value
Dividend per share, DKK 5.40 6.00 10.00
• The NIBD/EBITDA multiple was 0.9 at the end
Dividend, Mar 218 175 168
of 2017, on level with 2016
Dividend, Aug 108 174 387
Total dividend* 326 349 555
2018
Buyback, auction - 400 478
• Dividend of DKK 4.00 paid in March Buybacks, other 401 514 628
Total share buybacks 401 914 1,106
• Planned dividend in August suspended
Total distribution 727 1,263 1,661
• Share buyback launched in February Dividends exclude treasury shares
cancelled
• Board will reassess capital structure in
February 2019 and hence capital distribution
61Cash generation and CAPEX
• Cash conversion of 99% in 2017
Cash flow and investments
DKK bn
• Cash flow boosted by Light Capital project
started in 2013 to reduce working capital 3.0
• Limited tax payments due to European 2.5
tonnage tax regime
2.0
• Investments expected to stay below operating
cash flow for next cycle of asset investments 1.5
• Planned major CAPEX: 1.0
• 2018, outlook of DKK 5.0bn:
• DKK 500m: dockings/ship 0.5
upgrades/lengthenings
• DKK 150m: port terminals 0.0
• DKK 500m: new buildings 2013 2014 2015 2016 2017
• DKK 150m: logistics equipment
• DKK 100m: IT-systems and other
Operating cash flow after tax (FCFF) Investments
• DKK 3.6bn: U.N. Ro-Ro equity value
• 2019: delivery of 2 freight new buildings
• 2020: delivery of 4 freight new buildings
62
62delivery of 2 ro-pax new buildings
• 2021:ACQUISITIONS FUEL GROWTH DFDS GROUP Q2 2018 16 August 2018
Acquistions fuel growth and earnings in Q2
• UNRR consolidated from 7 June Q2 EBITDA before special items
with revenue of DKK 141m and DKK m
EBITDA of DKK 50m
2018 802
• DFDS Group revenue up 6% and
EBITDA up 9% to DKK 802m 2017 739
• EBITDA outlook for full-year 2018
2016 699
unchanged at DKK 3.0-3.2bn
• Financial leverage increased 2015 551
following acquisition, NIBD/EBITDA
at 2.4 on pro forma basis, reported 2014 403
2.9
0 200 400 600 800
64
64A bit more headwind than tailwind in Q2
• Bunker price up 47% in Q2 mitigated Oil price development, 2017-18
by 8% lower USD 700
650
• Lag of 1-2 months in recovery of
600
bunker price increase impacted Q2
negatively, also in Logistics 550
500
• Total EBITDA impact of DKK -40m
USD
450
• SEK down 6% y/y, main driver of 400
DKK -8m currency EBITDA impact 350
• Some disruption of tourism/holiday 300
patterns from soccer world cup 250
200
• European economies continued to
grow despite some political turmoil
0,1% LSMGO, USD 3,5% IFO 380, USD
65
65Q2 2018 numbers: Impact from UNRR acquisition
Change Change
• 6% revenue growth driven by UNRR and DKK m Q2 18 Q2 17 vs LY %
continued growth in freight volumes. Revenue REVENUE 3,894 3,688 206 6%
up 4% on a like-for-like basis EBITDA BEFORE SI 802 739 63 9%
margin, % 20.6 20.0 0.6 n.a.
• EBITDA up 9% to DKK 802m driven by UNRR P/L associates 1 0 1 n.a.
and continued growth in Logistics Gain/loss asset sales 3 1 2 n.a.
Depreciations -272 -237 -35 -15%
EBIT BEFORE SI 533 502 31 6%
• Depreciation increase of DKK 35m mainly due
margin, % 13.7 13.6 0.1 n.a.
to acquisitions and IT/digital
Special items -63 3 -67 n.a.
EBIT 470 506 -36 -7%
• Special items of DKK -63m include DKK -47m
Finance -39 -7 -32 -439%
related to UNRR acquisition PBT BEFORE SI 494 495 -1 0%
PBT 431 498 -67 -14%
• Profit before special items and tax was flat
EMPLOYEES avg., no. 7,483 7,145 338 5%
at DKK 494m
INVESTED CAPITAL 16,327 9,177 7,150 78%
ROIC LTM ex. SI, % 16.9 18.1 -1.2 n.a.
• ROIC before special items at 16.9% and 13.0%
NIBD 8,256 2,774 5,482 198%
on a FY pro forma basis
NIBD/EBITDA, times 2.9 1.0 1.9 n.a.
SOLVENCY, % 37 49 -12 n.a.
66
SI: Special items. PBT: Profit before tax. NIBD: Net interest-bearing debt.Mediterranean and Passenger key Q2 EBIT drivers
• North Sea +8m: Continued volume growth,
offset from lag in bunker cost recovery Q2 2018 DFDS Group EBIT development vs LY
DKK m
540
• Channel +1m: Positive route contribution
offset by extra ferry maintenance costs and
lag in bunker cost recovery 530
9
• Mediterranean +22m: Addition of UNRR
22 5
-2
520
• Passenger -30m: Cost increases in bunker and -30
9
ferry maintenance, adverse impact from
change in overseas booking agent behavior 510 1 533
and some weakness in Norwegian sales 8
0 9
• Nordic +9m: Continued good result from 500
contract logistics activities, offset from lag in 502
recovery of higher haulage costs
490
• Continent +5m: Continued good trading,
offset from lag in recovery of higher haulage
costs. Addition of Special Cargo
67
67Channel sailings reduced in Q2, DFDS level with 2017
Channel sailings 2017-2018
• In Q2 2018, the total number 1,800 3,500
of sailings was 1.7% below
2017 1,600
3,000
1,400
• P&O had 3.7% fewer sailings
due to a laid-up ferry that 2,500
1,200
was grounded in Dec 2017
and subsequent dockings of 1,000
2,000
other ferries after the
grounded ferry was returned 800
1,500
to service
600
• DFDS’ sailings were on level 1,000
with Q2 2017 400
500
200
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Total P&O DFDS
68
68Channel volumes: Freight down, pax up
Channel freight volume growth YOY, 2017-2018
• Freight market volumes were down 1.2% 10%
8%
in Q2 2018 and down 1.6% for H1 6%
4%
• The YOY growth per rolling full-year was 2%
-1.0% after June 0%
-2%
• Negative impact from lower ferry capacity -4%
-6%
-8%
• DFDS’ volumes were up 3.5% in Q2 and -10%
3.1% in H1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
YoY growth per month YoY growth per rolling year
Channel car volume growth YOY, 2017-2018
• Car market volumes were up 0.7% in Q2 25%
2018 and up 2.9% for H1 20%
15%
10%
• The YOY growth per rolling full-year was 5%
2.3% after March 0%
-5%
• DFDS’ volumes were up 1.9% in Q2 and -10%
-15%
6.3% in H1
-20%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
69
69
YoY growth per month YoY growth per rolling yearDFDS further increased market share in Q2
Channel freight market shares, 2017-2018
• DFDS’ freight market share was 29.4% in 43%
Q2 2018 up from 28.1 in 2017 41%
39%
• P&O’s freight market share was 30.4% in Q2 37%
2018 down from 33.0% in 2017. Decrease 35%
equals a 9% volume reduction
33%
31%
29%
27%
25%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
P&O DFDS Eurotunnel
Channel car market shares, 2017-2018
• DFDS’ car market share was 22.1% in Q2
2018 up from 21.9 in 2017 60%
50%
• P&O’s freight market share was 22.5% in Q2
2018 down from 23.0% in 2017 40%
30%
20%
70
70 10%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
P&O DFDS EurotunnelCapital structure in line with target leverage
• NIBD/EBITDA at 2.9 end of Q2 and 2.4 on pro NIBD/EBITDA
forma basis
3.5
• Share issue with proceeds of DKK 1.0bn 3.0
completed in June 2018 2.9
2.5
• Interest-bearing debt increased to DKK 9.5bn 2.4
Times
2.0
• Board will in February 2019 review capital
1.5
structure and distribution
1.0
0.9 0.9
0.5
0.0
2016 2017 LTM Q2 2018 LTM Q2 2018
pro forma
basis
71EBITDA outlook 2018 unchanged at DKK 3.0-3.2bn
• European real GDP growth above 2%
expected in 2018 OUTLOOK 2018
• Some slowdown in UK market but • Revenue growth of around 10%
demand for ferry and logistics services is
robust • EBITDA range of
DKK 3,000-3,200m
• Development of digital and IT
• Shipping Division: DKK 2,825-2,975m
capabilities progressing as planned
• Logistics Division: DKK 275-325m
• Investments forecast at DKK 5.0bn down
• Non-allocated items: DKK -100m
DKK 200m from previously as U.N. Ro-
Ro’s equity value was lower than
• Investments of DKK 5.0bn
expected
• Outlook is associated with a higher level
of uncertainty than usual due to the
recent sharp depreciation of TRY
72Priorities 2018 • Integration of U.N. Ro-Ro • Realise our next steps in digital strategy • Customer satisfaction – grow the topline • Continue push for efficiency improvements • Improve performance of Passenger business unit • Preparing for deployment beginning 2019 of two freight new buildings (ro-ro) • Pursue value-creating M&A 73
Q&A
.
74Diverse customer base: forwarders, manufacturers &
passengers
Passengers
21%
Forwarders
36%
Port terminal customers
3%
PAX
SOLUTIONS External charterers
3%
Manufacturers
(shipping)
5%
TRAILER
SHIPPING
Manufacturers
(transport & logistics)
32%
Percent of total revenue per customer
segment
75
75DFDS’ freight business model integrates routes and logistics
• DFDS’ logistics activities Manufacturers
have a narrow scope of
full/part load solutions Heavy Other Consumer
industrial goods industrial goods goods
• Own logistics provides
access to market
intelligence and ability to
DFDS Freight forwarders
allot volumes between
own and external routes
Shipping Full/part load Global providers: DHL, DSV, K&N,
for capacity optimisation logistics solutions Schenker, etc.
solutions for focused on own
• Around 20% of routes’ heavy goods, route network Regional providers: NTEX, Ewals,
primarily out of corridors LKW Walther, Vlantana
freight revenue from own
Scandinavia
shipping logistics and
full/part load solutions
DFDS ferry route infrastructure
Mediter
Baltic Sea North Sea N North Sea S Channel
ranean
76DFDS fleet overview and key figures 2017
Average age
Passenger Container and Ownership of owned
Total ships Ro-ro ships Ro-pax ships ships sideport ships share, % ships, yrs
DFDS Group 64 22 18 4 20 - -
Shipping Division 40 22 14 4 - - -
North Sea 18 18 - - - 72 13
Baltic Sea1 9 2 7 - - 67 16
Channel 6 - 6 - - 100 15
Passenger 4 - - 4 - 100 28
France & Mediterranean1 3 2 1 - - 33 17
Logistics Division1 20 - - - 20 - -
Nordic1 6 - - - 6 33 19
Continent1 14 - - - 14 0 -
Chartered out ships 3 - 3 - - 100 23
Laid-up ships 1 - 1 - - 0 -
1 Includes VSAs (vessel sharing agreements) and SCAs (slot charter agreements)
77
77You can also read
