Analyst and investor call - 25 March 2020 - HHLA
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Analyst and investor call
25 March 2020
© Hamburger Haf en und Logistik AG
Financial highlights 2019 of Port Logistics subgroup
Revenue EBIT EBIT margin
€ 1,350.0 million € 204.4 million 15.1 %
+ 7.3 % + 8.5 %* + 0.1 pp
Profit after tax
ROCE Operating cash flow
and minorities
11.1 % € 303.0 million
€ 93.6 million
- 4.4 pp + 41.1 %
- 9.0 %
* Mainly due to first time application of IFRS 16
25.03.2020 Analyst and investor call 2
© Hamburger Haf en und Logistik AG
The new circumstances as of today
Economy Pandemic
Economic researchers are only just beginning to assess the Containment in China, further spread of the virus in other
possible effects of the pandemic leading economies
▪ Unlike in other crises all leading economic nations are simultaneously ▪ Economic life will temporarily slow-down significantly in
affected by a supply and demand shock Europe and North America
▪ In the worst case scenario by OECD, global growth could decline by ▪ Peak of infections in developed countries should be reached
1.5 %, IfW even forecasts a 4.5 % – 9.0 % drop in German GDP
within the next few weeks
▪ Sharp declines in first half, recovery in second half 2020
▪ Afterwards, containment should be successful
Core business Efficiency measures
Both main segments will be affected due to focus on sea Urgency for further improvements obvious
containers ▪ Decrease opex by
▪ Temporary further reduction in business activity − Optimisation of internal organization
▪ Availability for customer demand needs to be maintained − Review depth of management levels
▪ Opex cannot be decreased accordingly due to inter alia − Accelerate automation
need for restacking of exuberant containers in the yards
− Digitally support as many processes as reasonable
25.03.2020 Analyst and investor call 3
© Hamburger Haf en und Logistik AGFirst estimates of potential economic effects by OECD und Drewry
OECD: 02 March 2020; Drewry: 27 February 2020
25.03.2020 Analyst and investor call 4
© Hamburger Haf en und Logistik AGMore recent studies draw an even gloomier picture
BDI: „Completely powerless growth in Germany in Institute for the World Economy (IfW Kiel) (as of 19
2020” (as of 05 March 2020) March 2020)
The global economic effects of the spread of the novel coronavirus are Compared to the spring forecast of the Kiel Institute a week ago, the
slowly becoming apparent. Health policy measures are having an economic situation has worsened dramatically weighing heavily on
impact on economic activity, particularly in industry. Consumer economic prospects. The Kiel Institute has therefore updated its
behaviour is also severely affected in some sectors and countries. The economic outlook based on two scenarios: A six-week lockdown (V-
global economy is experiencing both a moderately negative decline in shape scenario) and a three months longer lockdown (U-shape
supply and a similar decline in demand. scenario).
Even if the health situation now stabilizes in China and is quickly In both scenarios the slump in GDP is considerable ranging from
brought under control in the rest of the world, the economic 4.5 to 9 percent for the current year, followed by a strong rebound
consequences of temporary interruptions in production and transport next year.
are becoming apparent, particularly in China and other parts of the Due to the global burden on the economy, both scenarios do not
world. With China accounting for a good 20 percent of world industrial assume any significant catch-up effects in the further course of the
production, massive disruptions in the country will have an impact on year, although free capacities - especially in the manufacturing sector -
the rest of the world beyond the first quarter. The Chinese measures would be available for this purpose.
against the virus will also have negative economic effects as a sales In 2021, GDP increases strongly due to the recovery in both scenarios.
market in the automotive trade, tourism and many other sectors. In the V-shape scenario by 7.2 percent, and by 10.9 percent in the U-
The consequences are already serious. In all probability, this year shape scenario.
will not see a global economic recovery, but a slowdown in
growth.
25.03.2020 Analyst and investor call 5
© Hamburger Haf en und Logistik AGRapid developments
Drewry‘s baseline scenario has come true
25.03.2020 Analyst and investor call 6
© Hamburger Haf en und Logistik AGCurrent situation at HHLA
Corona has taken hold of economic life
Container segment Intermodal segment
Yards are full, but with decreasing tendency Significant effects in current business
▪ Up to date no infections amongst employees known ▪ Up to date no infections amongst Metrans employees known
▪ Various storm conditions have lead to ship delays ▪ A state of emergency was declared in many (Eastern)
independent from corona European countries
▪ Increased number of blank sailings after extended Chinese ▪ Metrans customers affected by lack of employees
New Year, leading to a lower number of vessels which in ▪ Limited production as well as import and export activities
turn are better loaded
▪ Decrease in transport activities due to
▪ Decrease of container throughput due to
− Production stops (formerly in China, now in Europe)
− Production stops (formerly in China, now in Europe)
− Decreasing number of imports from outside Europe, both,
− Normalisation of yard utilisation via sea and land bound transport modes
− Decreasing number of imports from outside Europe − Decreasing demand due to paralysed public life
− Decreasing demand due to paralysed public life ▪ Metrans is fully operational to serve demand from customers
▪ Container terminals are operational
25.03.2020 Analyst and investor call 7
© Hamburger Haf en und Logistik AGMeasures implemented since 01 March 2020
Consistently implement the measures necessary to steer through these challenging times
To protect employees To keep up business activity To counteract effects
Responsibility for health and safety Secure readiness for customer demand Reasonable use of resources
▪ Permanent corona working group ▪ Ensure work ability by prioritising processes ▪ Make efficient use of financial resources,
▪ Ongoing information on developments, ▪ Contingency plans for all operations e.g. review distribution of dividends
safety measures hygienic instructions ▪ Intense communication with customers and ▪ Review and where economically reasonable
▪ Home office for all employees where this is proactive anticipation of customer needs postpone investments to ensure liquidity
possible ▪ Establishment of processes and technical ▪ Intensify efficiency measures
▪ Separation of personnel in small groups with means to enable decentralised work ▪ Decrease engagement of temporary
no interaction ▪ Minimise work disruptions by measures to workers
▪ Minimisation of contacts amongst protect employees ▪ Review and where necessary apply for
employees ▪ Develop post-corona ramp-up plans public supportive measures:
▪ Cancelling of participation in large meetings, − Short-time compensation
conferences, trade fairs and other − Liquidity support
gatherings
▪ Prepare for resumption of normal business
▪ Adoption of all measures imposed by
authorities
▪ Avoidance of public transport, support for
individual way to work place
25.03.2020 Analyst and investor call 8
© Hamburger Haf en und Logistik AGFinancial stability with focus on cash flows
Port logistics subgroup
Net debt ▪ Financial funds as of 31
in € million 1,395.0 December 2019: € 227.6 m
▪ Dividend policy to strengthen
496,3
financial stability:
▪ Reduction of dividend
proposal to 0.70 € per A-
706.5 Pension provisions share (previous year: 0.80
631.6 636.1 Lease obligations
576.3 €)
617,4 Net financial debt
25.03.2020
442,1 ▪ Pay-out ratio 52%
409,2 453,5
442,1 3,9 ▪ Accumulation of ~ € 45 m of
2019 net profit
222,4 264,4 281,3
182,6
2,4 2,4 134,2
2,1
2,4 ▪ Scalable investments
2015 2016 2017 2018 2019 ▪ Focus on cash-flow control in
the weeks to come
25.03.2020 Analyst and investor call 9
© Hamburger Haf en und Logistik AGEver-changing environment
Different scenarios depending on ever-changing variables
World global growth scenarios
*Weighted average of US, EA, China and Japan. Source: Deutsche Bank
25.03.2020 Analyst and investor call 10
© Hamburger Haf en und Logistik AGFirst signs suggest that the situation in China is returning to normal
Ship calls in the ports of Shanghai and Yangshan
440
▪ HHLA has transparency on ship
420 movements in China
▪ In 2020, in the context of Chinese New
400
Year, a significant decline compared to
380 2019
▪ Return to previous year's level discernible
360
since week 8
340 ▪ Industry slowly resuming production
▪ Truck drivers return
320
▪ HHLA is in constant exchange with
300 Chinese partners to be able to forecast
further developments
280
260
CW 1 CW 2 CW 3 CW 4 CW 5 CW 6 CW 7 CW 8 CW 9 CW 10
Quelle: Lloy d‘s List, 12.März 2020 2019 2020
25.03.2020 Analyst and investor call 11
© Hamburger Haf en und Logistik AGOutlook 2020
Very high degree of uncertainty
Strong decrease in container throughput and container
transport
Strong decline in revenue and operating profit (EBIT)
HHLA will adapt capex to the current market environment
€
Liquidity sufficient to meet due payment obligations at all
times, despite the pandemic-induced burdens.
25.03.2020 Analyst and investor call 12
© Hamburger Haf en und Logistik AGQ&A
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