q1 2005 analyst meeting, 25 may 2005. to change the header information go to: view > header &...
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Q1 2005Analyst meeting, 25 May 2005
DFDS Q1 2005 2
Contents
• The quarter in brief
• DFDS Seaways
• DFDS Tor Line
• The quarter in figures
• Profit forecast 2005
DFDS Q1 2005 3
Financial performance, 1st quarter 2005
o Revenue rose by 9%
o Operating profit (EBITA) and pre-tax profit are on a par with the same period last year
o Considerable rise in invested capital following the addition of five new ro-ro vessels
DFDS GROUP
DKK million 1Q04 1Q05change,
% 2004
Revenue 1.198 1.302 9 5.723
Operating profit (EBITA) -46 -49 -7 376
Operating profit margin, % -3,8 -3,8 - 6,6
Pre-tax profit -93 -96 -3 201
Average invested capital 5.530 6.519 18 6.034
Return on invested capital (ROIC), % -3,4 -3,0 - 5,8
DFDS Q1 2005 4
Benchmarking
Average age own fleet, 2004
0
5
10
15
20
25
30
Nor
folk
line
Uni
ty L
ine
DF
DS
Tor
Lin
e
Brit
tany
Fer
ries
Birk
a
ICG
Fin
nlin
es
Cob
elfr
et
PO
Fer
ries
Tallin
k
Sca
ndlin
es
Ste
na L
ine
Sea
Fra
nce
Vik
ing
Line
Silja
Fjo
rd L
ine
Col
or L
ine
DF
DS
Sea
way
s
Pol
ferr
ies
Eck
erö
no. of years
DFDS Seaways on a level with
most comparable companies
DFDS Tor Line lower average
than comparable companies
DFDS Q1 2005 5
Ownership share of fleet, 2004
0
10
20
30
40
50
60
70
80
90
100
Tran
sfen
nica
Finnlin
es
Norfo
lkline IC
G
Unity
Line
DFDS Tor
Line
PO F
errie
s
Scand
lines
Cobelf
ret
Britta
ny F
errie
s
Fjord
Line
DFDS Sea
ways
Tallin
k
Stena
Line Silja
Polfer
ries
Birka
SeaFra
nce
Viking
Line
Color L
ine
%
Benchmarking
DFDS Q1 2005 6
DFDS Seaways
DFDS Q1 2005 7
DFDS Seaways - Market development
Positive reception for the upgrading of the Oslo ferry
Generally stable market development, particularly in Scandinavia
High level of competition due to an increasing range of short-break destinations
Changes in duties on land, e.g. in the Netherlands, have influenced on-board sales
Introduction of new vessels and consequently greater capacity in Norway primarily
aimed at the German market
DFDS Q1 2005 8
DFDS Seaways - Financial performance
DFDS Seaways - no. of passengers, '000 (continuing routes)
0
100
200
300
400
500
600
700
1Q 2Q 3Q 4Q
2003 2004 2005
DFDS Q1 2005 9
DFDS Seaways - Financial performance
o Revenues negatively affected by fewer departures due to upgrading, and by alterations in Dutch tobacco duties
o 26% growth in passenger numbers per departure on Oslo route. Upgrading and early Easter helped progress
o The booking situation for the rest of the year is on a par with last year
DFDS SEAWAYS
DKK million 1Q04 1Q05change,
% 2004
Revenue 336 319 -5 1.934
Operating profit (EBITA) -100 -93 7 119
Operating profit margin, % -29,8 -29,2 - 6,2
Average invested capital 1.606 1.535 -4 1.572
Return on invested capital (ROIC), % -24,9 -24,2 - 7,0
Passengers, '000 297 301 1 1.693
DFDS Q1 2005 10
Upgrading welcomed by customers
Customer surveys on Copenhagen-Oslo route revealed that:
The surveys were taken in the period immediately prior to the upgrading, and in each of
the first 10 weeks after the upgrading
90 percent of passengers said they will probably travel with DFDS Seaways again!
84 percentof passengers stated that they were satisfied or very satisfied with their trip with DFDS Seaways!
DFDS Q1 2005 11
On-board sales undergoing transformation
Changes in duties ashore have created new conditions for on-board sales
Restructuring from mainly tax-free to more conventional shopping
The process of improving retail skills is ongoing
Continued major potential for shopping as part of income base
DFDS Q1 2005 12
New concepts – Sea Shops
• New, brighter interior with more open areas
• Retention of traditional tax-free and shop-in-shop concept
• New product range
Renovated shops Theme shops New products
DFDS Q1 2005 13
Examples of new products
Jack & Stella products
PILGRIM jewellery
MontBlanc
Up-market watches
Toys – bestsellers / season
Sun-glasses
Ver de Terre – RTW for children (outdoor)
Ski RTW – accessories
Gastronomic specialities
International tourist souvenirs & gift articles
DFDS Q1 2005 14
Examples of new products
• More local products and customised themes introduced on non-tax-free routes
• More seasonal variation, special offers and adaptation to varying customer
segments in the course of the year, e.g. ”incoming” guests
• Performance of existing product groups tested on an ongoing basis
DFDS Q1 2005 15
Examples of other measures
Logistics optimisation, business intelligence and retail skills
Clearer communication of savings and advantages:
• Best Buys
• Shopping lists
• Signage on board and in shops
• TV on board
• Etc.
DFDS Q1 2005 16
DFDS Tor Line
DFDS Q1 2005 17
DFDS Tor Line - Market development
Market in North Sea region was stable, with positive developments in areas
affected by the new German road tax
Growth supported by good progress in Scandinavia, while UK is more subdued -
continued lack of balance in east/west traffic
East/west traffic in the Baltic region remains affected by over-capacity in the land
transport sector - the overall market is however growing
Bad weather in the 1st quarter caused some disruption of operations
DFDS Q1 2005 18
DFDS Tor Line - Financial performance
DFDS Tor Line - lane metres, '000
0
500
1.000
1.500
2.000
2.500
3.000
1Q 2Q 3Q 4Q
2003 2004 2005
DFDS Q1 2005 19
DFDS Tor Line - Financial performance
o Revenue positively affected by the purchase of Swedish transport activities, increased activity on North Sea routes and Lys-Line, and the DFDS Nordic Terminal
o Co-operation agreement with MACS increased volumes between UK and Benelux in the 1st quarter
o First quarter for BelgoBridge was hit by operational difficulties, resulting in a high level of costs
o Bad weather increased the general level of costs
DFDS TOR LINE
DKK million 1Q04 1Q05change,
% 2004
Revenue 869 988 14 3.815
Operating profit (EBITA) 64 58 -9 304
Operating profit margin, % 7,4 5,9 - 8,0
Average invested capital 3.982 5.063 27 4.527
Return on invested capital (ROIC), % 6,4 4,6 - 6,2
Lane metres, '000 2.445 2.527 3 9.920
DFDS Q1 2005 20
New EU member nations influencing the transport market
DFDS Q1 2005 21
Open borders, less waiting time, increased capacity by 30%
Open borders reduced waiting time and released 30% more trucking capacity – at no cost. (Source: LKW Walter)
30% MORECAPACITYIN TRUCKINGBECOMESAVAILABLE
01 May 2004
DFDS Q1 2005 22
Rates under pressure in several areas
German LKW Maut cost increase 01 Jan. 2005 is more than neutralizedthrough trucking cost reductions
Polish drivers are engaged in UKwhere driver shortages exist
“NEW EU” trucks engaged in wider area –Polish drivers now covering Intra-EU alsofrom Spain
More is invested in “New EU” and deployed in Western Europe on top of the previously released truckingcapacity.
1,000 km rate drops Euro 200compared to < 1 year ago.~ 20% down?
DFDS Q1 2005 23
1st quarter 2005 in figures
DFDS Q1 2005 24
Revenue rose by 9% to DKK 1,302 m.
0
200
400
600
800
1.000
1.200
1.400
DFDS Seaw ays DFDS Tor Line DFDS Group
DK
K m
ill.
1Q03 1Q04 1Q05
DFDS Q1 2005 25
Costs and EBITDA development
• Bad weather in the 1st
quarter increased vessels'
operating costs for DFDS Tor
Line
• Operational difficulties
increased costs for the new
BelgoBridge route
• Training expenses rose for
DFDS Seaways in
association with upgradings
DFDS GROUP
DKK million 1Q04 1Q05
Revenue 1.198 1.302
Ships' operating costs 636 698in % of revenue 53 54Charter costs 122 131in % of revenue 10 10Staff costs 280 314in % of revenue 23 24Other costs 89 97in % of revenue 7 7
Operating profit before depreciations (EBITDA) 72 62EBITDA-margin, % 6,0 4,8
DFDS Q1 2005 26
Depreciation and EBITA development
• DKK 7 mill. profit on the
sales of two multi-purpose
vessels in LISCO
• Slightly lower level of
depreciation for ships
DFDS GROUP
DKK million 1Q04 1Q05
Operating profit before depreciations (EBITDA) 72 62
Profit/loss on sale of ships, buildings and terminals1 7
Depreciations, ships 99 101in % of revenue 8,3 7,8Write-down ships - -in % of revenue - -Depreciations, other assets 20 17in % of revenue 2 1
Operating profit (EBITA) -46 -49EBITA-margin, % -3,9 -3,8
DFDS Q1 2005 27
EBITA on a par with last year
-130
-110
-90
-70
-50
-30
-10
10
30
50
70
90
DFDS Seaw ays DFDS Tor Line Non allocated items DFDS Group
DK
K m
ill.
1Q03 1Q04 1Q05
DFDS Q1 2005 28
Financing, tax and profits for the year
• The cost of financing
remained on a par with last
year despite a 23% rise in
the average net interest-
bearing debt
DFDS GROUP
DKK million 1Q04 1Q05
Operating profit (EBITA) -46 -49
Goodwill/badwill, net 0 0in % of revenue 0 0Financing, net -47 -48in % of revenue -3,9 -3,6
Pre-tax profit -93 -96
Tax 2 -1in % of pre-tax profit -2 1
Profit before minority interests -91 -97
DFDS Q1 2005 29
Rate of turnover, invested capital
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
1Q03 1Q04 1Q05
DK
K m
ill.
0,0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1,0
Tim
es
Revenue Average invested capital
Turnover rate invested capital, times
DFDS Q1 2005 30
Newbuilding no. 5 delivered at the beginning of 2005
-350
-300
-250
-200
-150
-100
-50
0
50
100
1Q04 1Q05
DK
K m
ill.
Cash f low from operations before investments Net investments Free cash f low
DFDS Q1 2005 31
Stronger equity ratio expected for the whole year
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
1Q03 1Q04 1Q05
DK
K m
ill.
0
5
10
15
20
25
30
35
40
%
Net interest-bearing debt Equity ratio
DFDS Q1 2005 32
Transition to IFRS, 1st quarter 2005
Change of comparative figures in connection with transition to IFRS
Profit Balance sheet 1 January 2004 Balance sheet 31 March 2004
DKK mill. 1Q 2004 Assets Liabilities Equity Assets Liabilities Equity
Present accounting policies (95) 6.999 4.471 2.528 7.294 4.892 2.402
Adjustments:
Goodwill/negative goodwill 1 33 - 33 34 - 34
Docking costs 7 25 - 25 32 - 32
Share-based payment (6) - 6 (6) - 8 (8) Defined benefit schemes (1) - 82 (57) (2) 82 (59)
Tax effect - - (25) - - (25) -
Minority interest - - (165) 165 - (167) 167
Total adjustments 1 58 (102) 160 64 (102) 166
New accounting policies (IFRS) (94) 7.057 4.369 2.688 7.358 4.790 2.568
DFDS Q1 2005 33
Profit forecast 2005
Revenue will increase by around 6-8% on the basis of growth in both divisions
Net investments of around DKK 500 m.:
o DKK 300 m. in connection with the fifth and sixth new ro-ro ships
o DKK 100 m. in connection with the upgrading of cruise ferry ships
Hedging:
o A significant proportion of the expected oil consumption for the remainder of the year is hedged via price regulation agreements and financial contracts
o The majority of the cash flows denominated in USD are hedged
o Currency risks are overall very limited in 2005
DFDS Q1 2005 34
Profit forecast 2005
DFDS Seaways' operating profit (EBITA) is expected to rise by around 10-15%
DFDS Tor Line's operating profit (EBITA) is expected to rise by around 5-10%
A small rise is expected in non-allocated costs
For the DFDS Group, pre-tax profits are expected to be approximately DKK 225 m.
The profit forecast has been calculated pursuant to IFRS rules. Calculated in the same manner, profits before tax for 2004 were DKK 201 m.
DFDS Q1 2005 35
DFDS Q1 2005