Interim report Q3 2014 CEO Daniel Skjeldam CFO Erik Hansen 6 November 2014
Agenda Highlights and Key Figures Operational & Financial review Outlook Q&A 2
Highlights and key figures
NOK 77 million pre tax profit improvement in Q3 2014 important for delivering profit in 2014 Pre-tax profit of NOK 269 million Improvement of NOK 77 million compared to Q3 2013 In line with expectations Continuous improved results from Q3 2013 as a result of a completely turn around of the company with long term effect EBITDA* of NOK 406 million Improvement of NOK 59 million compared to Q3 2013 Improved results from all products with Norwegian Coast as the main contributor in Q3 2014 Gross ticket revenue increase of 16% compared to Q3 2013 mainly driven by Norwegian Coast Costs are under control, and increase is explained by higher volume and new regulations related to pay roll tax 4 * Excluding gains/losses
EBITDA improvement five quarters in a row Turn around of the company necessary and with positive result EBITDA improvement five quarters in a row, reflects a commercialized and more cost effective company 5
Result improvement in Q3 2014 driven by Norwegian Coast (NOK 1 000) Q3 2013 Q3 2014 EBITDA ex gains and losses 346 955 405 877 EBIT 249 090 309 978 Net profit (loss) before tax 192 243 269 224 Earning per share 0,46 0,64 300 Bridge result before tax Q3 2013 to Q3 2014 Hurtigruten group 250 3 1 1 0 2 15 0 1 54 200 150 269 100 192 50 0 Result Q3 2013 Increased EBITDA Norwegian coast Increased EBITDA Explorer Increased EBITDA Spitsbergen Increased EBITDA Other business Unchanged other losses/gains Reduced Reduced net depreciations financial items Unchanged share of associates Increased Result Q3 2014 profit discontinued business 6
EBITDA increase of 17% in Q3 2014 reflects a significant potential in second quarter Seasonality affects mainly first and fourth quarter second quarter with significant potential on the Norwegian Coast 500 000 EBITDA per product per quarter Q1-Q3 2014 and Q4 2013 400 000 300 000 200 000 100 000 Other business Spitsbergen MS Fram Norwegian Coast 0-100 000 Q1 14 Q2 14 Q3 14 Q4 13 7
Reductions in phase 1 delivered, new initiatives and restructuring costs explains increase in SG&A costs Development in SG&A, depreciations and net financial costs Q3 2012 - Q3 2014 140 120 100 80 60 40 20 - Q3 12 Q3 13 Q3 14 Increased SG&A due to higher personnel costs related to projects and restructuring Depreciations on par with last year Decrease mainly due to instalments and FX effects SG&A costs Depreciations Net financial costs 8
NOK million Increased equity ratio and reduced debt 5 000 4 000 3 000 2 000 1 000 - Development in assets from Q3 2013 vs Q3 2014 4 135 Non-current assets 3 947 Current assets Assets held for sale 876 660 Q3 13 Q3 14 Non-current assets reduced due to depreciations and non-core bus operation divested in Q3. Current assets reduced due to Non-core bus operation divested in Q3 Cash closing balance of NOK 442 million 5 000 4 000 3 000 2 000 1 000 Development in equity and liabilities from Q3 2013 vs Q3 2014-1 334 2 606 1 295 2 267 302 282 668 609 Q3 13 Q3 14 Equity Long term debt Other non-current liabilities First year's instalment Other current liabilities Equity ratio of 28,1% compared to 26.4 % in Q3 2013 Deferred income tax asset off balance of NOK 107 million Instalments of NOK 343 million last 12 months reduces long term debt 9
Increased cash flow in Q3 2014 (NOK 1 000) Q3 2013 Q3 2014 Variance Operating activities 161 847 243 978 82 131 Investing activities 16 388-39 060-55 448 Financing activities -131 535-110 144 21 391 Net cash flow 46 700 94 774 48 074 600 500 400 300 200 100 0 Cash flow Q3 2014 Hurtigruten group IB cash Q3 2014 Operation Investments Finance UB cash Q3 2014 Change in cash from operations consist of EBITDA ex gains/losses and change in working capital Change in cash to financing activities is due to Instalments of NOK 84 million Dividend to non-controlling interests of NOK 26 million 10
11 Operational & Financial review
Norwegian coast Segment information
NOK 149 million revenue increase realized with a utilization of 85% - potential of further growth in Q3 Revenue development Norwegian coast Q3 2012 - Q3 2014 * 1 000 900 800 700 600 500 400 300 200 100-878 788 729 Q3 12 Q3 13 Q3 14 Volume -12 % - 2 % + 9 % Gross revenue per CN +9 % - 6 % + 12 % Utilization 80 % 78 % 85 % 13 * Excluding contractual revenue
Improved EBITDA of NOK 54 million for Norwegian Coast Improved EBITDA in Q3 2014 due to growth in all markets Improvement allows the company to invest for further growth in new and existing markets for 2015/2016 EBITDA development Norwegian coast Q3 2012 - Q3 2014 400 350 300 250 200 150 100 50 0 Q3 12 Q3 13 Q3 14 14
Volume growth in all markets Cruise nights development Norwegian coast Q3 14 vs Q3 13 US 8 % 19 % UK/RoW 12 % 37 % Cruise nights development Norwegian coast Q3 14 vs Q3 13 Nordic 13 % 22 % Market share total revenue Hurtigruten Q3 14 CE 9 % 58 % 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 15
NOK Improved revenue from continued increase in on board sales per CN combined with 9% volume growth On board revenue in Q3 2014 of NOK 91 million realized from improved performance from sales staff on board the ships On board sales crucial in differentiation from competitors Excursion sales per CN reduced due to operational challenges related to weather and cancellations 250 Development in on board sales per CN Q3 2012 - Q3 2014 +0,1% +3,1% 200 66 72 69 150 100 50 164 158 168 Excursions F&B incl shop - Q3 12 Q3 13 Q3 14 16
Volume growth and 14.1% increase in employee tax affects operating cruise costs Increased passenger costs in the quarter mainly due operational issues Bunker consumption and initial price lower than last year, but stronger US dollar affects the total bunker cost negatively Crew costs in the hotel departments increased due to volume growth compared to last year Increased employee tax affects the crew costs negatively with NOK 11 million Development in operating cruise costs Norwegian coast Q3 2012 - Q3 2014 350 300 250 200 150 81 115 80 115 86 123 Other operating cruise costs Bunker costs 100 50 148 137 158 Crew costs 17 - Q3 12 Q3 13 Q3 14
Good regularity in operations Satisfactory regularity of 98.5 % in Q3 2014 Influenced by unstable weather conditions. YTD regularity at 96.9 % Full year target 97 % 18
MS Fram Segment information
Continued result improvement on MS Fram in third quarter 120 100 Revenue development MS Fram Q3 2012 - Q3 2014 80 60 40 92 94 104 20 - Q3 12 Q3 13 Q3 14 Volume -1 % -10 % -2 % 20 Gross revenue per CN +3 % +14 % +13 % Utilization 85 % 78 % 81 %
Continued positive development for MS Fram Increase in EBITDA despite marginal reduction in cruise nights EBITDA development MS Fram Q3 2012 - Q3 2014 50 45 40 35 30 25 20 15 10 5 0 Q3 12 Q3 13 Q3 14 21
Tight cost control on MS Fram continues Cost increase mainly driven by increased passenger- and harbor costs 25 Development in operating cruise costs MS Fram Q3 2012 - Q3 2014 20 15 8 6 10 Other operating cruise costs 10 5 7 7 7 6 6 7 Bunker costs Crew costs - Q3 12 Q3 13 Q3 14 22
Spitsbergen Segment information
16% revenue increase driven by both volume and price 70 60 50 Revenue development Spitsbergen Q3 2012 - Q3 2014 40 30 20 45 50 58 10 0 Q3 12 Q3 13 Q3 14 24
Continued positive development on Spitsbergen 12 10 EBITDA development Spitsbergen Q3 2012 - Q3 2014 8 6 4 2 0 Q3 12 Q3 13 Q3 14 25
Investing for future activities affects costs in third quarter 40 Development in operating costs Spitsbergen Q3 2012 - Q3 2014 35 30 25 20 15 10 7 12 5 18 6 20 Other operating cruise costs Other cost of goods Personnel costs 5 10 9 11 - Q3 12 Q3 13 Q3 14 26
Outlook
Northern Light guarantee to stimulate demand during fourth and first quarter Moderate revenue growth as expected in Q4 2014 due to weaker performance from UK Results in Q4 2014 expected to be in line with last years performance in fourth quarter 250 Presold gross revenue Norwegian coast October- December 2014 vs. 2013 200 26 +4.3 % 150 100 50 192 Oct - Dec 200 2013 - YTD 2013 YTD 2014 28 * As of 22 October 2014, including FX effects
Antarctica season in line with last year positive revenue effect from FX All time high results on Antarctica in Q4 2013 reflects limited growth potential on volume in Q4 2014 10.1% increase in presold gross revenue mainly driven by increased price and FX 80 70 60 Presold gross revenue MS Fram October- December 2014 vs. 2013 9 +10.1 % 50 40 30 20 59 Oct - Dec 2013 65 10 - YTD 2013 YTD 2014 29 * As of 22 October 2014, including FX effects
Launching 2015 season with positive effect expectations of revenue increase in 2015 Expectations of revenue increase in 2015, but expect a correction during main booking season in November-December due to periodization of introduction campaigns Positive effect from hedging approximately 75% of Euro revenue hedged in 2015 Underlying price on par with last year gross revenue increase driven by volume and FX 800 700 Presold gross revenue Norwegian coast January - December 2015 vs. 2014 +15.1* % 600 500 400 300 200 100 638 718-2014 2015 30 *As of 22 October 2014. FX effects included
Reduced capacity on MS Fram due to planned maintenance in 2015 Pre bookings affected by reduced capacity Available cruise nights reduced with 18% due to maintenance and adjusted itinerary Results for MS Fram is expected to stabilize in 2015 based on 2014 performance 250 Presold gross revenue MS Fram January - December 2015 vs. 2014 200-7.1 % 150 100 208 195 50-2014 2015 31 *As of 22 October 2014. FX effects included
Effective differentiation strategy crucial for revenue improvement on Norwegian Coast
Hurtigruten scores sky-high in new British survey Authenticity defeats mass-tourism Meeting real local people is part of the appeal of Hurtigruten cruises. (...) I'd go back just to slumber beneath the Northern Lights. Surely that has to be next on my bucket list. Kimberley Lovato, Huffington Post
Expected good improvement of pre tax profit in 2014 and further growth in 2015 Q3 2014 with good results and in accordance with expectations Results in Q4 expected to be on par with last year: Presold gross revenue* Norwegian coast for remaining 2014 +4.3 % vs last year Presold gross revenue* MS Fram for remaining 2014 +10.1 % vs last year Presold gross revenue* Norwegian coast for 2015 +15.1 % vs last year Presold gross revenue* MS Fram for 2015-7.1 % vs last year Further result improvement expected in 2015 from increased revenue and cost reductions from efficiency program Phase 4 34 * As of 22 October 2014, including FX effects
35 Q & A