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Edited Transcript of HHFA.DE earnings conference call or presentation 25-Mar-20 1:00pm GMT

Q4 2019 Hamburger Hafen und Logistik AG Earnings Call

Hamburg Mar 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Hamburger Hafen und Logistik AG earnings conference call or presentation Wednesday, March 25, 2020 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Angela Titzrath

Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board

* Roland Lappin

Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board

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Conference Call Participants

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* Adrian Pehl

Commerzbank AG, Research Division - Head of TMT and Consumer

* Brian Molner

* Christian Cohrs

Warburg Research GmbH - Analyst

* Nikolas Mauder

Kepler Cheuvreux, Research Division - Junior Equity Research Analyst

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Presentation

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [1]

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Thank you. Ladies and gentlemen, these are extraordinary times in which we come together virtually. We hope that you're all in safe environments and practice the social distancing, just like we do at HHLA. While working mostly from home office and with digital means, we published our expectations for business development already last Friday.

Today, we would like to use this call to explain to you how we see the current situation, and what we do to mitigate risks. Therefore, we are happy to see that so many of you have joined this call.

Although 2019 seems light-years away, I would briefly like to remind you of the results achieved in that year. In a mixed and increasingly difficult market environment, we were able to improve most KPIs. Against the background of current developments, especially the significantly improved cash flow and the net profit close to EUR 94 million, are important. I will come back to that a little later.

ROCE decreased due to the changed accounting policy, IFRS 16, which led to a substantially increased asset base. Since the end of last year, the coronavirus became more and more dominant in the news and the economy. Being in epidemic first, it now has grown into a pandemic, with social and economic effects in the whole world.

If we could spend hours on discussing the current status and recent developments, I would like to structure our description of today's situation, alongside 4 focus areas.

First, economy. At the moment, there are not too many research reports out, examining the potential effects. The few studies that have been published paint an increasingly dark picture. OECD expects a decline in global GDP of 1.5%. The IfW in Cologne even forecast a drop of 4.5% to 9% in German GDP. What is so special about the situation is that we experienced a supply and demand shock at the same time.

Second, the pandemic itself. It seems as if China was meanwhile able to contain the virus. In other countries, especially in Europe and North America, a containment was not yet possible. With increasingly harsh measures being put in place, the economy will nearly come to a temporary standstill. Hopefully, this will help to flatten the curve of infection and allow for timely containment.

Third, the core business. As you know, both main pillars of HHLA's business model are linked to sea containers. Therefore, we expect a temporary further reduction in business activity. As we are one of the operators of critical infrastructures, even in an unprecedented times, we are fulfilling our service mission for the industrial nation.

And fourth, efficiency measures. It is obvious that we will push further on improving our operational efficiency. OpEx and an infrastructure-related company like HHLA is difficult to decrease. Still, we will speed up the optimization of our internal organization, accelerate automation and push digitalization.

On the next few slides, we have collected the research reports, which are already out and published, and which also mirror our expectations for the near future. OECD was one of the first who tried to assess the potential economic effects. In the beginning of March, OECD has lowered its expectations for virtually all economic regions, with the most pronounced cuts in GDP growth for the G20 in China, which have been cut by 0.5% and 0.8%, respectively.

We tried to process duration by scenarios. In all cases, effects on container shipping will be perceivable, but with different intensities. The quantification was not possible at the end of February.

The federation of German industry shares, the OECD view, that in 2020, the global economy will slow down. For Germany, they forecast growth of only 0.5%. Last week, the Institute for the World Economy in Kiel published the most gloomy report of them all. The researchers calculated 2 scenarios: a lockdown of 6 weeks and a lockdown of 3 months. Even in the first scenario, they expect German GDP to slump by 4.5% in 2020, with no significant catch-up effects in the course of the year. This catch-up effect is expected for 2021, the earliest.

What we see in our business is that the baseline scenario by Drewry has come true. It seems as if China was able to contain the virus, while it spreads more rapidly in other countries. In this scenario, a slowdown in GDP growth or even a compression is possible. This fits well into the expectation and horizons of other researchers, which we just presented to you.

Against this background, let us take a brief look at the current situation of HHLA, as of today. I emphasize the, "as of today," because the situation is changing so quickly at the moment. Most importantly, in both segments, we are not aware of any corona infections amongst our employees.

Now on the Container segment first. The consequences of the spread of the coronavirus in China are only now being felt. Fewer ships are expected to arrive from China in the coming weeks. These are the consequences of the Chinese government's decision to stop production over the usual Chinese New Year period in order to be able to combat the coronavirus more effectively. At the same time, either in January or February, some European ports experienced a stop in transhipment due to strong winter storm. This led to massive delays in ship arrivals here in the Port of Hamburg. In some cases, the delays lasted several weeks. This, in turn, meant that our warehouses were filled to capacity with export containers.

Reducing this traffic jam has demanded a lot from us in recent days. But we keep up operations at all our terminals in Hamburg, Odessa and Tallinn.

In our Intermodal segment, we see significant effects in our business too. Many European countries have declared a state of emergency, leading to limited production and economic activity. The production stops in China, and now in Europe, lead to reduced export and import activity.

The partly stopped public life reduces demand and therefore, lowers the need for transport services. Still, we are ready to serve customers' needs, and this is true for all our terminals.

In this situation, there are 3 action fields we work in to steer through these challenging times. Firstly, we do everything. I repeat, we do everything to protect the health and safety of our employees, and do our part to help contain the pandemic.

We have implemented a permanent corona working group, steered by me and the Board, which discusses all necessary steps on a daily basis. For sure, only digitally, not in person. We have sent to home office all employees that can work remotely. We separate our staff, canceled all large meetings, we give advice on hygiene, and support our employees to come to work without public transport.

Secondly, we stay ready for customer demand. We prioritize tasks, we have contingency plans for all operations, we have boosted our technical equipment for decentralized work and safeguard our operations by keeping our employees safe. And thirdly, we continuously evaluate our possibilities to counteract the negative effects.

Roland, would you like to elaborate on that briefly?

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Roland Lappin, Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board [2]

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Definitely, Angela. Ladies and gentlemen, in these times, liquidity is the first focus for us as management. Controlling and securing cash flows and providing for sufficient cash to meet all due payment obligations is our main interest. This is why we challenge all investments against the question whether they can help us short-term or can be postponed for a little while. We push our efficiency program, decrease the number of temporary workers and closely monitor which supportive measures are offered by the government.

We want to secure jobs and make use of short time compensation if this should become necessary. And last but not the least, we are also preparing for the resumption of normal business once we have come through the crisis.

Our financial position supports us here. A breakdown of our indebtedness helps to clarify the picture. While there is a total of nearly EUR 1.4 billion in liabilities on our balance sheet, the net financial debt only accounts for EUR 260 million of that. Lease obligations increased significantly due to the IFRS 16, and the pension provisions increased with decreasing interest rates as outlined on this chart.

As of 31st of December 2019, our financial balance stood at approximately EUR 230 million for the listed subgroup. To further strengthen the financial position, we have decided to propose a dividend of EUR 0.70 per share, which equivalent to a decrease of 12.5% on one hand. But on the other hand, it is still in the communicated payout ratio between 50% and 70%. And with the proposal released, it stood at 52%.

We think that we would found -- that we have found a good balance between the deserved shareholder participation in the success of 2019, and necessary precautionary measures to ensure sufficient liquidity required for operations. In the weeks to come, EBITDA will be the key KPI of relevance before we hopefully can return to normal.

Back to you, Angela.

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [3]

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Thank you, Roland. I would now like to take a cautious look into the future. I suppose that all of you know this chart with the 2 scenarios, how the world's economy could develop in the months to come. Some researchers assume a V-shaped recovery, meaning that we will experience a sharp but short drop in the economic activity before the economy recovers and returns to its growth path of the past.

Others will see a longer phase of worse case growth, the U scenario. In this scenario, we will go through some months of shrinking GDPs before the economy recovers. The V-shape scenario seems to come true at least for shipments from China. Their production has now been resumed. We know from customers that the first fully loaded trips are on their way to Europe, and that a normalization of the containerships cargo capacity is expected afterwards. This means that these ships will reach Europe in the beginning, mid of May. The question will then be whether the pandemic in Europe has been stopped by then, so that the goods and cargo can be transported quickly to the European hinterland.

Ladies and gentlemen, building on the last year's successful business performance, we had drawn up our plans for fiscal 2020 and fall 2019. Due to the upheavals in global supply chain caused by the corona pandemic, we have adjusted our targets for the current fiscal year to reflect reality.

Our forecast currently still contains a great deal of uncertainty, as the extent and the duration of the pandemic cannot be predicted. We assume that container handling and container transport will decline sharply in the first half of the year. But this decline will not be compensated for by an economic catchup movement in the second half of the year when an upturn is expected. This will result in a strong decline in turnover and operating profit for the year as a whole.

We have put our investment plans under review to adapt it to the changing market environment. And as Roland explained, we have sufficient liquidity to navigate through these stormy waters.

Roland and myself will now be happy to answer your questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Adrian Pehl from Commerzbank.

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Adrian Pehl, Commerzbank AG, Research Division - Head of TMT and Consumer [2]

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2, 3 questions from my side. First of all, actually, on the situation where we are currently and given what the container liners have said, maybe you could be a little bit more precise, at least, from a directional point of view on what we should think about your first half.

Basically, we have the impression actually, that liners fared relatively well still in Q1. But obviously, some of them seeing now lower volumes going into May. However, given that your share of Chinese business is relatively high, should we actually assume a relatively sharp drop, basically as of March? Or do you see a different phasing here?

And maybe about the sensitivity of your business, what is the level actually you might refer either to both segments, Intermodal or Container or maybe only to Container, of the revenue drop, where actually the business is not generating any profits.

Second or thirdly, on basically your personnel expenses. What is the amount of temporary staff that you're using and that you're probably about to phase out? And what contractual liabilities do you have? And do you actually apply for short-term work beyond that?

And lastly, on liquidity, I'm a little bit surprised. I mean, clearly, given that your operating leverage is pretty high. I can imagine why you're doing that. On the other hand, from your balance sheet perspective that you're stressing liquidity that much is a bit surprising because looking purely at your financial debt versus cash in hand, your balance sheet is pretty strong, and I don't have any doubts that you can get sufficient credit lines. So maybe you could elaborate also a little bit here on the solvency situation.

And very lastly, a bit housekeeping. There's still this EUR 95 million cash settlement in the balance sheet for in conjunction with HGV. I was wondering, what is that still? And when is that actually going out of the balance sheet, transferring into cash? What's the situation around that?

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [3]

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Okay. I will start, and then I will ask my colleague, Roland, to add in. We are emphasizing the sufficient liquidity as this was always a question. You are very literate in reading balance sheet, some journalists are not, and they're all basically putting everybody in one basket. Just confirming your observation, we have a sufficient liquidity and we have a solid base that is standing on. In addition, we are very sensitive and cautious, obviously, to maintain, in addition, liquidity for things to come. As nobody has the crystal ball in their hands right now to really forecast what is happening.

So let me start from the revenue side to your questions towards the liners. First of all, yes, we have a high degree on Chinese cargo. But as outlined, there is a lead trucking of 6 to 7 weeks of weakening, where China has closed their production site. And all signals that we have received so far is that they are again up, full and running, even knowing that we can just not evaluate this from this point of view, we are, as well as everybody else, need to trust to what we are hearing.

But I think important is to understand that we have a very, very strong global base. I mean we have cargo coming from basically North America, very strong, very solid. And that's why it makes it so difficult to give a prognose, clearly one, because liners, for example, are as well outlining that we see already a shift from cargo, which has been before within China is now in Vietnam and in Taiwan. We see a very strong cargo flow from Japan. So there is not one clear answer to your question other than we are basically steering everything cautiously on a day-to-day mode, as we are managing the crisis as well on a day-to-day mode, with the maximum of secureness that we can handle all scenarios.

And with regard to the personnel expenses, obviously, we prepare as well for everything as well we are in the phase of negotiation of potential short-term work agreement with our unions, but this is more in terms of being cautious to have all viable instruments in our hands. We have enough flexibility of personnel management right now in our hands. We have still days and weeks of vacation that people can take. So we are still a way -- we're lot away from any serial -- severe measurement in these directions. And in terms of contractual workers, as you may know, that the port has -- they have HGV that which is basically a common used pool of workers, which can be used on a temporary basis. So we have a lot of space, as we call it, to basically breath and to take profit of.

Maybe, Roland, you would like to comment and add on to the liquidity question of the EUR 95 million, which, to my mind, is cash.

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Roland Lappin, Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board [4]

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Yes, definitely. This is a short-term deposit as we participate in the cash clearing with our main shareholder, in case the terms are from a market perspective in favor of us. And you know as we have excess capacity on one hand and banks have started to charge us negative interests. We make use of these options. But on the balance sheet, it is assessed as short-term deposits, but it's, in practical terms, cash. And this is reflected in the figure I mentioned when I commented on the financial funds as of end of 2019 at approximately EUR 230 million. This includes this position.

But I think this is mentioned on Slide #9, just to clarify this. But the -- I want to address 2 other aspects. As Angela outlined, the extent and the duration of the pandemic cannot be predicted from today's point of view. And to prepare for such a situation, make sure that the asset remains in a financially-wise healthy status. We are cautious in that regard. And this against the background that the balance sheet is strong. I fully agree to your position, but we try to always to find a balance. And what is the characteristics of the HHLA asset, I think we have repeatedly announced to the investors community that it is -- it's a model with 2 sides. On one hand, it's a value asset, and this is underlined by the strong financial balance sheet. The financial funds that are available on one hand, and the other side of the model is the growth story behind business model.

So referring to the first side of the model, we discussed indeed jointly with the Supervisory Board, with regard to the dividend policy. And we found it is well balanced to aim at the lower end of the communicated range to distribute 50% to 70%, and we ended with 52% as a report this morning.

Just to underline that the HHLA asset and the HHLA stock is a value asset, even in crucial times. On the other hand, as you mentioned, it is a fixed cost heavy business, but we take all measures needed to keep the asset financial wise solid.

And now I'm referring to your question with regard to the personnel costs. The temporary workforce accounts approximately for 25% to 30% of the personnel costs in Hamburg. So on segmental level, if you look at to the full year results in the Container segment, you can easily calculate it. And this is to a certain extent scalable. And as already mentioned, we are focusing on that just to comply with the volatility of the utilization on the different operations here in the port.

Whether we will make use of short-time work, we prepare for, for the time being. It will be cited in case it is needed. But for the time being, we prepare for. Your question regarding how much the revenue can drop until we post negative results? I think this cannot be precisely answered. But I can tell you what the experience of the Lehman prices. And the Lehman prices, we were able to manage and run the business, at least cash flow -- free cash flow neutral. And at that time, we lost approximately 30%, 32%, 35% temporarily of the throughput we have handled pre-Lehman. And for the time being, we do our utmost to keep the business at least free cash neutral over the course of the next month. This is how management looks at it. And with regard to the differentiation between first and second half, sorry, but we do not comment on Q1 developments today.

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Operator [5]

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Next question is from the line of Nikolas Mauder from Kepler Cheuverex.

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Nikolas Mauder, Kepler Cheuvreux, Research Division - Junior Equity Research Analyst [6]

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I appreciate that this call is on the immediate effects of the coronavirus and that you prefer to talk in this regard at the moment. However, looking beyond the current crisis, assuming that there is beyond, I have 2 questions. First, given the border controls that have been reinstalled in Europe, we've seen press articles mentioning long truck lines at the border, whereas trains have an easier time passing borders now. Do you see an increasing willingness post the crisis of your customers to use rail transportation more? And the second question, regarding your balance sheet strength. And if you really manage to steer the current crisis in free cash flow neutral territory. Are you willing to -- or are you seeing and are you willing to acquire distressed assets that fit your network?

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [7]

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Thank you very much for your questions. I think you're hitting right on what we understand as crisis management. First was, obviously, to safeguard the health of our employees. The second one was to keep on being in business. And if we say being in business, then we mean at best liquidity, at best productivity and at best results oriented.

And the third element that we are managing, obviously, is already to come back and look beyond the crisis. We truly believe that our business model and our strategy that we have outlined and are executing since 2.5 years is paying into this view. It is basically -- clearly already a sign visible that our train business, the rail business itself, is something which comes through this crisis as potentially something, which will be for -- in the eyes of our customers even more interesting.

We have no lining up if we use the train and rail business. We have been the ones, even in the severe emergency mode situation, where Poland and others were closing the borders, still to maintain the cargo flow vivid and obviously, by the way, as well towards China, the trains are still running and going. So our view of today, and I'm always stressing and outlining of today because in the crisis mode, a lot of things are changing on a daily base. But seeing it from today's perspective, we see that there is a chance that the rail business will be even increasing. This is true as well for Germany, and it is true definitely as well for Europe.

Do we have the willingness to look towards distressed assets? Definitely, yes, we can. And yes, definitely, we do.

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Operator [8]

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(Operator Instructions) The next question is from the line of Christian Cohrs from Warburg Research.

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Christian Cohrs, Warburg Research GmbH - Analyst [9]

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Yes. I hope you can hear me well. First of all, in the current crisis, there is a risk that shipping lines actually can go bust. Have you taken some measures of precaution or insurance solutions or tightening payment terms in order to prepare for such a scenario or to actually to prevent that you are hit or that you are going to face bad debt in that event?

Secondly, cash is king. You mentioned it already. Can you maybe remind us or provide us with an updated figure? What is the CapEx minimum you have to spend for maintenance in your operations in Intermodal and Container? That brings me then to a question regarding one of your main customer, here actually in Hamburg. It's said that you've had a very intensive dialogue about payment terms. And so is it fair to assume that we should factor in lower average revenue per treatment as of 2020 onwards.

And lastly, more follow philosophical or general question, now with the current crisis in place and also the -- during the past -- in 2019, there was a tariff dispute between the U.S. and China. And there are thoughts and rumors that the GDP multiplier of container trade growth versus GDP growth has already shrunk below 1 from 1.5 previously. Is this something would you also observe? And do you think that this trend will go on or could even further deteriorate in the course of the pandemic trend?

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [10]

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Okay. I will start, and then Roland is just basically adding to it. With regards to shipping lines, as we have outlined in other presentations, you have basically a situation of 3 major shipping alliances, forming 80% of the transportation power on a global level. So this, by itself, is a certain surveillance net, I would describe it. That one is observing the other that nobody basically is falling through this insurance net. We are monitoring on a weekly base outstanding positions with the shipping lines. We can just confirm from our side that there is everything in. In green line, we don't see there any problems. The shipping lines itself, if you look very carefully into it, most of them are backed indirectly by nations or national governments. So that I don't see anything happening in terms of bail out in this area. Still, that's an observation which we are carefully monitoring. But we have no insurance to cover this. And yes, cash is king. And for the cash is king question, Roland, would you like please to add?

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Roland Lappin, Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board [11]

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Yes, I will -- but Angela, one second remark with regard to the situation of the liners. I think you should differentiate between the situation 3 or 4 years ago, where we had a very fragmented market that is nowadays, highly consolidated.

And with the liners that survived, I would say, it's more a question of too big to fail, than that the remaining will go bust. I think even if you foresee financial restrictions going forward, and the debt the liners still have to carry is high, no doubt. But on the other hand, on a global scale, the limited number of liners that remained is simply to back -- or to anticipate really aggressive or pessimistic scenario if such things will happen or should happen.

So now regarding your question with regard to the CapEx, I would give you an answer that is more generally focusing it. As I outlined before, we are working hard on keeping the business model, free cash neutral, at least. And this means, as outlined before, we are focusing on the CapEx that -- on the component in the CapEx that can be postponed. But on the other hand, the components that contribute to efficiency with regard to automation or digitization, we will definitely not postpone. But I feel confident that we will end up, within the next months, to run the business free cash neutral. And the exact figure, we will release to the market if we feel comfortable, and if all the measures, we are concentrating on materialized.

And with -- I would try to answer your question with regard to the multiplier between -- I think this is GDP and container volume. I think it is clear with the current level of container-ization, we come closer to a certain ceiling. And in theory, it is clear that if we -- if you touch it, the ratio must come closer to one. And if it is below one, this gives you a signal that some imbalances are in the market. And of course, in the current situation, we are facing imbalances. So nothing surprising. But I do not think that going forward we will see a multiple less than one with regard to the GDP as a rough indicator to estimate trade volumes.

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Christian Cohrs, Warburg Research GmbH - Analyst [12]

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Okay. There's one question missing regarding the -- regarding your intensive dialogue with one of your customers on prices and whether we should factor in our average revenue per TEU going forward?

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [13]

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Well, we actually never talk about prices with our overall results, and that's what we have done.

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Operator [14]

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We have a follow-up question from the line of Adrian Pehl from Commerzbank.

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Adrian Pehl, Commerzbank AG, Research Division - Head of TMT and Consumer [15]

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Well, first of all, let me start with housekeeping questions on IFRS 16. I was just wondering whether you could share with us a rough ballpark figure where we should think CapEx for right of use might be? And on the other side, what the redemption of lease liabilities could look like? And then a question actually on your yard, in particular, Burchardkai, probably, as we have read that actually containers are piling up. I mean, short term, this should be good probably on the fees that you can collect from there. But is it already turned to bad because it's too much and it's interfering with your operations? Or where do we stand there?

And lastly on the other dredging, actually, do you expect some postponements of the works due to corona? And secondly, now given that actually the passing boxes are ready for quite some time and time has elapsed, I think the question came already with the last call, but nevertheless, do you see already some improved nautical use of it? And will you be able -- or did you already make the experience that your cost base modeling has gone a bit easier, thanks to that? Where do we stand here?

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [16]

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Okay. I'll start with your last question. There is no postponement foreseen with regards to the dredging. There's everything in time. And basically, the passing boxes were already realized. And yes, obviously, there is already, in terms of passing of the big vessels, an improvement in terms of time. So there is no longer one-way river element here. But the passing, obviously, is reducing the time that they are needing to come up to the harbor of Hamburg.

The piling up of containers, yes, you are very well informed. Obviously, in terms of revenue, always something that is light from our side because you have a higher degree of time where containers are sitting in -- on our premises. But I can already confirm that there was no hindering of our businesses. And actually, this week, it turns to be already normal and is further declining. Unfortunately, as we see the first signs of nonshow quote of vessels coming from China.

IFRS 16, Roland, can you add in, please?

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Roland Lappin, Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board [17]

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Yes, I will. Three details on your question. The first statement I understood is, what's the portion of IFRS 16 impact on the CapEx reported? I guess it's in a range of EUR 45 million with regard to the CapEx in 2019. Second, what's the impact on balance sheet? Right-of-use is in the range of 600, 620 in that range and in P&L. I think in the depreciation, it accounts for approximately EUR 40 million in the financial result in the range of EUR 14 million.

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Adrian Pehl, Commerzbank AG, Research Division - Head of TMT and Consumer [18]

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Okay. That was the expectation for 2020 that you had, right?

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Roland Lappin, Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board [19]

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Sorry, these are the details of the reported 2019 figures.

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Adrian Pehl, Commerzbank AG, Research Division - Head of TMT and Consumer [20]

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Yes. And should they materially change actually going into 2020? Is there any big changes we should factor in there?

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Roland Lappin, Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board [21]

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Not yet, not yet. With regard to the CapEx, as I mentioned before, we are focusing on CapEx components that affect short-term liquidity. So if we make use of opportunities and enter into long-term lease contracts in order, for instance, to enlarge our terminal network. As in -- according to the new standard, it has an impact on the CapEx reported in 2020 or would have an impact on the CapEx to be reported. On a cash flow basis, it's not the net present value of the rent, it's the annual portion of the rent where we -- that we would then contract. But this is the complexity of the new standard. But so far, well, as all in before, if there come up opportunities, we have all the freedom to use them -- make use of them, but it's nothing that I would forecast from today's point of view.

And with regard to changes in these lease liabilities and the impact on P&L, I would say, with regard to 2019, and again I mentioned approximately EUR 40 million in depreciation, approximately EUR 14 million in the financial results, I do not expect any substantial changes going forward.

And I think on the third question regarding the utilization on the yard side in CTB?

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Adrian Pehl, Commerzbank AG, Research Division - Head of TMT and Consumer [22]

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Yes. Well, basically, that was -- exactly that was the question a bit related to the containers piling up. I think it was already answered.

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Roland Lappin, Hamburger Hafen und Logistik Aktiengesellschaft - CFO & Member of Executive Board [23]

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All right. Thank you.

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Operator [24]

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(Operator Instructions) We have another question from the line of Brian Molner from Independent Advisory Research Services

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Brian Molner, [25]

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Can you just remind us in the -- when you look at overall over a year, for example, what comes into your port and containers? We do have, for example, a certain amount of stores that are not open in Germany, and maybe the same thing in Eastern Europe, for a while. I was just wondering, I mean, these stores, obviously, are not going to be able to compensate for that loss in online business. So I was just wondering if you could just remind us what portion of the goods coming in are going into, for example, clothing stores, things like that, where they're probably, yes, really not selling much right now. I just want to make sure that they don't get piled up with stuff later on. I'm not going to be able to sell. It's not the right season anymore or something like that. So just if you can give me a little insight on well presenting in the containers is coming in and things like that.

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [26]

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Well, they would definitely not pile up in the harbor if there are goods ordered, which cannot be sold because we are basically giving all containers through into the hinterland. For us, it's very difficult to really evaluate what is in terms of goods in the container. I would like just to remember, you have all kinds of goods, coming foods, medical equipment, everything, which is now in the groceries or in the stores in terms of daily usage, which is required even in a higher demand right now.

So for us, it's very difficult to really pinpoint exactly what is in these containers. I think the goods coming from China, you have basically the 6 weeks before, so they were able to basically manage what they would order or not order and everything else. We can just see and wait a little bit, but we see that the consumption of goods are changing, but we see as well that the order behavior is changing. So please factor into your thoughts that all kinds of medical equipment has improved and increased significantly, and all kinds of other goods now are basically asked for, which are used in hospitals and so on.

So it's -- I would rather see it as a changing of orders, but not so much a piling up of orders. And on the same token, to carefully observe online demand and purchasing has increased significantly. So the online purchasing is happening even in the case where basically the other shops, the physical shops, are closed. Definitely, we can just oversee the next 2 weeks, and then still the behavior or the different nations will decide what's actually happening next. But from behavior of consumers, there is a change of consumer behavior towards a lot of other topics. Everybody is renovating. Everybody is gardening. Everybody is consuming daily goods in a more intensive way and piling and stocking. So we see -- yes, we see definitely still a lot of flow of goods, just the containers are changing.

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Brian Molner, [27]

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Okay. Can I add on that? I just -- maybe just remind me, what is the percent of your business? Again, that goes to North America or coming back and forth approximately?

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [28]

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Around 10%.

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Operator [29]

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There are no further questions at this time. And I would like to hand back to Angela Titzrath for closing comments. Please go ahead.

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Angela Titzrath, Hamburger Hafen und Logistik Aktiengesellschaft - Chairwoman of the Executive Board [30]

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Thank you. Ladies and gentlemen, 2 things are equally important for us in our corporate responsibility. On the one hand, we must ensure that our employees have adequate health protection. And on the other hand, we must guarantee the stability of the company. Those are 2 sides of the same coin. In doing so, we have to deal with the crisis situation that no one expected in this scale, let alone for which they are generally valid solutions. In its 135-year history, HHLA has mastered many crisis. With our experience and knowledge, we will once again work with determination of cash for a successful future. Thank you for your support and trust. Please stay healthy, take care and good luck to everybody.