The HHLA share

Successful year despite adverse conditions

The economic outlook and political developments seemed to indicate a weak year. But despite fears of recession, the seemingly never-ending tug of war regarding Brexit, growing populism and not least the US-China trade war, 2019 was a surprisingly good year for the world’s stock markets. They also benefited from the central banks’ decision to step up their expansive monetary policy in the face of flagging economic data. Following a major sell-off at the end of 2018, the German benchmark index started the year in a decidedly upbeat vein. In late March, the DAX gained further momentum following positive economic reports from China and the USA. In May, strong corporate earnings shored up stock prices while the increasingly bitter trade dispute between the USA and China dampened market sentiment. In mid-June, hopes of economic support from the central banks gave the DAX a renewed boost. This mood was further buoyed by positive signs in the tariff dispute. In early July, a series of profit warnings then dampened market sentiment. Share prices were also hit by new tariff threats and a cautious outlook issued by the European Central Bank. It was only in mid-August, after the USA had postponed new tariffs and promised tax breaks, that German shares began to recover. Buoyed by robust corporate earnings and easing tensions in the trade dispute – and in spite of weak economic data in October – this upward trend continued until the end of the year. As a result, the DAX closed at 13,249 points on 30 December 2019, 25.5 % up on the previous year – its highest annual gain since 2013. The SDAX performed even better with an increase of 31.6 % to 12,512 points.

Share price development 2019

Source: Datastream

HHLA share outperforms strong market

The HHLA share started 2019 at a year-low price of € 17.33. Within the first few weeks, the share was already outstripping the strong performance of the benchmark indices. Following publication of HHLA’s figures for 2018 in late March, the share price temporarily decoupled from the benchmark indices and significantly exceeded the gains achieved by both the DAX and SDAX. It subsequently maintained this lead, even though the share was unable to fully escape market fluctuations over the course of the year. Following publication of the nine-month results and an upgrading of guidance for container handling and transport, as well as EBIT growth at segment level for the 2019 financial year in mid-November, the HHLA share reached its year-high of € 25.26 in late November. On the last trading day of the year, 30 December, the HHLA share stood at € 24.54 – and thus 41.6 % above the previous year’s closing figure. It exceeded the strong performance of the SDAX by 10 percentage points.

Annual General Meeting

The Annual General Meeting of HHLA was held at the Hamburg Messehallen convention centre on 18 June 2019. The Executive Board’s invitation was accepted by around 700 shareholders and guests, representing 84.8 % of nominal capital (previous year: 81.8 %).

In her upbeat speech to the shareholders, the Chairwoman of HHLA’s Executive Board, Angela Titzrath, stressed that HHLA had asserted its position as a leading European logistics group and had once again achieved profitable growth. Following the acquisition of Estonia’s largest terminal operator, TK, the company had also become more international. Titzrath also cited the numerous initiatives with which HHLA was now driving the digital revolution. She highlighted in particular the company’s efforts in terms of climate protection and the prudent use of resources.

The shareholders formally approved the actions of HHLA’s Executive Board and Supervisory Board for the 2018 financial year and appointed Prof. Dr. Burkhard Schwenker, Chairman of the Advisory Council of Roland Berger GmbH, as a new member of the Supervisory Board. The proposal to increase the dividend to € 0.80 (previous year: € 0.67) per listed class A share was also approved. HHLA thus distributed dividends totalling € 56.0 million (previous year: € 41.3 million). This corresponded to a payout ratio of approximately 54 % of the Port Logistics subgroup’s net profit after minority interests for the year. The dividends were paid out to the shareholders on 21 June 2019. Based on its closing price of € 22.38 on the day of the Annual General Meeting, the HHLA share achieved a dividend yield of 3.6 %, putting it in the top 20 of the SDAX.

Shareholder base still widely spread

Shareholder structure

as of 31.12.2019

HHLA’s shareholder base remained largely stable in 2019. In terms of the listed class A shares, the Free and Hanseatic City of Hamburg remained the company’s largest shareholder with an unchanged stake of 68.4 %. The free float portion amounted to 31.6 %. According to the voting rights notifications submitted to HHLA at the end of 2019, no single investor held more than 3 % of the remaining free float shares at this time.

As of the reporting date, ownership shifted slightly in favour of institutional investors. They continued to hold the majority of free float shares at year-end, accounting for 23.2 % of all shares (previous year: 22.9 %). The proportion of nominal capital held by private investors amounted to 8.4 % (previous year: 8.7 %). Overall, HHLA’s share capital remained widely distributed among some 26,000 registered shareholders. In regional terms, the largest free float shareholders were based primarily in Germany, the USA, the UK and other countries in continental Europe.

Dialogue with capital market maintained

Rapid reaction times, an ability to provide comprehensive information and an open dialogue with financial analysts and investors remained key to HHLA’s investor relations activities in 2019, given the consistently volatile industry environment. In order to serve the needs of both institutional and private investors, HHLA attended a number of investor conferences in the key financial cities of New York, Frankfurt, London and Paris, as well as various private investor events in Germany. These initiatives were supplemented by roadshows in London, Paris and Munich. Investors were also invited to a large number of meetings at the company’s headquarters in Hamburg. Furthermore, the Executive Board provided details on business developments during quarterly conference calls. There was considerable interest in the information provided and the opportunities offered for discussion. HHLA also presented its new business fields and innovative products at this year’s Capital Markets Day. Under the heading “Transport streams join data streams”, HHLA project managers and managing directors gave an insight into their pioneering work and answered detailed questions from financial analysts and investors. Angela Titzrath, Chairwoman of the Executive Board, stressed the competitive advantage for its customers that HHLA’s development of digital solutions offered.

Contacts with investors

by region in 2019

With its proactive approach to communications, the Investor Relations department maintains a close dialogue with shareholders and potential investors. In addition to informing interested members of the public, the team also responds to issues of particular relevance to investors. In the 2019 financial year, HHLA’s investors showed great interest in the dredging of the river Elbe, a crucial project for HHLA. In the wake of new shipping alliances and the resulting schedule changes, there were also numerous enquiries about the shifts in volume which might ensue. Other key topics for the capital market were the effects of punitive tariffs being imposed and the development of the Intermodal business.

HHLA has provided a full HTML version of its Annual Report since 2016. Online reporting enables all stakeholders to navigate information interactively, search for content in a targeted manner and compile this information as desired. The dedicated investor portal of HHLA’s fully revamped website provides a wealth of information on the HHLA share performance, including an interactive share chart and a personalised portfolio calculator. In addition, there is an online service that allows users to register for e-invites to the Annual General Meeting. HHLA also uses the social media channel Twitter to publicise current and future notifications from the company.

HHLA share still of interest for analysts

Recommendations by financial analysts

as of 31.12.2019

Despite changes in the macroeconomic environment resulting from more stringent MiFID II regulations, the HHLA share continues to enjoy broad and well-informed coverage by financial analysts. This gives potential investors the possibility to find out about HHLA’s business model and environment through independent analyses. The Executive Board and Investor Relations department therefore remain in close contact with all financial analysts in order to ensure a broad set of opinions.

A total of 14 financial analysts covered HHLA’s business development and issued reports and recommendations concerning the share. This means that the HHLA share has considerable coverage for an SDAX company. On the reporting date, eight analysts recommended buying the share. They particularly emphasise the successful Intermodal business and growth potential resulting from the forthcoming dredging of the navigation channel. Those analysts who recommend holding the share primarily see risks arising from the fact that the river Elbe has still not been dredged, as well as the low level of cost flexibility. Analyst sentiment is also tempered by increasingly fierce competition among North Range ports and the potential worsening of current trade conflicts. There were no sell recommendations as of the reporting date.

Dividend proposal for 2019

Dividends per listed class A share

in € / payout ratio in %

2019: Dividend proposal

On the basis of the earnings achieved in 2019, the Executive Board and Supervisory Board will propose a dividend of € 0.70 per class A share at the Annual General Meeting to be held on 10 June 2020. A total of € 49.0 million would therefore be distributed (previous year: € 56.0 million). At 52 %, the payout ratio would be roughly on the previous year's level (previous year: 54 %). HHLA therefore continues to pursue its dividend policy of distributing between 50 and 70 %, where possible, of the Port Logistics subgroup’s relevant net profit for the year to its shareholders.