Hapag-Lloyd's operating profit more than halved in 2016 against the previous year, as a weak rate environment dragged down the company’s top line performance.
The German carrier’s operating result, or earnings before interest and tax, was down 65.6% year-on-year to €126m ($133m) from €366.4m, according to preliminary unaudited figures.
Earnings before interest, tax, depreciation of intangible and fixed assets reached €607m, compared to €831m in the year ago period, while the EBITDA margin stood at 7.9%.
The result came as the Hapag-Lloyd’s average freight rate during the 12-month period fell significantly to $1,036 per teu against $1,225, a decline of 15.4%.
Revenues decreased from the €8.8bn posted in 2015 to €7.7bn. This was despite a 2.7% hike in the group’s transported volumes, climbing from 7.4m teu to 7.6m teu.
Transport costs fell 12.3% to €6.4bn, attributable to a lower average bunker consumption price, synergies created from the integration of CSAV’s container shipping business and cost saving programs, according to Hapag-Lloyd.
At the end of December 2016, Hapag-Lloyd had €5.1bn in equity and a liquid reserve of $760m, while net debt amounted to €3.6bn against €3.3bn a year earlier.
Hapag-Lloyd will publish its full financial result on March 24th.
Hapag-Lloyd is approaching completion of its merger with United Arab Shipping Co, which in effect will see the carrier elevated as the world’s fourth largest box line ahead of Cosco and the soon-to-be merged Japanese lines.
The amalgamation will provide Hapag-Lloyd with access to UASC’s fleet of 18,000+ teu ships, fulfilling its long term objective of being one of the big tonnage providers on the Asia-Europe trade.
Combined the pair will boast annual transport volumes of around 10m teu and a turnover of around $12bn.
The German carrier is also gearing up for the launch of ‘The Alliance’, one of two new consortia, alongside the Ocean Alliance, due to commence on the east-west trades from the start of the second quarter.
From April 1st, the pair will join the existing 2M partnership, comprising Maersk Line and Mediterranean Shipping Co., to form a trio of new major carrier groupings.
Hapag-Lloyd will link up with Yang Ming and the three Japanese lines under the new vessel sharing agreement, as the curtain comes down on the existing G6.