Hapag-Lloyd shrinks losses

9/2/2017

Hapag-Lloyd has reported a €46.1m ($55.2m) net loss for the first half of 2017 versus a €158.5m loss in the corresponding period of last year. That makes Hapag-Lloyd the latest line to report an improving financial performance over the past month.

The German carrier’s latest financial update is also the first to include the business activities from Middle Eastern line United Arab Shipping Co, following the companies’ merger in May.

Container volumes grew 14% through the first six months of the year to 4.2m teu, including an additional 250,000 teu from UASC, consolidated from May 24, according to Hapag-Lloyd.

This helped to drive revenues up by a further €732.8m to €4.5bn. The UASC group contributed €199m to this total.

Hamburg-based Hapag-Lloyd also managed to improve its operational result before interest, taxes, depreciation and amortisation to €360.4m against €196.7m in the year-ago period.

“The market in container shipping remains challenging, but we have managed to make very good progress in the first half year of 2017,” said Hapag-Lloyd chief executive Rolf Habben Jansen. 

“We improved profitability significantly and the integration of UASC will be largely completed in the third quarter. That will allow us to start capturing synergies very soon after the integration.”

According to Hapag-Lloyd, the merger is expected to generate annual savings of $435m from 2019 onwards, with a large proportion of this already achieved by 2018.

The German carrier’s improved financial performance also comes off the back of the first three months of operation of its slot and vessel sharing agreement The Alliance, which it expects to help reduce costs further through greater efficiencies than in its former G6 grouping.

Hapag-Lloyd is joined in The Alliance alongside Yang Ming and the soon-to-be merged Japanese carriers MOL, K Line and NYK — one of the three consortia plying the east-west trades.

All five alliance members have now announced gains to their bottom lines since The Alliance’s inception at the start of April.

NYK Line and K Line rebounded from year-ago losses in the second quarter, as MOL reported further rises in its profits and Yang Ming shrank its losses.

Continuing the industry’s recovery narrative, Maersk Line, the world’s largest ocean carrier, confirmed that it returned to the black in the April-June period after four consecutive quarters in the red.

This came after positive accounts from Taiwanese carriers Evergreen and Wan Hai Lines in the second quarter. 

With global demand growth outstripping the influx of new capacity since the third quarter of last year, carriers are now starting to see the benefits on their respective balance sheets. Maersk Group chief executive Søren Skou has even suggested that the industry is currently in its best shape since the global financial crisis.

For the full year, Hapag-Lloyd said that it expected its transport volume to continue to rise and bunker costs, despite increasing during the first half of the year, to remain at current level, as would its average freight rate recorded at the halfway stage. 

The group also anticipates to report an operating result for 2017 exceeding the previous year’s level.