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Hapag-Lloyd Boasts Third Quarter Profit

Hapag-Lloyd

By MarEx 2016-11-14 17:20:47

German container shipping group Hapag-Lloyd reported a rise in third-quarter net profit and said it would press ahead with cut costs and seek economies of scale to cope with the worst downturn the industry has ever seen.

Net profit at the Hamburg-based firm came to 8.2 million euros ($8.83 million) in the three months ending September 30, up from 3.2 million a year earlier, while profit before interest and tax (EBIT) came to 65.6 million euros, down from 80.9 million euros previously.

"The market has been very difficult so far this year, but in that environment, Hapag-Lloyd has performed relatively well, which underlines our competitiveness," said Chief Executive Rolf Habben Jansen.

"Our main focus for the upcoming quarters will be to further optimize our cost position," he added.

The container shipping industry has been in prolonged downturn since 2008 due to excess of ship capacity and slowing trade.

Japan's top three shipping companies said last month they will integrate their container operations to create the world's sixth-largest fleet, and global market leader A.P. Moller-Maersk posted a third-quarter loss.

Hapag-Lloyd said it transported 5.65 million TEUs in the first nine months of the year, up 1.3 percent on the year. The average freight rate fell sharply, decreasing by 17.7 percent year-on-year in the period from January to September to $1,037/TEU. The decline was partly due to a fall in bunker prices compared with the previous year but also due to prevailing overcapacity in the main trades combined with modest demand growth. Hapag-Lloyd’s average bunker consumption price came to $195/ton in the first nine months of 2016.

Hapag-Lloyd signed a binding agreement with Arab peer UASC in July to form the world's fifth largest shipping company by the end of 2016, which is expected to bring annual net synergies of $400 million, some of which should take effect from next year.

Shareholders approved a capital increase in the summer to fund the deal.

The enlarged company will also be the key player in a new shipping alliance, THE Alliance, due to start in April next year. THE Alliance plans to deploy a fleet of more than 240 modern ships in the Asia/Europe, North Atlantic and Trans-Pacific trade lanes including the Middle East and the Arabian Gulf/Red Sea. 

Hapag-Lloyd shares were up 0.2 percent at 18.2 euros by 1424 GMT, in line with the SDAX index.