Posted on August 15, 2016
By Michael Hollmann, Fairplay
Hapag-Lloyd’s earnings continued to deteriorate in the second quarter, dragging the German container line’s first-half operating result to a loss.
Earnings before interest and tax (EBIT) posted a EUR39.7 million shortfall, reversing a EUR267.7 million surplus in the same period last year, despite estimated synergies and cost savings of hundreds of millions of dollars from integrating CSAV’s container shipping business last year.
The net second-quarter result slumped to a loss of EUR142.1 million (USD157.9 million), down from a EUR157.2 million profit in the first six months of 2015.
Hapag-Lloyd chief executive officer Rolf Habben Jansen blamed the group’s disappointing results on the prolonged slump in freight rates.
“Although rates have recently picked up across various routes for the peak season, the recovery occurs later than we expected,” he said in a press statement.
Reactions on the stock exchange to the results were muted as the group had issued a profit warning last month. In Frankfurt Hapag-Lloyd’s share price was down 2.8% by around noon on Wednesday.
Carrying volumes during the first half of the year edged down only -0.4% to 3.7 million teu. But the average freight per teu dropped by almost 20%, prompting a similar slide in turnover to EUR3.9 billion, down from EUR4.7 billion last year, said the company.
Rising bunker costs in the second quarter put further pressure on margins.
Habben Jansen said the focus on cost savings should intensify in the second half.
He also urged that a merger with United Arab Shipping Co be closed quickly, pending regulatory approval, and that the Dubai-headquartered carrier be integrated rapidly into Hapag-Lloyd. Synergies from the union should total at least USD400 million, some of it hopefully in 2017.
Source: Fairplay
