Hapag-Lloyd chalked up an adjusted profit in the third quarter of EUR33.1 million (US$41.3 million), down from EUR66.9 million a year earlier, and indicated it will take up more measures to improve its operational performance.
“Although it is a first step in the right direction, we are not satisfied with the result. We are, however, on a good path,” said Rolf Habben Jansen, chief executive officer of Hapag-Lloyd.
The company’s net loss in the quarter was EUR50.7 million after a profit of EUR16.6 million a year earlier.
The German ocean box liner said that alongside the “expected synergies [cost savings] of US$300 million from the combination with CSAV’s container business,” Hapag-Lloyd is also using “a comprehensive optimization package to face the continuing challenges of the market and the competition.”
Foremost among these measures are to further cut costs and maximize sales, a company statement said.
The shipping line has been preparing for the planned integration of Chilean carrier Compañía Sud Americana de Vapores’ (CSAV) container business. Earlier this month, Brazil’s competition regulatory agency Conselho Administrativo de Defesa Economica approved the merger without conditions. This followed earlier clearance from, among others, the Department of Justice of the United States, the European Union, and Chile. Approvals of a few jurisdictions are still pending.
Closing of the merger transaction “is expected to occur in the coming weeks,” said Hapag-Lloyd.
In the first nine months of 2014, Hapag-Lloyd had a transport volume of 4.3 million twenty-foot-equivalent units (TEUs), a year-on-year increase of around 6%. Transport expenses fell by EUR46 million to EUR4.33 billion.
At $1,432 per TEU, the average freight rate from January to September was down almost 5% on the previous year’s figure. Revenue totaled EUR4.9 billion, a fall of 2.5% compared to the previous year. This was due to a weak U.S. dollar and low freight rates.
EBITDA (earnings before interest, taxes, depreciation, and amortization) reached EUR178.6 million for the first nine months of 2014 from the previous year’s EUR305.4 million. Operating loss came to EUR40.6 million from the previous year’s loss of EUR80.4 million, largely a result of freight rates “which fell again sharply in 2014.”
Group net loss amounted to EUR224 million, a further slide from a net loss of EUR56.1 million in the same nine months last year.
“We expect 2015 to be yet another challenging year. But we all have good reason to look ahead with optimism. With CSAV’s container business, Hapag-Lloyd will become the fourth-largest liner shipping company in the world. In addition to our market leadership in the North Atlantic, together we will also become one of the leading providers in the attractive North-South trades,” continued Habben Jansen.
Meanwhile, the Hamburg-based carrier said it will adjust rates upward on the East Asia-Arabian Gulf route from December 1, 2014. The rate increase of $300 per TEU will be applied to all cargoes and container types from the Far East (excluding Japan) to the Arabian Gulf.
