-
Revenue rises 34.7% year on year to KRW18,587 billion (US$14.54 billion) in 2022
-
Operating profit up 34.8% to KRW9,946 billion ($7.78 billion), producing net profit of KRW10,066 billion ($7.8 billion)
-
HMM says it will stay on the course to enhance its business capability and face the challenges of sliding rates and weakening demand
South Korean container shipping giant HMM says it will stay on course after strong 2022 results that saw revenue rise 34.7% year on year to KRW18,587 billion (US$14.54 billion), but reflected the impact of falling shipping rates in the final quarter.
Releasing its unaudited on February 13, the carrier formerly named Hyundai Merchant Marine said operating profit surged 34.8% y-o-y to KRW9,946 billion ($7.78 billion) in 2022, producing KRW10,066 billion net profit, nearly double the KRW 5,337 billion in 2021.
The company’s fourth-quarter revenue fell 30.9% y-o-y to KRW3,528 billion, operating profit dove 51.6% to KRW1,259 billion, and net profit plunged 46.6% to KRW1,396. This was in stark contrast to the first quarter last year, when HMM posted a record set of results.
HMM, a member of The Alliance of ocean liners that includes Germany’s Hapag-Lloyd, Japan’s Ocean Network Express and Taiwan‘s Yang Ming Line, admitted that from this year onward, sailing will be rough, as the rate slide that began last year continues.
The company said it will stay on the course to enhance its business capability in line with its mid- to long-term strategy unveiled in July 2022. HMM said it will pursue this strategy by seeking to secure high-yield cargoes, promote cost control and improve operational efficiency.
“The freight rates in most key trade lanes have been under downward pressure since the first half of 2022, led by a slowdown in demand and the ease of supply chain strain,” HMM commented.
“Unfavorable market conditions are expected to continue due to widespread inflation and weak economic growth putting pressure on demand,” the company added, alluding to the sliding rates and weak demand that have forced carriers to cancel or blank sailings.
In 2022, container lines saw revenues diminish in the latter part of the year as high inflation in the US and Europe sparked by rising fuel prices amid western economic sanctions on Russia for invading Ukraine led to economic slowdown that weakened consumer demand.
The Shanghai Containerized Freight Index(SCFI) in December 2022 was 1,129 points, significantly down from 5,067 points in January 2022.
Adding to the container shipping industry’s concerns is a decision of global shipping giant Maersk to divorce from its equally mammoth 2M alliance partner MSC in January 2025.
Some market watchers are speculating that The Alliance and Ocean Alliance, which groups China’s COSCO, Hong Kong’s OOCL, Taiwan’s Evergreen and France’s CMA CGM, will follow suit and individual operators will go on their own or find new partners.
Reuters said in a January 31 report that the global shipping landscape is expected to be reshaped after the Maersk-MSC split, and may be an opportunity for HMM to expand its presence.
The new service cited speculation by multiple industry sources that the 2M break-up will bring about a more complex alliance structure that will see the alliances increase to four.
Before joining The Alliance, HMM signed a strategic partnership with 2M in 2018. Once the 2M split, shippers are expected to seek sea carriers that provide better service, Reuters said.
HMM will be able to secure a more stable route if it joins hands with the world’s second-largest shipping company Maersk, Reuters said.
