Global ocean carrier Hapag-Lloyd announced it made very good business in 2019 with net income rising to around US$418 million from $54 million the previous year due to higher volumes and better rates, but warns its earnings, at least in the first half of 2020, would be affected by the coronavirus outbreak.
The liner shipping company said earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $2.2 billion last year from $1.3 billion in 2018, while earnings before interest and taxes (EBIT) climbed to $908 million from $524 million.
“Today we are in rapidly changing and uncertain times, but that does not take away that 2019 was a very good year for Hapag-Lloyd,” the company said.
“We benefitted from higher volumes and better freight rates, kept a close eye on our costs and brought down our financial debt significantly. We also continued implementing our Strategy 2023, and achieved a Group net result that is well above the prior-year result,” said Rolf Habben Jansen, chief executive officer of Hapag-Lloyd.
Revenues increased in the 2019 financial year by about 3% to $14.1 billion. The average freight rate of $1,072 per twenty-foot equivalent unit (TEU) was up by 2.7% over the previous year “due to a stronger focus on more profitable trade lanes and active revenue management.”
The 1.4% year-on-year increase in transport volumes to more than 12 million TEUs also made a positive contribution to revenues. Lower expenses for the handling and inland haulage of containers, a slightly lower average bunker consumption price as well as the first-time application of IFRS 16 all had a positive effect on transport expenses.
For 2020, Hapag-Lloyd now expects an EBITDA of EUR1.7 billion to EUR2.2 billion and an EBIT of EUR0.5 to EUR1.0 billion, but “subject to considerably higher uncertainties than normal, particularly due to the coronavirus outbreak.”
After a decent start of 2020, global container volumes would be impacted by the global coronavirus crisis, and the magnitude of that is impossible to determine right now, it continued. It anticipates possible adjustments to its transport capacity deployments in light of the coronavirus in the coming months to cope with lower demand.
The extent of the coronavirus outbreak cannot be accurately predicted, but Hapag-Lloyd expects that it will have an impact on the development of earnings at least in the first half of 2020.
“2020 will be a very unusual year after we have seen that due to the coronavirus outbreak conditions in many markets have changed very quickly over the last weeks. After the initial shock, markets in China and other Asian countries have started to recover probably faster than many feared—but now also the other continents are impacted, and the effects of that will be significant,” said Jansen.
Photo courtesy of Hapag-Lloyd
