Hapag profit soars 1,000% to US$10.8B on Asian goods-driven rate surge

Hapag-Lloyd expects earnings trend to continue in first half of this year. Photo from Hapag-Lloyd
  • Net profit leaps from US$1.07 billion in 2020 on “very strong’ demand for Asian goods 
  • Earnings uptrend expected to continue in 1H22 in the shadow of supply chain disruptions and Ukraine conflict
  • With net debt paid off, liquidity rises to US$8.7 billion, and group proposes €35 (US$38.20) dividend per share 

Hapag-Lloyd, one of the world’s largest ocean container liners, has reported around US$10.8 billion net earnings, soaring nearly 1,000% from US$1.07 billion in 2020 as shipping rates surged due to “very strong” demand for goods that Asia exports.

The audited annual report for the 2021 financial year that the German shipping group published on March 10 showed earnings before interest, taxes and debt amortization, or EBITDA, increased to slightly more than US$12.8 billion from US$3.08 billion in 2020.

EBIT also rose nearly 10 times to US$11.1 billion last year from US$1.5 billion in 2020, mainly driven by the significantly improved freight rates.

“We look back on an exceptionally successful year in which we invested massively in modern vessels and new containers. In addition, we have significantly strengthened our financial and asset position,” said Rolf Habben Jansen, chief executive of Hapag-Lloyd AG.

“However, transport expenses have unfortunately also risen significantly, mainly due to the bottlenecks in the global supply chains,” he added.

Revenues more than doubled to roughly US$26.4 billion from US$14.6 billion in 2020, which the group attributed mainly to a higher average freight rate of US$2,003 per 20-foot equivalent units (TEU), as against US$1,115/TEU in 2020.

Hapag-Lloyd said transport volumes were roughly on a par with the prior-year’s level, at 11.9 million TEU versus 11.8 million TEU, due to the strained supply chains.

At the same time, transport expenses rose 17.1% to US$12.2 billion, particularly due to higher bunker prices and charter rates as well as increased demurrage and storage fees.

In 2021, net debt was completely paid off, taking the group’s liquidity to roughly US$8.7 billion, significantly exceeding its financial debt.

This left Hapag-Lloyd with net liquidity of around US$2.5 billion as of December 31,2021.

“In light of this very successful financial year, the Executive Board and Supervisory Board of Hapag-Lloyd AG have decided to propose to the annual general meeting that a dividend of €35 per share be paid out for the 2021 financial year,” the group said in its report.

Hapag-Lloyd now expects earnings to be very strong in the first half of 2022 and forecasts that the strained situation in the global supply chains will ease in the second half of the year, leading to a start of normalization of the container shipping sector’s earnings.

The group expects EBITDA to range from US$12 billion to US$14 billion and EBIT to be between US$10 billion and US$12 billion. But Hapag-Lloyd said this forecast remains subject to considerable uncertainty due to the COVID-19 pandemic and the Ukraine crisis.

“The 2022 financial year has gotten off to a successful start for us, but the disruptions in the supply chains have not eased materially yet. In addition to that, we all face the terrible war in Ukraine,” said Jansen, whose contract as CEO was extended by the group.

“We stand united with the international community, have stopped our bookings to and from Russia, and call for de-escalation and peace,” he said, adding that the safety and well-being of his employees remains the top priorityin addition to providing humanitarian support.