Home » Breaking News, Maritime » Hapag-Lloyd improves H1 profit on higher volumes, freight rates

Germany’s largest container shipping liner Hapag-Lloyd has reported significantly higher earnings in the first half of 2019 as against the same period of the previous year, citing improved trade volumes and slightly better freight rates.

In a statement, Hapag-Lloyd said earnings before interest and taxes (EBIT) increased to EUR389 million (US$435 million) in the first half of the year from EUR91 million in the same period in 2018. Net profit rose to EUR146 million, a reversal from a loss of EUR101 million in the first six months of 2018.

Earnings before interest, taxes, depreciation and amortization (EBITDA) climbed to EUR956 million from EUR427 million year-on-year. The EBITDA increase of EUR529 million included a positive effect of EUR217 million caused by the new reporting standards IFRS 16, said the company.

“Against the backdrop of unwavering intense competition the earnings performance in the first half of the 2019 financial year was clearly positive and within the Executive Board’s expectations,” said the financial report.

“Thanks to higher transport volumes in our core trades, good cost control and slightly better freight rates, we can look back on a good first half year. This also allowed us to redeem additional debt through the early repayment of a senior note,” said Rolf Habben Jansen, chief executive officer of Hapag-Lloyd.

Revenues increased in the first half year to EUR6.2 billion from EUR5.4 billion in the same period last year. The transport volume rose by 2% to 5,966 TTEUs as against 5,848 TTEUs previously, and the average freight rate climbed by 5% to $1,071 per TEU from $1,020 per TEU in the first six months of the preceding year.

In contrast, higher bunker prices of $429 per tonne, from $385 per tonne last year, had a negative impact on the result, said the report.

Said Jansen: “After a solid first half of 2019, our outlook remains unchanged, even if we have to deal with more trade restrictions and see increasing geopolitical risk, which of course could impact growth. In the second half of the year, we will continue implementing our Strategy 2023 in our efforts to become the number one for quality.”

Hapag-Lloyd is forecasting EBITDA of EUR1.6 to EUR2.0 billion and EBIT of EUR0.5-EUR0.9 billion in 2019, including a currently anticipated earnings effect from the first-time application of IFRS 16 on EBITDA. This outlook, it said, is provided the shipping company achieves the expected freight rate, the anticipated improvement in revenue quality combined with a low triple-digit amount in cost savings as part of Strategy 2023, and the expected growth in volumes.

Photo: Henry M. Trotter

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