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Hapag-Lloyd posted significantly lower earnings in the first nine months of the year
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A further decline in freight rates in the third quarter was seen
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Transport volumes were up in third quarter, stable year-to-date
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Terminal activities reported separately in new business segment
Hapag-Lloyd posted lower earnings in the first nine months of the year, “significantly below the prior-year level due to the severe change in market conditions,” the company said in a statement.
Group EBITDA for the period sank 73% to US$4.5 billion (EUR 4.2 billion) from $16.6 billion, and Group EBIT plunged 80% to $3.0 billion from $15.1 billion. Group profit stood at $3.4 billion from $14.7 billion, a 77% drop.
With the further expansion of its terminal business, the Hapag-Lloyd Group’s business activities were split for the first time into Liner Shipping and Terminal & Infrastructure segments.
In the first nine months of 2023, EBITDA in the Liner Shipping segment decreased to $4.5 billion. EBIT also declined to $3.0 billion.
Revenues decreased to $15.2 billion mainly due to a lower average freight rate of $1,604/TEU compared to $2,938/TEU year-on-year. This dropped even further in the third quarter of 2023 to $1,312/TEU from $3,106/TEU year-on-year, and it was much lower in several trades compared to the same period of the prior year.
In contrast, transport volumes improved in the third quarter, rising by just under 5% to 3,110 TTEU. As a result, the combined volumes of 8,916 TTEU in the first nine months of the year were almost on a par with those of the prior-year period of 8,987 TTEU.
Transport expenses experienced a year-on-year decrease of 11% to $9.6 billion, owing in particular to the ongoing normalization of global supply chains as well as a lower average bunker consumption price of $611 per tonne compared to 755 USD/t year-on-year.
In the Terminal & Infrastructure segment, an EBITDA of $38 million and an EBIT of $29 million were achieved in the first nine months of 2023. Since the new segment is still in the process of being formed, it does not reflect the results of a full nine-month period. It comprises Hapag-Lloyd’s stakes in 20 terminals in Europe, Latin America, the United States, India and North Africa as well as other infrastructure participations.
“Thanks to an increase in transport volumes in the third quarter, volumes are roughly flat for the nine-month period compared to 2022. At the same time, we have continued to implement our strategic agenda, expanded our terminal portfolio, and boosted customer satisfaction again through quality improvements. However, freight rates are below the prior-year level and, as expected, fell again in the third quarter – which is reflected in much lower earnings. In response, we are working hard to reduce our expenses even more, such as by achieving savings on the procurement side and making adjustments to our service network. Nevertheless, if spot rates do not recover, we could face some challenging quarters in this subdued market environment,” said Rolf Habben Jansen, CEO of Hapag-Lloyd AG.
For the full year 2023, EBITDA is now expected to be in the range of $4.5 billion to 5.5 billion and EBIT to be in the range of $2.4 billion to $3.4 billion. This forecast is subject to uncertainty given the many geopolitical conflicts, persistent inflationary pressures, and the continued high inventory levels of many customers.
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