Hapag-Lloyd cautiously upbeat after logging profit in 2017

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German ocean carrier Hapag-Lloyd said it achieved positive income growth and more than tripled its operating result (EBIT) in 2017 compared to 2016, spurred by the successful merger with United Arab Shipping Company (UASC) and higher freight rates and volumes.

The Hamburg-based box liner said that based on its 2017 annual report released March 28, 2018, group net result last year stood at EUR32.1 million (US$35.3 million), an increase of EUR125.2 million compared to the previous year of contraction amounting to negative EUR93.1 million. EBIT rose by 226.2% to EUR411 million, more than triple the EBIT of EUR126 million in 2016.

Meanwhile, earnings before interest, taxes, depreciation and amortization (EBITDA) increased 73.8% to EUR1.055 billion in 2017 from 2016’s EBITDA of EUR607 million.

“Given the market environment, we are satisfied with the financial results in 2017, especially because we at the same time completed the integration of the businesses of Hapag-Lloyd and United Arab Shipping Company Ltd. (UASC),” said Rolf Habben Jansen, chief executive officer of Hapag-Lloyd, in a written statement.

“The successful merger with UASC has significantly strengthened our competitive position. We also benefitted from improved freight rates and a positive development of the worldwide container transport volume.”

In 2017, the German ocean carrier saw revenues increase by about 29% to around EUR10 billion from 2016’s EUR7.7 billion, supported by an improved average freight rate in 2017 of $1,051 per TEU (2016: $1,036/TEU).

Transport volume increased significantly by 29% to 9.8 million TEUs last year from 7.6 million TEUs the preceding year, driven by the merger with UASC and a healthy underlying organic volume growth.

“Looking ahead, we will continue to further reduce our debt. In addition to that, we want to capture all possible synergies from the merger with UASC and become even more efficient,” said Jansen.

He also bared company plans to further improve services and introduce new digital products. “We will invest to strengthen our position as a quality services provider and will continue to grow profitably in the future.”

The executive said the market environment remains challenging, “but as we see some of the fundamentals improving gradually over the upcoming period, we remain cautiously optimistic.”

The shipping line expects an increasing demand for container shipping services, and year-on-year volume is also seen to grow due to the inclusion of UASC’s business activities for the whole year.

“Provided that the expected freight rate is achieved and the planned synergies from the merger with UASC are realised, along with the expected improvement in the quality of earnings and the anticipated growth in transport volumes, Hapag-Lloyd is forecasting a clearly increasing EBITDA and EBIT in 2018,” said the statement.