German box carrier Hapag-Lloyd reported a significantly better operating result in the first half of 2017, supported by freight rate recovery as well as healthy volume growth as the synergy from the merger with United Arab Shipping Company (UASC) started to make an impact.
In the first six months, Hapag-Lloyd generated an operating result before interest, taxes, depreciation and amortization (EBITDA) of EUR360.4 million (US$427.5 million) in the first half of 2017, up from the prior-year period of EUR196.7 million. EBIT rose to EUR87.3 million, a reversal from a loss of EUR39.7 million the preceding year.
The company still posted a net loss in the first half of the year, but this has shrunk to EUR46.1 million from the prior year’s loss of EUR142.1 million.
The half-year result includes a number of one-off effects related to the UASC transaction, whose net impact on the EBIT is around negative EUR19.0 million, it added.
In the first six months, transport volume increased by 14.0% to 4.22 million TEUs, which include almost 250,000 TEUs from the UASC group which was consolidated from May 24, 2017 onward. The combined freight rate of $1,056 per TEU is 1% above the Hapag-Lloyd rate in the first half of 2016.
Revenue rose to EUR4.5 billion (up from the prior-year period of EUR3.8 billion), which includes EUR199.0 million from the inclusion of the UASC group.
In the second quarter of 2017, the group delivered an EBIT of EUR83.8 million, reversing the year-ago loss of EUR44.5 million, and posted a net result of EUR16.0 million as compared to a loss of EUR99.3 million in the same period last year.
“The merger with United Arab Shipping Company (UASC) on 24 May 2017 helped the Company to strengthen its market position and climb to fifth place among the world’s liner shipping companies,” said Hapag-Lloyd in a written statement.
“The market in container shipping remains challenging, but we have managed to make very good progress in the first half year of 2017,” said Rolf Habben Jansen, CEO of Hapag-Lloyd AG. “We improved profitability significantly and the integration of UASC will be largely completed in the third quarter. That will allow us to start capturing synergies very soon after the integration.”
Overall, the merger with UASC is expected to generate annual savings of $435 million from 2019 onward, with most of the savings already to be realized in 2018.
For 2017, Hapag-Lloyd expects to see an increase in its transport volume. Bunker cost rose in the first half of 2017 and will remain on that level for the rest of the year, and the average freight rate will be unchanged compared to 2016.
“EBITDA and EBIT will clearly exceed the previous year’s level,” it forecasts.
Photo: Buonasera
