HMM grows Q1 profit by 20,238% to US$2.4B

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HMM ship at berth
HMM expects a modest uplift in container volumes, led by the gradual easing of the Shanghai lockdown and demand to replenish US inventory. Photo from HMM
  • HMM grows Q1 profit by 20,238% to US$2.4B
  • Revenue rose 103% to KRW4.919 trillion (US$3.83 billion) in the first quarter this year from KRW2.428 trillion in the same period last year
  • Operating profit increased three-fold to KRW3.149 trillion in the first quarter from KRW1.019 trillion a year ago. Operating margin grew to 64% in 2022 from 42% in 2021
  • Net profit was KRW3.132 trillion with a margin of 64% in Q1 2022

HMM Co. Ltd., formerly Hyundai Merchant Marine, grew its profit by a whopping 20,328% to KRW3.132 trillion (US$2.44 billion) in the first quarter of 2022, its best-ever quarterly profit, mainly driven by high freight rates and efficient fleet operations, the company announced on May 13.

The profit upsurge from KRW154 billion in the first quarter of 2021 vastly outperformed the Shanghai Containerized Freight Index (SCFI), which climbed to 4,851 points, up 74.5%, from 2,780 points in the first quarter last year.

HMM increased its revenue 102.6% to KRW4.919 trillion from KRW2.428 trillion in the same quarter last year.

Global trade remained strained due to the Russia-Ukraine war and stringent COVID-19 lockdown measures in China during the first quarter this year, said HMM in its media advisory.

“These uncertainties are still widespread and market volatilities are expected to continue in the coming months,” said HMM, the eighth largest global container liner.

HMM is headquartered in Seoul and operates a fleet of over vessels. The company moves the largest portion of South Korea’s exports.

The company is scheduled to join contract negotiations this year between the International Longshore & Warehouse Union (ILWU) and Pacific Maritime Association (PMA) in the US West Coast, which will impact global supply chains.

High inflationary pressure this year arising mainly from the Russian war on Ukraine can negatively impact demand growth in the Asia-North America trade, which accounts for the highest proportion of HMM’s business portfolio, the company said.

However, HMM said a modest uplift in container volumes is expected, led by the easing of the lockdown in Shanghai on a gradual basis and demand for inventory replenishment in the United States.

HMM returned to profitability in the second quarter last year with an operating profit of US$115 million and net profit of US$23 million, despite high volatility due to the Covid-19 pandemic.

HMM said it will seek to enhance its profitability with the seamless operation of twelve 24,000-TEU ships in its fleet, the realignment of service routes, and a string of cost-cutting measures.

In March this year, HMM elected Kyung-bae Kim, the former chief executive of Hyundai Glovis, as its new CEO in place of Jae-hoon Bae.

Kim is regarded as a logistics expert who had led the steady growth of Hyundai Glovis while serving as its chief executive for about nine years.

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