HMM’s profits continued their steep decline amid lingering uncertainty over the future of the South Korean liner company.
Net profits sank by 79% to KRW 301bn ($226m) in the fourth quarter, down from KRW 1.41trn in the same period in 2022.
Revenues fell 41% to KRW 2bn, down from KRW 3.5trn a year earlier.
The Seoul-based carrier blamed a slowdown in demand and the influx of new container ships, which had led to the normalisation of the container market.
That put freight rates in key trade lanes under downward pressure in 2023, it said.
Disruptions in the Red Sea and a severe drought in the Panama Canal had left the company facing “widespread uncertainty and market volatility”.
HMM’s future is further clouded after the collapse on 6 February of its sale by government stakeholders to South Korea’s Harim Group.
Complications
Analysts believe any future sale of HMM will be more complicated, given expectations of further rate declines eating into profits and the pending shake-up of the liner alliance in which the company is a member.
But HMM said it can secure a “solid foundation for future growth”, regardless of the collapsed sale.
Part of that conviction is premised on the pending delivery of 12 LNG-ready neo-panamax newbuildings from South Korean shipyards.
Once delivery is completed, large container ships over 10,000 teu will account for 80% of HMM’s fleet, “substantially improving cost structure and operational efficiency”, it said.
The first of those newbuildings, the 13,000-teu HMM Garnet (built 2024), was named at a ceremony at HD Hyundai Heavy Industries in January. Other ships in the series are being built at Hanwha Ocean, the former Daewoo Shipbuilding & Marine Engineering.
“We expect our new ships to give us strong environmental credentials and to provide us with the capacity and flexibility in the face of growing competition in the global market,” said HMM chief executive Kyung-bae Kim.
The HMM Garnet is deployed in the trades from Asia to the US East Coast together with HMM’s partners in THE Alliance, Germany’s Hapag-Lloyd, Taiwan’s Yang Ming Marine Transport and Japan’s Ocean Network Express.
But HMM and its Asian alliance partners may be forced to adapt that service next year, when Hapag-Lloyd is leaving THE Alliance to form a new cooperation with AP Moller-Maersk.
HMM operates around 100 container ships, of which around 60 are owned, including container ships, VLCCs and bulk carriers. It has 35 newbuildings on order.
