State-owned South Korean liner operator HMM saw quarterly profits soar over the billion-dollar threshold on the back of much stronger freight rates.
Net profits soared to KRW 1.74trn ($1.2bn) in the three months to the end of September.
That is a rise 1,731% from the figure of KRW 95bn in the same period in the previous year.
Revenues rose by 67% to KRB 3.5trn over the period.
The Seoul-based company attributed the rise to a more than tripling of freight rates.
That was illustrated by a rise in the Shanghai Containerized Freight Index to 3,082 points, up from 986 points in the same period last year.
That pushed up operating profit to KRW1.4trn — up from KRW 76bn last year — and lifted the operating margin to 41.1%.
Weaker prospects
Looking ahead, HMM described the market outlook for its container division during the fourth quarter as weak due to the off-peak season.
The company also flagged ongoing supply uncertainty due to the prospect of port strikes in the US.
However, the company said a new alliance structure will optimise its transport network and boost revenue.
HMM is forming the Premier Alliance network with Japanese liner operator Ocean Network Express and Taiwan’s Yang Ming Marine Transport, following the departure of a fourth partner, Hapag-Lloyd, from the existing partnership known as THE Alliance.
For HMM’s bulk division, demand uncertainty and economic risks remained despite the winter peak season.
The company would focus on maximising profitability through long-term contract extensions and new agreements.
HMM is the eighth largest liner company and is 67% owned by two state-owned shareholders, the Korea Development Bank (KDB) and ship finance institution Korea Ocean Business Corp (KOBC).
KDB controls 33.7% and KOBC some 33.32%, having recently raised their stake from just under 58% of the liner operator.
That followed the conversion in 2023 of over KRW 1trn ($740m) of bonds for shares that raised their stake in HMM from 40% to 58%.
KDB and KOBC announced a plan to privatise HMM in July 2023, but efforts since then have failed to find a buyer.
The disposal of a 58% stake in the company to South Korea’s Harim Group collapsed in February when the two sides were unable to agree terms.
But the fate of the company remains uncertain given mixed messages issued by important stakeholders.
