Germany’s Hapag-Lloyd saw quarterly profits plunge by nearly $5bn as weaker freight rates continue to erode profitability.
The world’s fifth-largest liner operator saw net profits plummet to $293m for the three months to the end of September — a paltry comparison with the profit of $5.1bn in the same quarter last year.
The numbers could have been worse had volumes not picked up in the three months to the end of September.
“Thanks to an increase in transport volumes in the third quarter, volumes are roughly flat for the nine-month period compared to 2022,” chief executive Rolf Habben Jansen said.
“However, freight rates are below the prior-year level and, as expected, fell again in the third quarter, which is reflected in much lower earnings.”
The Hamburg-based company said freight rates were much lower in several trades. Rates averaged $1,312 per teu in the third quarter, down from $3,106 per teu in the same period last year.
Revenues halved to $4.4bn, down from $9.8m in the same quarter last year.
“In response, we are working hard to reduce our expenses even more, such as by achieving savings on the procurement side and making adjustments to our service network,” Habben Jansen said.
“Nevertheless, if spot rates do not recover, we could face some challenging quarters in this subdued market environment.”
Narrower guidance
The company’s new full-year guidance excludes its earlier higher-end earnings forecast.
Ebitda is expected to be in the range of $4.5bn to $5.5bn, compared with a broader estimate of $4.3bn to $6.5bn issued in March.
Ebit is expected to be in the range of $2.4 to $3.4bn, compared with an estimate eight months ago of between $2.1 to $4.3bn.
Ebitda in the third quarter dropped to $744m, down from $5.7bn, and Ebit was $228m, down from $5.2bn.
Habben Jansen said the company had “continued to implement our strategic agenda, expanded our terminal portfolio, and boosted customer satisfaction again through quality improvements”.
That includes an organisational change designed to accommodate an expanded terminal business.
Hapag-Lloyd has split its business activities for the first time into Liner Shipping and Terminal & Infrastructure segments.
In the first nine months of the year, the Ebitda in the Liner Shipping segment decreased to $4.5bn. Revenues fell to $15.2bn over the period.
In the Terminal & Infrastructure segment, an Ebitda of $38m and an Ebit of $29m were logged in the first nine months.
The terminal division comprises Hapag-Lloyd’s stakes in 20 terminals in Europe, Latin America, the US, India and North Africa as well as other infrastructure participations.
