HAPAG-LLOYD REPORTS 100% JUMP IN LINER PROFIT

HAPAG-LLOYD REPORTS 100% JUMP IN LINER PROFIT

   Hapag-Lloyd, the shipping, chemical logistics and construction modules group, said it will report a near doubling of its operating profit results for its fiscal year ending Sept. 30, largely due to record profit in container shipping.

   Group operating profit before interest is expected to reach 253 million euro ($228 million) for the year, compared to a pro forma 1998-1999 operating profit of 130 million euro. Hapag-Lloyd recalculated last year's results to exclude tourism activities now transferred to parent company Preussag and to include logistics business now part of Hapag-Lloyd.

   Hapag-Lloyd’s group revenue is expected to increase 17 percent, to 3.6 billion euro ($3.2 billion).

   Hapag-Lloyd said most of the increase in operating profit came from liner shipping. Liner shipping is expected to make an operating profit before financial items of 172 million euro ($155 million), twice the operating result of 84 million for the previous fiscal year.

   Revenue from container shipping is expected to increase 25 percent, to 2 billion euro ($1.8 billion).

   Bernd Wrede, chairman of Hapag-Lloyd, said liner shipping earned two-thirds of the net profit of the group in the financial year. Liner shipping accounts for 56 percent of Hapag-Lloyd’s group revenues, following the sale of the tourism activities.

   Hapag-Lloyd said the strength of the U.S. dollar boosted profit, but higher bunker costs added 50 million euro ($45 million) to its annual expenses. Overall, the positive currency effect more than compensated for the extra fuel costs.

      The company reported that the 25-percent increase in Hapag-Lloyd Container Line’s revenue, calculated in euro, comes from higher volumes, from the depreciation of the euro against the U.S. dollar, and from higher revenues per TEU.

   Container volumes increased by 10 percent during the financial year, to 1.6 million TEUs. Average revenue per TEU rose about 2 percent.

   “There has been little recovery (in rate levels),” said Gunther Casjens, chief executive of Hapag-Lloyd Container Line. However, commenting on the state of the liner shipping industry, he said “the industry is in a much better shape.”

   Hapag-Lloyd Container Line’s operating profit margin as a percentage of revenues will reach 8.6 percent, up from 5.2 percent in the previous fiscal year. Hapag-Lloyd’s management said that this is one of the highest profit margins in the liner shipping industry.