Hapag-Lloyd makes a comeback
Hapag-Lloyd’s operating earning’s more than doubled in 2007 due to an upswing in freight rates from the second half and the completion of the CP Ships integration.
Amid uncertainty over the German carrier’s future, parent TUI AG today reported earnings before interest, tax and amortization (EBITA) from container shipping of 327.7 million euros ($482 million), compared to an EBITA loss of 114.3 million euros in 2006. The latest results include one-off effects of 200.5 million euros from the sales of Montreal Gateway Terminals and a minority interest in Germanischer Lloyd. Adjusted to exclude those disposals and other one-off items related to the CP Ships acquisition, Hapag-Lloyd’s underlying EBITA for 2007 was 182.5 million euros ($269 million), up 124.5 percent for the year on a like for like basis.
TUI’s revenue from container shipping dropped 1.2 percent to 6 billion euros ($8.85 billion) from 6.09 billion euros in the previous year, which the Hanover-based shipping and tourism group said was primarily due to the weakness of the U.S. dollar exchange rate against the euro.
Hapag-Lloyd’s global container volumes increased 9 percent to
5.45 million TEUs, although despite what TUI described as a “substantial” rise in freight rates in the second half of 2007, average rates for the year were down 1.3 percent at $1,411 per TEU with the only increase coming in the Asia/Europe trade:
' Far East/Europe: 1.37 million TEUs transported, up 16.1 percent; Average freight of $1,379 per TEU, up 12.8 percent.
' Transpacific: 1.04 million TEUs (up 10.2 percent); $1,453 per TEU (down 2.1 percent).
' Transatlantic: 1.46 million TEUs (up 4.6 percent); $1,523 per TEU (down 8.2 percent).
' Latin America: 890,000 TEUs (up 12.5 percent); $1,399 per TEU (down 3.5 percent).
' Australasia: 690,000 TEUs (no change); $1,189 per TEU (down 2.8 percent).
As at Dec. 31, Hapag-Lloyd’s fleet was 141 containerships (58
owned) with an aggregate capacity of 493,000 TEUs. It has a total of
16 ships of 8,750 TEUs due to be delivered between this year and 2011.
“The completion of the integration of CP Ships brought the group back to the productivity level already achieved by Hapag-Lloyd in 2005,” said TUI Chief Executive Officer Michael Frenzel. “With markets picking up again, we are benefiting from the new constellation, as illustrated by our regained profitability, although average rates were still down year on year. Container shipping continues to hold considerable growth potential. We intend to develop the sector further so that Hapag-Lloyd will continue to hold a lead position among the world’s large container lines.”
Looking forward, TUI said it expects freight rates to grow in all trade lanes during 2008 and that Hapag-Lloyd will increase its volumes by 7 percent on the back of strong trade on Chinese routes.
“TUI expects to leverage the full synergy potential of 220 million euro and thus achieve a considerable improvement in earnings by the shipping division, even if volume growth should turn out to be only moderate and freight rates should only recover slightly,” the group said in its annual report.
“In this connection, the effect of the sub-prime crisis on the development of world trade cannot yet be fully assessed and thus entails an element of risk. The development of shipping bunker prices will also play an important role.” ' Simon Heaney
