Amid the German ocean carrier’s merger with United Arab Shipping Co., operating results increased with a 14 percent rise in transport volumes, while overall earnings dropped due to “one-off effects related to the UASC transaction.”
Hapag-Lloyd experienced financial setbacks with its acquisition of UASC earlier this year, but expects future savings as early as 2018.
Ocean carrier Hapag-Lloyd of Germany posted improved operating results, along with a loss of 46.1 euros (U.S. $55.4 million) for the first half of 2017, due primarily to its merger with United Arab Shipping Co. (UASC) earlier this year, according to the company’s most recent financial statements.
The German carrier said the first half result “includes a number of one-off effects related to the UASC transaction” with a net impact on earnings before interest and tax (EBIT) of negative EUR 19.0 million.
However, Hapag-Lloyd’s transport volumes increased 14 percent to 4.22 million TEUs during the first half, while its combined average freight rate of $1,056 per TEU was an increase of 1 percent over the same period last year.
Revenues for the carrier increased 21 percent to EUR 4.5 billion (U.S. $5.4 billion), which includes UASC’s revenue of EUR 199 million euros. Hapag-Lloyd generated an operating result before interest, taxes, depreciation and amortization (EBITDA) of EUR 360.4 million in the first half year of 2017, up from EUR 196.7 million during the same period last year. Earnings before interest and tax rose to a positive 87.3 million euros, up from an EUR 39.7 million loss the year prior.
“The market in container shipping remains challenging, but we have managed to make very good progress in the first half year of 2017,” Hapag-Lloyd CEO Rolf Habben Jansen said of the results. “We improved profitability significantly and the integration of UASC will be largely completed in the third quarter. That will allow us to start capturing synergies very soon after the integration.”
According to Hapag-Lloyd, the merger with UASC is expected to produce savings of $435 million annually from 2019 onwards, most of which “will already be realized in 2018.” For 2017, Hapag-Lloyd expects transport volumes to increase and bunker costs and freight rates to remain stable. EBITDA and EBIT will exceed the previous year’s level, the company said.
Hapag-Lloyd operates a fleet of 219 container ships and with a total container capacity of 2.3 million TEUs, offering 129 liner services, particularly within the transatlantic, Middle East, Latin America and intra-America trades.