The German ocean carrier increased its operating result, revenues and volumes from 2016 figures, largely thanks to its acquisition of United Arab Shipping Co., which closed May 24, 2017.
Hapag-Lloyd said Wednesday that it handled more containers, had higher revenues and a significantly improved operating result for the full year in 2017 from a year prior.
“Besides a positive development of the worldwide container transport volume and a slight recovery of freight rates, this development was mainly driven by the merger with the United Arab Shipping Company Ltd. (UASC),” Hapag-Lloyd said. That merger, which made Hapag-Lloyd the sixth largest container carrier, closed in May 2017. Commercial integration of the two companies was completed in October and November of last year.
Hapag-Lloyd reported its financial results in U.S. dollars as well as euros.
The preliminary and unaudited results as reported by the company showed:
• Revenues rose 32 percent to $11.3 billion in 2017 from $8.5 billion in 2016;
• EBIT rose 234 percent to $466 million from $140 million in 2016;
• And earnings before interest, taxes, depreciation and amortization (EBITDA) climbed 78.5 percent to $1.2 billion from $671 million in 2016.
Hapag-Lloyd did not release an estimate of net income for the year, but is scheduled to release its full financial statement and annual report on March 28.
The company transported 9.8 million TEUs last year, 29 percent more than the 7.6 million TEUs handled in 2016.
The average freight rate improved less than 1.5 percent to $1,051 per TEU in 2017 compared with $1,036 per TEU in 2016.
The company said an increase in average bunker consumption price from $226 per metric ton in 2016 to $318 per metric ton in 2017, along with increased container volumes, drove its transport expenses up by 25.5 percent. However, despite the higher fuel costs, the company saw a further reduction of unit costs.
At the end of last year, the combined companies had a fleet of 219 ships with a carrying capacity of 1.6 million TEUs.
In a presentation to investors, the company said its “main focus going forward is to realize the synergies of the UASC integration and further cost optimization,” as well as to deleverage the company in the wake of the merger. The company said total synergies of $435 million per year are expected to be achieved from 2019 onward as a result of the merger.
It said those synergies will come from:
• An optimized new vessel deployment and network, lower slot costs, and efficient use of its fleet;
• Lower overhead through the consolidation of corporate and regional headquarters, country organizations, as well as combining functions such as marketing, use of consultants, and auditing;
• And lower container handling rates, a reduction in container imbalances and leasing costs, optimization of the combined company’s inland haulage network, and sharing of best practices.
The company gave an upbeat assessment of the outlook for 2018, saying, how “container shipping growth remains on a healthy and constant level, driven by solid global economic growth.”
At the same time, it said the containership orderbook “remains at a historically low level, while almost no idle capacity is available.”
Hapag-Lloyd also said it has “no planned new vessel investments in the next years.”
The company said that short term, supply pressure will most likely persist, with shipyards expected to deliver 1.5 million TEUs of new capacity in 2018, consisting of 1.2 million TEUs in the first half of this year and 300,000 TEUs in the second half.
However, it said deliveries of containerships from shipyards are currently expected to drop off in 2019 and 2020, citing analyst estimates of deliveries of containerships with capacity of 700,000 TEUs in 2019 and 500,000 TEUs in 2020.
Hapag-Lloyd’s 2017 growth fueled by UASC deal
