Hapag-Lloyd’s liner business doubles operating profit
Hapag-Lloyd Container Line increased its operating profit after interest 158 percent last year to 253 million euros ($316 million) in 2003 from 98 million euros in 2002.
Hapag-Lloyd AG’s publication of its annual results in Hamburg today provides further data on the strong results of its container shipping activities last year that were not disclosed when TUI AG, the parent company of Hapag-Lloyd, reported the group’s results on March 31.
TUI said at the time that Hapag-Lloyd’s combined operating profit from liner shipping and cruise activities increased 108 percent last year to 252 million euros ($314 million). The latest figures show that Hapag-Lloyd Container Line generated virtually all of the profit of TUI’s shipping activities, whereas the Hapag-Lloyd cruise shipping arm made an operating loss of 5 million euros ($6 million).
Hapag-Lloyd Container Line increased its revenue 8.5 percent last year to 2.2 billion euros ($2.8 billion) when measured in local currency, despite the depreciation of the U.S. dollar. Hapag-Lloyd Container Line’s carryings jumped 13.5 percent last year to 2.1 million TEUs.
Hapag-Lloyd said Hapag-Lloyd Container Line’s container volume was “expanding faster than the market on average.” The German company cited a Global Insight estimate that world container traffic rose about 7 percent last year to 65.7 million TEUs.
Hapag-Lloyd said Hapag-Lloyd Container Line's improved results were due to its volume growth and the rise in freight rates in dollars.
“It also benefited from revenues from hedging operations and the release of provisions,” Hapag-Lloyd said. “A negative factor was the weaker U.S. dollar.”
Hapag-Lloyd Container Line handled the increase in volume 'with almost no increase in staff,' the company added.
Hapag-Lloyd’s non-shipping activities, comprising logistics and forwarding subsidiaries VTG-Lehnkering AG, Pracht Freight Forwarding and Algeco S.A., reported an operating profit of 81 million euros ($101 million) for 2003, similar to the profit of 82 million euros in 2002.
In 2003 Hapag-Lloyd made an overall operating profit of 343 million euros ($429 million) from its shipping and logistics activities up 70 percent on 2002. This was the best operating profit in the company’s history. Hapag-Lloyd’s revenue rose to 3.9 billion euros ($4.9 billion) last year from 3.8 billion euros in 2002.
Hapag-Lloyd also produced a cash flow of 514 million euros ($642 million) in 2003 up from 310 million euros in 2002, and said its return on equity before tax amounted to 22 percent last year.
The German company plans to reward its sole stockholder, TUI, with a huge dividend payment of 462 million euros ($578 million) this year up from 53 million euros in the previous year.
Hapag-Lloyd reiterated it plans to place about one-third of its shares on the stock exchange in the second half of the year.
Hapag-Lloyd said it will be quoted on the stock market as a “focused shipping company,” comprising Hapag-Lloyd Container Line and Hapag-Lloyd Cruises, and will therefore sell its activities outside shipping.
“Following the sale of bulk and special logistics, the processes for selling rail logistics at VTG-Lehnkering and the holding in Algeco have been initiated,” said Michael Behrendt, chairman of Hapag-Lloyd.
The German company said the preparations for the stock market listing are under way. The selection of consortium banks will begin soon, to allow the initial public offering to be completed on the Frankfurt stock exchange in the second half of this year.
The preparations for the stock market listing also included the transfer of the containerships of Hapag-Lloyd AG to Hapag-Lloyd Container Line.
Commenting on its prospects for this year, Hapag-Lloyd said owing to its forthcoming disinvestments, its sales and profit in 2004 will be down on the previous year. However, it said it 'aims to achieve another gratifying operative profit.'