Hapag-Lloyd delivers strong 2019 result despite worries for coming months

Hapag-Lloyd delivers strong 2019 result despite worries for coming months
The carrier saw revenue growth of 3%

Hapag-Lloyd delivered a net result of around US$418m last year, boosted by higher volumes and better freight rates, although there are lingering fears about expectations for 2020 owing to the coronavirus (COVID-19).

The average freight rate of 1,072 US$/teu was up by 2.7% over the previous year due to a stronger focus on more profitable trade lanes and active revenue management, noted the German company.

The 1.4% year-on-year increase in transport volumes, to more than 12m teu, also made a positive contribution to revenues, which increased in the 2019 financial year by approximately 3% to US$14.1bn.

EBITDA rose to US$2.2bn while operating profit (EBIT) climbed to US$908m.

Lower expenses for the handling and inland haulage of containers, a slightly lower average bunker consumption price of US$416 per tonne as well as the first-time application of IFRS 16 had a positive effect on transport expenses, which amounted to US$10.9bn.

Rolf Habben Jansen, CEO of Hapag-Lloyd, said: “Today we are in rapidly changing and uncertain times, but that does not take away that 2019 was a very good year for Hapag-Lloyd.”

He is confident about the shipping industry’s hopes of emerging from the COVID-19 crisis in better shape than it did following the 2008/9 financial crisis.

On a conference call with investors, he noted: “This crisis today is very different. One of the things that could actually help us there is the orderbook is at pretty much an all-time low of around 10% of the global fleet, which is very different than the 50-60% we used to see 12 years ago when we got into the financial crisis.

“A lot of supply came in [during] the years after that when demand was slowly starting to recover. We believe that will be different now.”

For 2020, Hapag-Lloyd today expects an EBITDA of €1.7 -2.2bn (US$1.8-2.3bn) and an EBIT of €0.5-1.0bn (US$0.5-1.1bn although this forecast is subject to considerably higher uncertainties than normal, particularly due to the coronavirus outbreak, which will impact the development of earnings in at least the first half of 2020, it added.

After a decent start of 2020, global container volumes will be impacted by the global coronavirus crisis, pointed out the carrier, and the magnitude of that is impossible to determine right now.

The shipping line anticipates that transport capacity deployments may have to be adjusted in light of the coronavirus in the coming months to cope with lower demand.

Habben Jansen stated: “2020 will be a very unusual year after we have seen that due to the coronavirus outbreak conditions in many markets have changed very quickly over the last weeks.After the initial shock, markets in China and other Asian countries have started to recover probably faster than many feared – but now also the other continents are impacted, and the effects of that will be significant.

“We will in the upcoming weeks and months mainly focus on the three things that matter most to us: the safety and health of our people, keeping the supply chains of our customers flowing and taking precautionary financial measures to weather the storm if it lasts longer than anticipated.”