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Photo courtesy Hapag-Lloyd.

Hapag-Lloyd: ‘Exceptionally Strong’ Earnings Should Help to Navigate ‘Difficult Waters’ Ahead

Mike Schuler
Total Views: 558
November 10, 2022

As good times give way to bad for container shipping, Hapag-Lloyd says its strong balance sheet should help it stay on course even in choppy waters.

Hapag-Lloyd, the world’s fifth largest ocean container carrier, sees “difficult waters” ahead for container shipping after an “exceptionally strong” first nine months of 2022.

Hapag-Lloyd operates a fleet of 252 containerships representing a total transport capacity of 1.8 million TEU.

The German liner reported “significantly higher” earnings in the first nine months of 2022, compared to 2021, propelled by higher freight rates and transport volumes that are on par with last year’s level. Group profit climbed to $14.7 billion year-to-date through September, compared to $6.7 billion during the same period last year. EBITDA came in $16.6 billion and EBIT at $15.1 billion in the first nine months of this year.

Hapag-Lloyd said the first nine months were “significantly marked” by disruptions in the global supply chains, which resulted in longer turnaround times for ships and containers. Echoing others in the sector, there was weaker demand for container transports towards the end of the third quarter resulting in “a slight easing in the shortage of available transport capacities.”

“Thanks to higher freight rates, we have achieved an exceptionally strong nine-month result. However, we are also seeing that the market environment has deteriorated further in the third quarter. This is evident, for example, in falling spot rates and rising inflation-related unit costs,” said Rolf Habben Jansen, CEO of Hapag-Lloyd AG.

Transport volumes in the first nine months remained on a par with the prior-year level, at 8,987 TTEU compared to 8,980 TTEU in 2021. Revenues increased to $28.4 billion, mainly be attributed to a significant increase in the average freight rate—to 2,938 USD/TEU in 9M 2022 vs 1,818 USD/TEU in 9M 2021—and a stronger U.S. dollar.

Significantly higher bunker prices and higher expenses for container handling pushed transport costs to $10.8 billion.

The strong results in the first nine months should help Hapag-Lloyd navigate uncertain waters ahead.

“In the coming months, the strained situation in the global supply chains should continue to normalize. At the same time, our strong balance sheet will help us to stay on course even in difficult waters,” Jansen added. “We will stick to our strategic agenda while investing more in quality and growth as well as in the further decarbonization of our fleet. One very significant focus is investment in infrastructure, which we are using to further expand our terminal portfolio.”

Speaking of terminals, Hapag-Lloyd has continued to expand its involvement in the sector, most recently through agreements on acquiring stakes in the terminal business of Chile-based SM SAAM and the Italy-based Spinelli Group. Hapag-Lloyd also has stakes in JadeWeserPort in Wilhelmshaven, the Container Terminal Altenwerder in Hamburg, Terminal TC3 in Tangier, and Terminal 2 in Damietta, which is currently under construction.

Looking ahead, Hapag-Lloyd confirmed its outlook for full year 2022, with EBITDA expected in the range of $19.5 to $21.5 billion and an EBIT in the range of $17.5 to $19.5 billion.

“However, this forecast remains subject to considerable uncertainty given Russia’s war of aggression on Ukraine, supply chain disruptions that have not yet been fully resolved, and the effects of the COVID-19 pandemic,” the company said.

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