Hapag-Lloyd posts 77% drop in 9-month net profit, cuts outlook (updated)

Hamburger Hafen und Logistik AG

09/11/2023 08:22

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      Profits fall as freight rates dive
    

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      Company lowers full year earnings guidance
    

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      Cancels several services but does not plan job cuts
    

  
 (Adds details from ad hoc statement in paragraphs 7 and 10, CEO
quotes from interview in paragraph 4, 8 and 9, shares reference
in paragraph 10)
    By Vera Eckert and Elke Ahlswede
       FRANKFURT, Nov 9 (Reuters) - German container shipper
Hapag-Lloyd  HLAG.DE  on Thursday posted a net profit of 3.2
billion euros ($3.43 billion) for the first nine months of 2023,
down by 77% from a year earlier, and cut its forecasts for
full-year earnings.
    Net profit was down from 13.8 billion euros in comparable
2022 when the shipping industry, a proxy for global trade,
boomed amid post-pandemic recovery and because logistics
disruptions drove up prices for consumers.
    This year, the global economic slowdown and the clearing of
port log-jams sent freight rates down sharply, which has also
harmed Hapag-Lloyd competitor Maersk  MAERSKb.CO .
    "At the moment, everything is under pressure. Freight rates
in some segment are at a level where you cannot operate ships
profitably," chief executive Rolf Habben Jansen said in an
interview with Reuters.
        Earnings before interest and taxes (EBIT) were now seen
to be ranging between 2.2-3.1 billion euros, down from a 2-4
billion euros range quoted before.
    EBITDA was expected to be in a range of 4.1-5 billion euros
vis-a-vis a previous range of 4-6 billion euros.
     The forecasts remained exposed to uncertainty amid
geopolitical conflicts, inflationary pressure and high inventory
levels of customers, the company said.
        Transport volumes, however, remained almost at par with
those in the prior year at 8.9 million twenty-foot equivalent
units (TEU), up nearly 5% year-on-year in the third quarter.
    Relief also came from lower shipping fuel prices, which
dropped by 19% to an average $611 per tonne in the nine months.
    Freight rates were off 45% in the nine months at $1,604 per
TEU, taking revenue down 46% to 14.1 billion euros.
        Habben Jansen said the company expects no short-term
recovery of the rates and has responded by cutting several
services on key routes.
  
        But the cancellations so far do not exceed 20% of
previous voyages schedules.
  
        Cuts to staff, totalling 13,500 worldwide, were
currently not on the agenda.
  
        Maersk is seeking up to 10,000 reductions.
  
    A small free float of tradeable shares in Hapag-Lloyd did
not change hands early on Thursday.
    
($1 = 0.9340 euros)

 (Reporting by Vera Eckert; Editing by Janane Venkatraman and
Linda Pasquini)
 ((vera.eckert@thomsonreuters.com; +49 30 2201 33654;
@EckertVera;))