News / Hapag-Lloyd's 'pretty good half-year' turns around 2018 losses

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Hapag-Lloyd produced a net profit of $56m in the second quarter, resulting in a half-year result of $165m, a turnaround from the $122m loss recorded in the same period of 2018.

“It was a pretty good half-year,” reflected chief executive Rolf Habben Jansen (pictured) during this morning’s earnings call presentation.

“Rates were up 5%, volumes up 2% and we kept our costs stable,” he added, “but clearly there are some clouds on the horizon.”

Hapag-Lloyd carried 5,966,000 teu in H1, compared with 5,848,000 the year before, driven by healthy growth across its Atlantic, EMAO (Europe, Med, Africa & Oceania), Far East and Latin America sectors, which mitigated a weakening of liftings on the intra-Asia and Middle East regions.

The average freight rate during H1 was $1,071 per teu, versus $1,020 the previous year, which helped to compensate for an 11% jump in fuel prices, to an average of $429 per ton.

The carrier also reduced its costs for handling and haulage by 18% on the previous year, as “less profitable inland business was actively reduced”.

Mr Habben Jansen said the outlook for the full-year remained “unchanged”, with an ebit (earnings before interest & tax) range of €500m–€900m – “even if we have to deal with more trade restrictions and see increasing geopolitical risk, which of course could impact growth”.

But Mr Habben Jansen said: “We don’t see any signs that the market is falling apart. Instead, we see a market that is reasonably stable.

“We still expect a peak season, although it is a little late to start, but from our forward booking prospects we see no reason to be extraordinarily concerned about that.”

He reiterated the carrier’s strategy to focus on profitable routes and gave the example of its reduced exposure to the intra-Asia market, where, he said, “we simply could not make money”.

Hapag-Lloyd, ONE and Yang Ming will be joined in THE Alliance by HMM on 1 April next year, in a 10-year vessel sharing agreement. It was confirmed that the South Korean carrier’s 12 23,000 scrubber-fitted newbuild vessels will be immediately deployed on the Asia-North Europe tradelane.

With the inclusion of HMM, THE Alliance’s market share on Asia-Europe will increase to 25%, behind the 36% of the Ocean Alliance and the 39% of the 2M. However, on the transpacific, THE Alliance will have 30% of the market, second to the 41% dominance of Ocean, but above the 2M’s 20% and the 9% covered by “others”, such as Matson.

Mr Habben Jansen dismissed media reports that Hapag-Lloyd was about to confirm an order for six 23,000 teu ULCVs, saying the company had “no plans” to order any ships this year – but he but did not rule out placing orders in 2020.

Hapag-Lloyd has agreed IMO 2020 low-sulphur fuel long-term contracts with its customers, but will only agree surcharges for spot rate and three-month contracts in Q4.

Mr Habben Jansen said the carrier was confident there would be a sufficient supply of compliant fuel at its main bunkering hubs of Rotterdam and Singapore.