News / HMM warns of more cost cutting, despite Q1 profit boost

Photo: © Marius Steinke | Dreamstime.com

Announcing its Q1 results today, HMM warned that, despite rising profits, fears of a change in market conditions would see it cut costs and focus on high-yielding business.

Q1 revenue climbed 12% year on year, to KRW2,330bn ($1.7bn), while net profit shot up 63%, to KRW485bn, and operating profit rose to KRW407bn.

The carrier said: “Despite market uncertainties, the combined operating margin reached 17.5%, marking a surplus for the last 16 consecutive quarters.”

And the Korean shipping line put its success down to higher rates, noting that points on the SCFI were more than double what they had been in Q1 23, leading to increased revenue and profit.

The results showed similar growth to Yang Ming, which announced its Q1 results on on Friday.

HMM added: “The main economic indicators are favourable due to consistent consumer demand, including the recovery of the US economy, growth in online business from China and the easing of inflation.”

However, it warned that it “intends to prepare for rapidly shifting market conditions through cost-cutting and lucrative operations”.

Part of its plan to improve sales will begin next month with a slot exchange with its fellow The Alliance members and SM Line on its Pacific South Express service.

THEA will become the smallest alliance when Hapag-Lloyd leaves in February, even though HMM and ONE have plans to increase their fleet sizes.

HMM CEO Kim Kyung-Bae said Hapag-Lloyd’s departure would be a big opportunity for South Korea’s flagship carrier to expand and plans to work with a consultancy to devise a mid-to-long-term strategy for that expansion.

The carrier said it would also “reinforce its environmental competitiveness” as well as continue to introduce digitisation.