Hapag 9 months 2023 profit drops 77% on lower freight rates
Hapag-Lloyd Group’s business activities have been split into liner shipping and terminal & infrastructure segments
German carrier Hapag-Lloyd reported a 77 percent decline in group profit at €3.2 billion for the first nine months of 2023 compared to €13.8 billion in the same period last year on 45 percent decline in average freight rate to $1,604/TEU.
Carried volume declined marginally to 8.92 million TEUs from 8.99 million TEUs in the corresponding period last year, says an official release.
Total revenue declined 47 percent to €14.1 billion from €26.7 billion in the first nine months of 2022.
"Following the completed acquisition of the terminal business of Sociedad Matriz SAAM on 1 August 1, 2023, the business activities have been separated into liner shipping and terminal & infrastructure segments.
"In the liner shipping segment, a significant decline in the average freight rate caused EBITDA to fall to €4.1 billion in the first nine months of 2023 (9M 2022: €15.6 billion). Segment EBIT fell accordingly from €14.1 billion to €2.7 billion.
"The terminal & infrastructure segment generated EBITDA of €35.5 million and EBIT of €27.1 million in the first nine months of 2023. Since the new segment is still in the process of being formed, it does not reflect the results of a full nine-month period. It comprises Hapag-Lloyd’s stakes in 20 terminals in Europe, Latin America, the United States, India and North Africa as well as other infrastructure participations."
Rolf Habben Jansen, CEO, Hapag-Lloyd says: “Thanks to an increase in transport volumes in the third quarter, volumes are roughly flat for the nine-month period compared to 2022. At the same time, we have continued to implement our strategic agenda, expanded our terminal portfolio, and boosted customer satisfaction again through quality improvements. However, freight rates are below the prior-year level, and, as expected, fell again in the third quarter – which is reflected in much lower earnings. In response, we are working hard to reduce our expenses even more such as by achieving savings on the procurement side and making adjustments to our service network. Nevertheless, if spot rates do not recover, we could face some challenging quarters in this subdued market environment."
Net liquidity decreased to €2.8 billion at the end of September 30, 2023 (December 31, 2022: €12.6 billion) after distribution of a dividend of €11.1 billion and the purchase price payment for SAAM, the release added.
With the business development in the first nine months of 2023 being in line with expectations, the board has reiterated its forecast for 2023. Group EBITDA is now expected to be in the range of €4.1-5 billion (previously: €4-6 billion) and EBIT in the range of €2.2-3.1 billion (previously: €2-4 billion).
"This forecast is subject to uncertainty given the many geopolitical conflicts, persistent inflationary pressures, and the continued high inventory levels of many customers."