Disappointing rate development affects results in first half of 2016

Subdued economic growth in many parts of the world, persistently tough competition in the liner shipping industry and further declines in freight rates have marked the first half of the 2016 business year. While transport volume remained stable in the first six months at 3.7million TEU (-0.4% compared to the prior year period), the average freight rate fell by USD 254 year on year to 1,042USD/TEU, or almost 20percent. Revenue reached EUR 3.8billion in the first half of the year (prior year period: EUR 4.7billion).

It was possible to reduce year on year transport expenses by approximately EUR 600 million, or almost 16 percent. Aside from lower bunker prices and consumption than in the previous year, this development was also attributable to synergies realized as a result of the integration of the container business of CSAV and ongoing cost savings and efficiency programs. Bunker prices started to go up in the second quarter of 2016 while freight rates remained at a low level. This led to an additional negative impact on earnings.

In the first half of the current business year, Hapag-Lloyd achieved an EBITDA of EUR 196.7million (prior year period: EUR 493.3million) and an operating result (EBIT) of EUR -39.7million (prior year period: EUR 267.7million). The Group net result stood at EUR -142.1million (prior year period EUR 157.2million).

“The first-half result is disappointing,” said Rolf Habben Jansen, CEO of Hapag-Lloyd. “Our cost saving measures and efficiency programs are on track and the synergies from the merger with CSAV are being realized on schedule. But this isn’t enough to completely compensate for the significant drop in the average freight rate. Even though freight rates have finally gone back up towards the peak season in various trades this rebound is coming later than anticipated and more is needed going forward.”
 

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