Hapag-Lloyd posts operating profit of $104.5 million in H1 » Manila Bulletin Business

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By (Reuters)

A Hapag-Lloyd container ship sails across the Gulf of Suez towards the Red Sea before entering the Suez Canal, in El Ain El Sokhna in Suez, east of Cairo, Egypt. (Reuters file photo)

Frankfurt – German container shipping group Hapag-Lloyd swung to a first-half operating profit as it raised transport volumes and freight rates stabilized, but it still posted a net loss after higher ship fuel costs weighed on first quarter earnings.

Profit before interest and tax (EBIT) in the first six months came to 87.3 million euros ($104.55 million), up from a year-earlier loss of 39.7 million, the company said on Tuesday.

Hapag-Lloyd posted a first-half net loss of 46.1 million euros, paring heavy losses of 142.1 million in the same period a year earlier. It posted a 16 million euro net profit in the second quarter, compared with a 99.3 million loss last year.

Hapag-Lloyd said that EBIT, earnings before interest, taxes, depreciation and amortization (EBITDA) and transport volumes in the full year will “clearly exceed previous year levels.”

The company benefits from an ongoing consolidation in the sector where it has merged with Arab peer UASC to reap synergies and form the world’s fifth largest shipping company.

“The market in container shipping remains challenging, but we have managed to make very good progress in the first half year of 2017,” Chief Executive Rolf Habben Jansen said.

“We improved profitability significantly and the integration of UASC will be largely completed in the third quarter. That will allow us to start capturing synergies very soon after the integration.”

The container shipping group Hapag-Lloyd may pay a dividend for the current year if its earnings continue along the trend seen in the first half of the year, Chief Executive Rolf Habben Jansen told Reuters.

“If we were to write a positive (net) result by the end of the year, we would seriously think about a dividend payment for 2017,” he said in an interview.

Habben Jansen had shirked the question of a dividend on reporting first-quarter results in May, immediately after the group merged with Arab peer UASC to form the world’s fifth biggest shipping company.

But conditions in the second quarter improved, the group reported on Tuesday, allowing Hapag-Lloyd to report higher operating and net earnings for the first six months.

Both figures were still set to exceed their respective 2016 levels by the end of the year, the company said, adding that key indicators, revenue from freight rates and ship fuel costs, would remain stable.

“The market environment has improved somewhat, costs are under control and demand is developing well,” Habben Jansen said.

Analysts on average expect Hapag-Lloyd to report a full-year 2017 net profit of 74 million euros ($89 million), according to Thomson Reuters data.

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