By Mike Wackett
The newly-merged Hapag-Lloyd managed to stay in profit in a “very challenging” second quarter of the year, adding €29 ($37m) net profit to a record €157m ($175m) plus at the half-year stage. This compares with a €173m loss incurred in the same period of 2014, before the takeover of Chilean container line CSAV. Hapag-Lloyd said it was “well on track” to achieve a positive full-year result, despite a market environment that remained “very challenging”.
The integration of CSAV’s container services and ship systems into the ‘new’ Hapag-Lloyd was completed in the second quarter, and the company says it now expects to deliver an additional $100 million of synergistic annual savings – on top of the originally anticipated $300m – by 2017.
Chief executive Rolf Habben Jansen said: “After a solid start into 2015, we are satisfied with our results in the first half.” He added: “Our results prove that the merger with CSAV was the right decision and an important milestone in the development of Hapag-Lloyd.”
In a teleconference presentation of the H1 result, Mr. Habben Jansen said he was “very pleased with the speed of the integration” of CSAV, and accredited much of that to Hapag-Lloyd’s experience gained in the takeover of CP Ships in 2005.
Analysts had expressed concern that the merging of the unprofitable CSAV container business into an under-performing Hapag-Lloyd, forming the world’s fourth-biggest container line, would result in a lengthy period of negative results while integration took place.
However, by taking immediate steps to reduce its combined workforce of approximately 13,000 to the current 10,000, the carrier has cut overheads quickly, albeit that the restructuring ‘staff selection’ process was reported to have been a painful one.
Year-on-year statistical comparisons are difficult, but Hapag-Lloyd carried 3.7 million TEUs in the first six months of 2015 – 29 per cent more than in the same period last year – but Mr. Habben Jansen said volumes would be below last year’s combined liftings because of its new strategy of “cargo selection”. He said Hapag-Lloyd also wanted to “improve” its spot/contract business balance, which included “being more responsible on the spot market”. Indeed, Hapag-Lloyd seems to have been aggressive on the Asia – Europe route in Q2; its volume expanded to 323,000 TEUs, compared to 288,000 TEUs carried in the same period of 2014. And this was achieved at a cost: average revenue per TEU on the tradelane declined to $966/TEU, compared to the $1,176 average of Q2 14.
H1 revenue increased by €1.5bn to €4.7bn, but Hapag-Lloyd’s average rate declined 9 per cent, to $1,296 per TEU, due in part to the lower average rate from CSAV’s north-south trades. Average price paid for bunker in the period by Hapag-Lloyd was $346 per tonne, versus $592 in 2014, and the carrier also benefited from the U.S. dollar’s increase in value against other currencies in which it incurs vessel disbursements.
Mr. Habben Jansen said Hapag-Lloyd’s top 100 members of management would be meeting in Hamburg next week with a full agenda, but he would not be drawn on press reports of plans to launch a $5.5 billion IPO before the end of the year.
Reprinted courtesy of The Loadstar (www.loadstar.co.uk)