HAPAG-LLOYD’S SHIPPING ARM MOVES INTO THE RED

HAPAG-LLOYD’S SHIPPING ARM MOVES INTO THE RED    The shipping arm of Hapag-Lloyd AG, consisting of Hapag-Lloyd Container Line and Hapag-Lloyd Cruises, has moved into the red in the first quarter, with a loss of 5 million euro (about $5 million).
   The deficit from the shipping arm of Hapag-Lloyd in the latest quarter, the first financial loss at the German shipping group for many years, compares with a profit of 64 million euro in the first quarter of 2001.
   Revenue from shipping at Hapag-Lloyd decreased by 10 percent in the latest quarter, to 530 million euro ($493 million) from 585 million euro in the same period of 2001.
   “Container shipping was affected by the worldwide weakness of economic activity,” said a spokesman for Preussag, the parent company of Hapag-Lloyd AG. “World trade only recorded minor growth rates, and the shipping capacity overhang squeezed maritime freight rates to a level considerably below the high levels of previous years.”
   “Although Hapag-Lloyd Container Line increased its transport volume and benefited from the strength of the U.S. dollar over the euro, these factors did not suffice to offset the economic benefits of low freight rates,” Preussag commented.
   However, Preussag said that freight rates have “stabilized” during the first quarter.
   The logistics activities of Hapag-Lloyd, consisting of VTG-Lehnkering, Pracht Spedition and Algeco, posted an unchanged profit of 19 million euro ($18 million), on stable revenue of 372 million euro ($345 million).
   Preussag’s logistics division, including Hapag-Lloyd Container Line and Cruises, VTG-Lehnkering and Algeco, reported a sharp fall in profit for the first quarter, to 14 million ($13 million), from 83 million euro in the first quarter of 2001. The logistics division revenue decreased by 6 percent over the same period, to 901 million euro, because of the lower revenues from shipping.
   Hapag-Lloyd is regarded as one of the world’s most profitable container shipping lines. The announcement of a deficit at the carrier follows reports of first-quarter losses by CP Ships and P&O Nedlloyd.
   In 2001, Hapag-Lloyd Container Line defied adverse industry trends by increasing its operating profit by 17 percent, to 186 million euro ($164 million). Last year, the German carrier posted sales of 2.2 billion euro ($1.9 billion), with a volume of containers carried of 1.7 million TEUs.