HMM reports mixed financial results for 2016

Korea Investor Service, an affiliate of Moody’s, upgraded Hyundai Merchant Marine’s corporate credit rating after the carrier saw revenues decline and a larger operating loss in 2016, while the bottom line improved.    South Korean shipping company Hyundai Merchant Marine (HMM) reported an improved bottom line for 2016 when compared to 2015, but a much worse operating result.
   According to a filing on the DART Repository of Korean Corporate Filings, HMM had a net loss of 4.4 billion South Korean won (U.S. $3.9 million) for 2016 compared to a net loss of 627 billion won for 2015.
   However, its operating loss was 833 billion won for 2016 compared to a 279 billion won operating loss for 2015.
   HMM’s revenue for 2016 totaled 4.6 trillion won,18.8 percent less than the 5.6 trillion won recorded for 2015.
   South Korea’s Yonhap News Agency quoted the company as saying, “Low global trade and freight rates were behind the widening operating losses.”
   The company underwent a financial restructuring last year and received support from the government of Korea, while its chief South Korean competitor in the container liner business, Hanjin Shipping, went out of business.
   HMM’s net profit from continuing operations before income tax turned black in 2016, reaching 38.3 billion won compared with a loss of 651.8 billion won for 2015.
   HMM said in a statement posted on its website Friday that Korea Investor Service, an affiliate of Moody’s, had upgraded its corporate credit rating from D (default) to BB (stable).
   The company said the improved rating reflected HMM’s reduced financial burden, as it overcame financial challenges by performing a debt for equity swap, renegotiating charter rates on ships, and adjusting its debt with bondholders.
   The carrier said it “expected to have a high likelihood of upgrading its credit rating based on continuous improvement on earnings.”
   HMM said in a statement that its debt ratio has increased from 186 percent to 235 percent as a result of issuing convertible bonds and because it “acquired overseas shipping terminals.” Hyundai has purchased a 20 percent stake in Total Terminals International (TTI), which has facilities in Long Beach and Seattle
   The Wall Street Journal reported that this week, a group of Hanjin Shipping creditors in the U.S. filed an appeal asking the U.S. District Court in New Jersey to revisit a bankruptcy judge’s decision to approve the sale of TTI.
   Meanwhile, the Financial Times reported that in Korea, “The Seoul Central District Court on Thursday said it would declare Hanjin – once the world’s seventh-largest container line – bankrupt on Feb. 17 after a two week appeals period for creditors ends, firing the starting gun on the group’s liquidation.” The court said, “liquidation would bring more value to creditors than rehabilitating the container line as a going concern.”