TUI reports record profit from shipping, logistics

TUI reports record profit from shipping, logistics    TUI AG, the German tourism-to-logistics conglomerate, reported record earnings of 314 million euros ($391 million) from its logistics division, up 57 percent, largely due to bigger profits at its subsidiary Hapag-Lloyd Container Line.
   The result compares with earnings of 199 million euros in 2002, and shows a rebound following the unit’s poor results last year.
   “The bulk of this increase was contributed by container shipping, which took advantage of the growth in global container transport to expand its business, and benefited from an improvement in freight rates,” TUI said in a statement today.
   The logistics division, which included Hapag-Lloyd Container Line and Hapag-Lloyd Cruises, as well as the non-shipping subsidiaries VTG-Lehnkering, Pracht and Algeco, saw overall revenues increase 4 percent last year to 3.9 billion euros ($4.9 billion). The TUI group has since sold the Pracht forwarding and logistics subsidiary to Kuehne & Nagel.
   The liner shipping and cruise activities of Hapag-Lloyd boosted their overall earnings 108 percent last year to 252 million euros ($314 million) from 121 million euros in 2002. Revenue from shipping rose 7 percent in local currency, to 2.4 billion euros ($3 billion), from 2.2 billion euros, despite the depreciation of the U.S. dollar.
   Of this shipping revenue, Hapag-Lloyd Container Line generated 2.2 billion euros ($2.7 billion) last year, up 9 percent from 2.1 billion euros in 2002. In dollars, though, the revenue figures show a more robust growth of more than 20 percent from about $2.2 billion in 2002 to about $2.7 billion last year.
   TUI explained that the dollar/euro exchange rate fell nearly 20 percent last year, but Hapag-Lloyd increased its container volume more than 13 percent to 2.1 million TEUs last year and its average freight rates in dollars by 15 percent.
   “As before, global container transport grew faster than world trade in 2003,” TUI said. It reported that worldwide container traffic rose more than 7 percent last year to about 66 million TEUs. “Besides the increase in world trade, growth was spurred by the global division of labor and new types of goods which had not previously been shipped in containers,” the German group said.
   TUI noted that in 2003 Hapag-Lloyd Container Linie again grew faster than the market.
   Hapag-Lloyd increased its Asia/Europe volume 16 percent to 865,000 TEUs in 2003, as its average rates in this trade rose 21 percent.
   In the transatlantic trade, westbound traffic fell 1 percent, while eastbound volume grew 5 percent, a result of changes in exchange rates. Hapag-Lloyd’s transatlantic volume increased 7 percent to 550,000 TEUs in 2003. This was mainly attributable to new links between the Mediterranean region and North America. In addition, freight rates rose about 9 percent on the North Atlantic.
   Hapag-Lloyd lifted its transpacific traffic 14 percent last year to 540,000 TEUs, and increased its average transpacific rates by 14 percent.
   By contrast, in the Latin American region, Hapag-Lloyd experienced overcapacity and its freight rates did not increase.
   TUI reported a 21-percent fall in earnings from its non-shipping logistics activities to 62 million euros ($77 million), and a 1-percent decline in their revenue to 1.5 billion euros ($1.9 billion).
   “In the logistics sector, the VTG-Lehnkering group and the Algeco group operated in difficult markets and therefore reported a year-on-year drop in their earnings contribution,” TUI said.
   While announcing its annual financial results, TUI said that it is selling the bulk and special logistics division of VTG-Lehnkering to the investment firm Triton Managers Ltd., retroactively effective from Jan. 1.
   The sale, for which TUI has not disclosed the price, is conditional on the approval of the supervisory boards. The division generated revenue of about 520 million euros ($647 million) in 2003. It has a workforce of about 2,300.
   The sale is part of a policy by TUI to sell the non-shipping activities of Hapag-Lloyd before its planned initial public offering later this year.