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DAL acquisition part of Hapag-Lloyd’s strategic growth in Africa

German shipping line also reports $10.75 billion in 2021 profit and extends CEO’s contract

Hapag-Lloyd reported 2021 net profit of $10.75 billion. (Photo: Jim Allen/FreightWaves)

Coming off an “exceptionally successful year,” Hapag-Lloyd announced Thursday that it was acquiring fellow German carrier Deutsche Afrika-Linien (DAL) and extending the contract of CEO Rolf Habben Jansen. 

Net profit in 2021 increased by a whopping $9.6 billion year-over-year to $10.75 billion, according to the audited full-year earnings Hapag-Lloyd reported Thursday. Earnings before interest, taxes, depreciation and amortization jumped from $3.02 billion in 2020 to $12.8 billion in 2021.

“We look back on an exceptionally successful year in which we invested massively in modern vessels and new containers,” Habben Jansen said in a press release accompanying the 2021 figures. “In addition, we have significantly strengthened our financial and asset position. However, transport expenses have unfortunately also risen significantly, mainly due to the bottlenecks in the global supply chains.” 

Hapag-Lloyd said its transportation expenses rose “very significantly,” by 17.1% year-over-year, to $12.2 billion and cited higher bunker prices and charter rates as well as increased demurrage and storage fees.  

Revenue also increased significantly, from $14.5 billion to $26.4 billion, attributed largely to the freight rate averaging $2,003 per twenty-foot equivalent unit in 2021, compared to $1,115 in 2020. 

Hapag-Lloyd released its audited earnings for 2021 on Thursday. (Graph: Hapag-Lloyd)

Africa ‘important strategic growth market’

No monetary figures were included in the announcement Hapag-Lloyd released separately Thursday saying it was acquiring DAL.

DAL has been in business since 1890 and operates container services between Europe, South Africa and the Indian Ocean, according to Hapag-Lloyd, which said the “Africa expert” has third-party agents in 47 countries.

DAL has more than 150 employees, a 6,589-TEU ship, and about 17,800 owned and leased containers. 

“Africa remains an important strategic growth market. Particularly for our service offering from and to South Africa, DAL is a valuable addition, allowing us to offer our customers a better network and additional port coverage in this region. We are very much looking forward to welcoming the DAL colleagues. With their broad experience and market knowledge, they will significantly support us to further grow in Africa,” Habben Jansen said in the announcement. 

Hapag-Lloyd said last year’s acquisition of NileDutch “significantly strengthened” its presence and service offering to and from West Africa. 

Hapag-Lloyd did not provide a closing date or cost of the DAL acquisition.

In a call with reporters last month, Habben Jansen said Hapag-Lloyd was being cautious when it came to acquisitions. 

“Many of the prices people are looking for are sort of ridiculous. I’m a firm believer that buying expensive assets is in the long run not a good strategy,” he said at the time. “If we see a good opportunity, we will do something, but if we do not see that, we will not be forced to spend the money.”

Habben Jansen did say Hapag-Lloyd would not be getting into airfreight as competitor CMA CGM has, pointing out that “operating an airline is not something we would see as a logical extension of what we are doing.” 

Leaders ‘through challenging times’

Hapag-Lloyd’s supervisory board obviously likes what Habben Jansen is doing. It announced Thursday that it had extended his contract until March 31, 2027, and Chief Financial Officer Mark Frese’s until Nov. 30, 2027.

Habben Jansen, who has served as CEO since July 2015, “has led Hapag-Lloyd successfully through challenging times. Today Hapag-Lloyd is one of the most profitable companies in the industry. The supervisory board is convinced that the company will continue its profitable growth under [his] successful leadership,” Michael Behrendt, the board’s chairman, said in a statement.

Since Frese took the role of CFO in March 2020, “Hapag-Lloyd has further improved its profitability and optimized its balance sheet structure. It is also due to him that Hapag-Lloyd has a very healthy financial and asset base. This is an important prerequisite for the implementation of the strategic goals,” Behrendt said. 

‘Considerable uncertainty’

The company expects to remain very healthy, at least through the first half of 2022.

Hapag-Lloyd said Thursday it forecast earnings to be very strong in the first six months of the year but “anticipates that the strained situation in the global supply chains will ease in the second half of the year, which should lead to a beginning normalization of earnings.”

An EBITDA forecast for 2022 of $12 billion to $14 billion “remains subject to considerable uncertainty given the ongoing COVID-19 pandemic and current developments in Ukraine,” Hapag-Lloyd said. 

In a prepared statement, Habben Jansen said: “The 2022 financial year has gotten off to a successful start for us, but the disruptions in the supply chain have not eased materially yet. In addition to that, we all face the terrible war in Ukraine. We stand united with the international community, have stopped our bookings to and from Russia, and call for de-escalation and peace.” 

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Click here for more American Shipper/FreightWaves stories by Senior Editor Kim Link-Wills.

Kim Link Wills

Senior Editor Kim Link-Wills has written about everything from agriculture as a reporter for Illinois Agri-News to zoology as editor of the Georgia Tech Alumni Magazine. Her work has garnered awards from the Council for the Advancement and Support of Education, the Georgia Institute of Technology and the Magazine Association of the Southeast. Prior to serving as managing editor of American Shipper, Kim spent more than four years with XPO Logistics.