Hapag-Lloyd: Financial outlook for 2015 unchanged

The German ocean carrier, which is in midst of an initial public offering on the Frankfurt stock exchange, reiterated its revenue and earnings projections after competitor Maersk Line trimmed profit expectations Friday.    Hapag-Lloyd, which expects to complete an initial public offering and begin trading its stock this week, said in a press release issued Monday that it “reiterates its outlook for 2015” as provided in an IPO prospectus published on Oct. 14.
   “Based on current trading, the EBITDA (earnings before interest, tax, depreciation and amortization) margin in September is expected to be in line with the information provided in the IPO prospectus for July and August,” the German ocean carrier said. “For the full year 2015 the outlook remains unchanged, Hapag-Lloyd is expecting a high single-digit EBITDA margin.”
   In its IPO prospectus, Hapag-Lloyd said it anticipated cargo volumes this year would be similar to those in 2014 and that freight rates would remain under pressure, in particular on the Far East trades. As a result, the carrier said its average freight rate in 2015 would be lower than in 2014, leading to a modest decline in revenues.
   However, Hapag-Lloyd also said, “From a cost perspective, we anticipate that lower bunker costs, positive effects from the ongoing integration efforts and further improved efficiency will lead to a decline in expenses for raw materials and supplies, transport and personnel costs.”
   The company has been integrating its business with the container business of the Chilean carrier CSAV, which it acquired in December 2014.
   “We expect our EBITDA margin to reach a high single digit number in 2015 with the EBITDA margin in the second half of 2015 being below the 10.6 percent margin achieved in the first six months ended June 30, 2015,” Hapag-Lloyd  said in the IPO prospectus. “In the six months ended June 30, 2015 and especially the first quarter 2015, we delivered a positive EBITDA and net profit result. Based on the realization of the forecasted synergies and efficiency improvement in 2016, we are on track to achieve our goal of an EBITDA margin of 11 percent to 12 percent in 2016.”
   Hapag-Lloyd said it issued the press release in response to queries it received after the Maersk Group drowngraded its 2015 profit expectations last Friday, pointing specifically to changes in the container shipping business.
   “The container shipping market has deteriorated beyond the group’s expectations especially in the later part of Q3 and October and the Group does not expect market recovery in 2015,” the Danish conglomerate explained last week. Maersk said it now expected its container unit would make $1.6 billion in instead of $2.2 billion this year, and that was causing it to adjust its overall profit expectation for the group to $3.4 billion from $4 billion.
   The announcement by Maersk last week was a turnaround from Sept. 9, when it said during its annual “capital markets day” that its expectation of an underlying result around $4 billion was unchanged.
   Meanwhile, Maersk Oil, a sister company of Maersk Line within the Maersk conglomerate, announced today that the international oil and gas unit plans to cut its workforce by 10-12 percent as part of a “drive to reduce operating costs by 20 percent by the end of 2016.”