Hapag-Lloyd posts underlying 1st quarter loss, says better times ahead
Germany’s TUI AG, parent company of Hapag-Lloyd, said today that reduced freight rates in virtually every trade lane and the weakening of the U.S. dollar against the euro contributed to its shipping division (container and cruise businesses) posting an underlying first quarter loss of 53 million euros ($71.5 million), compared to an underlying profit of 22 million euros in the same period last year.
Including the one-off income of 181 million euros ($244.1 million) from the divestment of Montreal Gateway Terminals and 15 million euros ($20.2 million) from the sale of Hapag-Lloyd’s minority shareholding in German classification society Germanischer Lloyd as well as other integration effects, earnings by the shipping division totaled 141 million euros ($190.1 million), an improvement over a loss of 25 million euros in the first quarter last year.
The division’s quarterly turnover amounted to 1.5 billion euros ($2.02 billion), down 8.5 percent year-on-year from 1.64 billion euros. Container shipping accounted for about 1.45 billion euros ($1.95 billion) of the division revenue, a drop of 8.8 percent.
TUI said Hapag-Lloyd’s container volume in the period improved 9.9 percent year-on-year to 1.32 million TEUs, but due to freight rates declining in almost all trade lanes with the exception of the Far East trade lane, the global average rate was down 8.2 percent.
The company said it expects to see an improvement from container shipping over the coming months.
“Initial recovery trends are expected for the second quarter of 2007. Positive operating profit contributions are therefore expected again from the second half of 2007 onwards,” TUI said.
“The overall development of the shipping division will depend not only on the development of freight rates during the important summer period but also on the future development of costs, for example for land-based transportation and shipping bunker costs. The expected recovery of freight rate levels in the course of the year is expected to go hand in hand with a corresponding upswing in turnover.”