Hapag-Lloyd reveals UASC’s $384m loss for 2015

The German ocean carrier said its merger with UASC will create the world’s fifth largest container carrier and secure the large ships it needs for the Far East-Europe trade.    United Arab Shipping Company (UASC) had a net loss of $384.3 million in 2015, while the ocean carrier’s earnings before interest and taxes (EBIT) were at a loss of $298.7 million, according to documents prepared in advance of Friday’s annual meeting of Hapag-Lloyd shareholders.
   Hapag-Lloyd and UASC, each of which are controlled by a small number of shareholders, agreed to merge in July.
   UASC’s revenues of $3.3 billion in 2015 were about a third of Hapag-Lloyd’s $9.8 billion in revenues for the year.
   Hapag-Lloyd said the two carriers will be the fifth largest container carrier in the world, trailing behind Maersk Line, MSC, CMA CGM and COSCO China Shipping, carrying 1.6 million TEUs and a market share of 7 percent.
   “As a result of the merger, Hapag-Lloyd will possess one of the largest and most modern shipping fleets in the sector on all important trades and therefore profit from very competitive transport costs per slot,” the Hamburg-based carrier said.
   Hapag-Lloyd said the combined fleet of the two companies will have an average age of 6.6 years and an average ship size of 6,573 TEUs, calculated on the basis of the fleets as of March 31, 2016.
   “As such, the combined fleet will be significantly younger and will have a significantly larger average size than the Hapag-Lloyd fleet before the merger, which has an average age of 8.1 years and an average TEU capacity of 5,460 TEUs. The average ship size in the combined fleet will be around 30 percent above the average size of the fleet of the twenty largest container shipping companies and more than 90 percent above the average ship size in the global fleet,” the carriers said.
   “Based on TEU capacity, 62 percent of the combined fleet will be owned by the combined entity. In the size class above 10,000 TEUs to 18,000 TEUs, the combined entity will even own 94 percent of the ships and eight additional ships are in the order book, of which one ship has already been delivered and the others will be delivered in the months to come.”
   After the deal is completed, existing Hapag-Lloyd shareholders (which include the Chilean shipping company CSAV, the Hamburg investment company HGV, Kuhne Maritime, and the travel company TUI, as well as smaller shareholders) will own 72.2 percent of the new company and the six Middle East governments (Qatar, United Arab Emirates, Bahrain, Saudi Arabia, Iraq and Kuwait) that own UASC will own 27.8 percent of the merged company.
   The documents also explained that UASC is planning to sell its stake in the chemical tanker company United Arab Chemicals Carrier, which is valued at $182.35 million. If the sale is completed before the merger of Hapag-Lloyd and UASC is finalized at an amount less than the $182.35 million, the shareholders of UASC will provide compensation for the shortfall.