LOWER BOX RATES CUT HAPAG-LLOYD’S PROFIT BY 38%

LOWER BOX RATES CUT HAPAG-LLOYD’S PROFIT BY 38% Hapag-Lloyd saw its profit before amortization of goodwill fall by 38 percent in 2002, to 127 million euros ($132 million), from 206 million euros in 2001, because of a substantial decrease in container freight rates.
   “Overcapacity in the market led to a decline in freight rates,” said TUI AG, the parent company of Hapag-Lloyd. “The low level of freight rates also had a substantial effect on earnings, which fell considerably short of last year’s level,” the German shipping-to-tourism group commented.
   Revenue from the group’s shipping activities — which comprise Hapag-Lloyd Container Line and Hapag-Lloyd cruises — dropped by 7 percent last year, to 2.2 billion euros ($2.3 billion), from 2.4 billion euros in 2001.
   Hapag-Lloyd Container Line increased its traffic by 12 percent in 2002, to 1.9 million TEUs, but its revenue fell over the same period, to 2.1 billion euros ($2.2 billion). “The 7.2-percent decline (in revenue) clearly reflected the effects of the sharp drop in freight rates compared with the previous year,” Hapag-Lloyd’s parent company said.
   TUI said that Hapag-Lloyd Container Line’s results for 2002 were good,    when compared with the rest of the industry. Most container carriers have reported worse results for 2002, with some suffering losses of several hundred million dollars.
   In 2002, Hapag-Lloyd Container Line increased its transpacific traffic by 17 percent, to 470,000 TEUs, and its transatlantic volume by 7 percent, to 500,000 TEUs.
   “The container shipping market was characterized by a slump in freight rates which began in 2001 and intensified in the first half of 2002,” TUI said. “The decreases were only partly offset by the increases in freight rates carried out in the second half of the year.”
   Non-shipping logistics activities of the TUI group also reported lower profit results for 2002. Profit before amortization of goodwill from logistics amounted to 82 million euros ($85 million), down 19 percent, and revenue was 1.6 billion euros ($1.6 billion), up 3 percent.
   The TUI group reported a net profit attributable to shareholders of 32 million euros ($33 million) for 2002, a fall of 91 percent from 2001.