Moody’s Investors Service said Tuesday it had affirmed its ratings on Hapag-Lloyd, but changed its outlook on the liner to negative from stable.
“The change of outlook on HL’s ratings is primarily driven by the company’s weaker-than-expected performance during the first nine months of 2011 that is likely to translate into credit metrics very weak for the current rating category at year end,” said Marco Vetulli, a Moody’s vice president and senior credit officer, who is also the firm’s lead analyst for Hapag-Lloyd.
Moody’s noted “the negative performance of the container shipping market during 2011 has been due to the low level of freight rates, caused by the oversupply of vessels on the water. This development partly reflects the highly competitive structure of the industry and the concerns over increased capacity coming on stream. These factors have exerted pressure on operators to expand their market shares, making it difficult for the companies in the sector, including HL, to pass on material cost increases, despite good traffic volumes.”
Responding to the announcement, the German shipping company noted Moody’s had “confirmed Hapag-Lloyd’s B1 rating and acknowledged its business model and its solid financial structure and liquidity. The good market shares and flexible cost structure of the company were also emphasized as advantages. Hapag-Lloyd was the only major liner shipping company in the world to have achieved a positive result in the third quarter of 2011.” It noted Moody’s said Hapag-Lloyd was “the best industry performer in terms of operating profit for the third quarter 2011.”
“We are proud that our rating has remained unchanged,” said Michael Behrendt, chairman of the executive board of Hapag-Lloyd, in a statement. “Not only were we the only major liner shipping company to have made a profit in the third quarter of this challenging year, we also managed to remain in the black in our operating business for the first two quarters as well.”
He said Hapag-Lloyd was “actively contributing towards forging and determining the future for our industry. Proof of this is the new G6 Alliance,” announced Tuesday, which Behrendt said would make Hapag-Lloyd “a partner in the most significant alliance in the Far East–Europe trade. When it comes to strategic and financial focus, I believe that Hapag-Lloyd is without a doubt in one of the best positions of all of the liner shipping companies.” – Chris Dupin
Moody’s affirms Hapag-Lloyd ratings
