TUI’s shipping division matches record earnings, ready for Æ06 downturn
TUI AG said today its shipping division, comprising Hapag-Lloyd Container Line and now CP Ships, virtually matched 2004’s record earnings but warned that weakening freight rates will likely reduce its profits in 2006.
Hapag-Lloyd and CP Ships, which TUI acquired for $2.3 billion in October, posted consolidated net earnings of 278.5 million euros ($336 million) in 2005, down 0.4 percent from 279.6 million euros reported in 2004.
Hapag-Lloyd’s net earnings increased 0.5 percent to 281 million euros ($339 million). CP Ships posted a net loss of 2.5 million euros ($3 million) for the Oct. 25-to-Dec. 31 period.
Shipping revenue grew 42.7 percent to 3.8 billion euros ($4.6 billion) with Hapag-Lloyd posting full year turnover of 3.22 billion euros (up 20 percent) and CP Ships contributing 612 million euros ($739 million) in the two months since it was acquired.
TUI said its shipping division “benefited from persistently high worldwide demand for container transport and thus continued on its positive trend.”
The shipping division moved a consolidated 3.1 million TEUs in 2005, of which Hapag-Lloyd transported 2.67 million TEUs, an 11 percent increase over the 2.41 million TEUs it carried in the previous year. The German carrier said it handled 1.1 million TEUs in the Asia/Europe market (up 10 percent); 719,000 TEUs in the transpacific market (up 16 percent); 665,000 TEUs in the transatlantic trade (up 8 percent); and 192,000 TEUs in the Latin American market (up 12 percent).
“The program to integrate CP Ships is progressing according to plan. The announced operating cost synergies of 180 million euros ($218 million) will be partly achieved by 2007 and will be fully realized by 2008,” TUI said.
The German conglomerate warned that the outlook for this year is not as good as in recent years. “In view of the freight rates, in particular in transport operations in Asia, it will be difficult to repeat the good earnings of 2005 in 2006.”
Combined, Hapag-Lloyd and CP Ships operate a fleet of about 132 ships with total capacity of about 424,000 TEUs, making it the fifth-largest ocean carrier in the world.