Hapag-Lloyd had a reasonable set of results in the second quarter, although in the present market circumstances it is difficult to know what to expect.
For the whole company, revenue for the quarter was up 6% y-o-y but down 12% for the half-year. EBITDA (Earnings Before Interest, Depreciation and Amortisation) was up 9% y-o-y for the quarter but down 48% for the half-year. Group profit for the second quarter is up 45% but down 75% for the half year.
As the volatility in these numbers implies, the y-o-y comparisons are more a reflection on the dynamic of the market in 2023 than the performance in 2024. In fact, although profit margins have fallen, they are still quite healthy. The EBITDA margin for example, has fallen from 34.8% in the first half of 2023, to 20.7% in the first half of 2024. However, by historical standards 20.7% is still a highly profitable for a shipping line.
For the container shipping operations, the demand picture was quite healthy. The volume of containers handled by Hapag Lloyd increased by 3.2% y-o-y, with the half-year seeing a similar trajectory. Freight rates are still 21% below the levels seen in the first quarter of 2023, however they have increased by 5% over the second quarter. The problem is, of course, costs are higher although Hapag Lloyd’s figure show a comparatively modest rise of 6%, both due to higher expenditure on fuel and greater handling costs.
The new division within Hapag Lloyd called ‘Terminals and Infrastructure’ also saw a rise in revenues and profits, with EBIT (Earnings Before Interest and Tax) hitting $33m. However comparative performance ratios are limited as the business has only recently been established.
Unsurprisingly Hapag Lloyd’s management both raised its profit forecast for the year but also warned that “in view of the highly volatile development of freight rates and major geopolitical challenges, this forecast remains subject to a high degree of uncertainty”. This is stating the obvious. However, looking at the high level of vessel utilisation and a slowing in the growth of the vessel order-book, possibly the future is not quite as uncertain as it once was.
Source: Ti Insight
Author: Thomas Cullen
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