German shipping company, Hapag-Lloyd has stated that for the first quarter of 2020 despite the Coronavirus pandemic, it recorded earnings before interest and taxes (EBIT) of USD 176 million (EUR 160 million), which is below the corresponding prior-year figure of USD 243 million (EUR 214 million).
The Group net result declined to approximately
USD 27 million (EUR 25 million). Earnings before interest, taxes, depreciation
and amortisation (EBITDA) decreased slightly to USD 517 million (EUR 469
million).
“Despite the coronavirus pandemic, we have gotten the year
off to a good start. Higher transport volumes and better freight rates have
boosted our revenues. The financial result is below the first quarter of the
previous year as we faced higher bunker prices after the new IMO 2020 rules on
1 January and we had a significant negative bunker stock valuation after the
decline in crude oil prices at the end of the first quarter,” said Rolf Habben
Jansen, Chief Executive Officer of Hapag-Lloyd AG.
Revenues increased in the first quarter of 2020 by around 6
percent, to USD 3.7 billion (EUR 3.3 billion). This can primarily be attributed
to a 4.3 percent increase in transport volumes, to more than 3 million TEU, and
an improved average freight rate of USD 1,094 per TEU. Transport expenses
increased by almost 10 percent, disproportionately to revenues, particularly
due to higher bunker costs, which increased by USD 98 to USD 523 per tonne as a
result of the transition to low-sulphur fuel oil required by the IMO 2020
regulation. This had a negative impact on earnings, as did a devaluation of bunker
inventories of around USD 64 million (approximately EUR 58 million) due to the
rapid decline in crude oil prices that began at the end of the first quarter.
Free cashflow was once again clearly positive at USD 302
million (EUR 274 million). At the end of the first quarter, the liquidity
reserve stood at approximately USD 1.2 billion (EUR 1.1 billion), thereby
remaining at a persistently good level.
Rolf Habben Jansen: “Although we were able to pick up a bit
of tailwind at the beginning of the year, we anticipate that the coronavirus
pandemic will have very significant impacts in 2020, beginning in the second
quarter. Our main focuses will continue to be the safety and well-being of our
employees as well as the supply chains of our customers. We have taken a wide
range of measures designed to save an amount in the mid-triple-digit million
range to safeguard our profitability and liquidity. We adjust our service
network to the lower demand and seek savings in all cost categories, from
terminal, transport, equipment and network costs to overhead.”
Taking into account the prevailing uncertainties and building
on the planned cost cutting measures as well as based on the premise that the
pandemic will peak in the second quarter and give way to a gradual recovery in
the global economy in the second half of the year, the Executive Board has
substantiated its earnings forecast from the start of the year. This means that
Hapag-Lloyd still continues to expect EBITDA of EUR 1.7 to 2.2 billion and EBIT
of EUR 0.5 to 1.0 billion for the current financial year. However, unless there
is a recovery in demand for container transport services earlier and stronger
than expected in the market studies cited in the financial report for the first
quarter 2020, the upper end of the forecast ranges is barely achievable from
today’s perspective.
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