Hapag-Lloyd reports $38 million loss for 2011

Container shipping giant Hapag-Lloyd turned in a net loss of €28.8 million (about $38 million) in 2011.

According to the consolidated financial statements approved today by the Supervisory Board, Hapag-Lloyd increased its transport volume in 2011 by 5.1 percent to 5.198 million TEU. The average freight rate was $1,532/TEU, which represents a modest decline of 2.4 percent on the year. Revenue came to €6.103 billion, compared with €6.204 billion in the previous year. The decline was largely due to exchange rate fluctuations. In US dollars, the main currency for Hapag-Lloyd’s operational business, revenue rose by around 3.2 percent.

Much higher energy costs severely depressed Hapag-Lloyd’s earnings in the 2011 financial year. The average bunker price over the year was $605/tonne, more than $150/tonne higher than the year before, an increase of 34 percent. The additional energy expenses of around $600 million could not be passed on, as competitors used aggressive pricing to gain market share.

Despite these negative effects EBITDA for the financial year 2011 reached €367 million. The operating result (adjusted EBIT) came to € 101 million. After interest and taxes, earnings “nearly broke even” at a negative €28.8 million.

“In comparison with the competition this was an excellent result for Hapag-Lloyd in a challenging year. Not only were we the only large liner shipping company to achieve a positive operating result in all four quarters of 2011, but we were also the only market participant to close the second half-year with a group profit after interest and taxes,” said Michael Behrendt, Chief Executive Officer of Hapag-Lloyd.

Cash flow from operating activities was €244 million for the financial year under review.

The company says that in the first few weeks of the current financial year it has performed “in line with expectations.”

It says that further increases in bunker costs have put a strain on what is anyway the weaker season at the start of the year. High energy costs will remain a challenge for the entire industry throughout 2012. This difficult environment made it imperative to announce a sharp increase in freight rates beginning in March and April, which the market has accepted.

“These increases are unavoidable in order to get back to adequate and sustainable rates again, especially as the bunker price has gone up even further,” said Mr. Behrendt. “This is also in the interest of our customers, because in the long run it is the only way shipping companies can offer a comprehensive, dependable service, which given the global division of labour many customers rely on.” Furthermore, shareholders are also entitled to a reasonable return on their capital, he added. “The ability to pay dividends is one of our most important corporate goals,” said Michael Behrendt.

Hapag-Lloyd reports that it has a sound balance sheet. At year-end the company held liquidity reserves of around €750 million. All budgeted capital expenditure is fully funded, in particular the ten newbuilds that are due for delivery from July 2012 until the end of 2013.

March 21, 2012