The German container liner Hapag-Lloyd AG has weathered the storms of the past. Seen by the Group’s increased earnings in 2018 and the positive outlook delivered by the company’s management at the annual press conference held at their Hamburg, Germany headquarters last Friday.
CEO Rolf-Habben Jansen was in a good mood. After greeting each journalist attending the meet with a handshake, he unveiled the audited balance sheet figures for 2018. And these results are encouraging, convincing analysts and floor brokers alike. Seen by the increase in the company’s share price following the announcement of the result.
Earnings up, tonnage as well
EBIT went up to 443 million euros, an increase of 32 million on 2017. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to 1,138 million euros, versus €1,055 million achieved the year before. Revenues leaped by 15 percent to 11.5 billion euros. And in 2018 exactly 2.1 million more boxes were carried on board the liner shipping company’s vessels in a y-o-y comparison, reaching 11.9 million TEU.
The management states that as of 31 December 2018, H-L had 6.3 billion euros in equity (vs. €6.1 bn 2017) and a liquidity reserve of 1.1 billion euros, equaling 2017 figures. Net debt went down in 2018 from formerly 5.7 billion euros (2017) to now 5.4 billion euros, said CFO Nicolás Burr. It might have been the Chilenean national's last major press event after H-L decided not to prolong his contract. Burr will leave the container liner next February - at the latest.
Second half year 2018 was the revenue generator
The overall good result is mainly attributed to the second half of 2018, explained Mr Habben-Jansen. During the last two quarters the market situation improved notably compared to the first half in 2018. Simultaneously rising volumes and transport demand the rates for container shipping went up as well, he noted.
Ongoing rate increase predicted
Turning to 2019, the Dutch national, who heads H-L for five years, added that the year got off to a positive start. Although fuel costs are expected to rise slightly, the company expects higher earnings before interest and taxes (EBIT). After 443 million euros in 2018 the shipping line calculates with earnings ranging between 500 and 900 million euros in fiscal 2019. He expects rates to increase modestly in the coming months, indicated by significant transport contracts major clients have recently signed.
Pushing digitalization ahead
Touching H-L’s “Strategy 2023” project, Habben-Jansen said that his company will concentrate on further improving the product quality in order to become a benchmark in its field, focus even more on customer centricity and on achieving a sustainable increase in enterprise value year after year. This is complimented, he emphasized, by increased efforts to digitalize processes, offering shippers and forwarders time-saving options to book capacity on board H-L’s vessels electronically.
Turning to the global market and the business perspective for shipping in general Mr Habben-Jansen drew a positive perspective, predicting solid growth for the German liner company. His points: The order book for container vessels remains with 12 percent in the lower range. Simultaneously, more vessels are scrapped, thus taking transport capacity out of the market. Therefore, rate increases in ocean freight can be expected in the short and medium term.
And another prognosis he finds very encouraging: World container shipping will grow in the range of 4.1 to 4.9 percent this year, maritime analysts such as Drewry and others predict.
Low dividend payment announced
Finally, he denied an intention to purchase any logistics companies, as intended by competitors such as CMA CMG. “We stick to shipping and are not interested in adding warehousing, ground handling and alike activities to our core business,” as a reaction to a question raised by CargoForwarder Global at the annual press conference. An understandable decision because the shipping line’s door-door product offered on the market in close cooperation with local partners runs very well, confirms H-L’s management.
As to the blaze-hit Yantian Express that caught fire last January while crossing the North Atlantic, destroying about 200 containers and damaging the vessel, he said that the ship is inspected at the Bahamas and will resume service after its repair. He did not specify the costs incurred by the blaze.
Provided the Annual General Meeting confirms it, Hapag-Lloyd shareholders can expect dividend payments of 15 eurocents per share, equaling 26 million euros. Compared to the 0.57 eurocents paid per share a year before, it’s a rather meager dividend payout. The figure gives no reason for cheer, but the low payout helps to reduce the debts, emphasized CEO Habben-Jansen.