The Hapag-Lloyd Group achieved an outstanding financial result in H1 of 2021. The EBIT reached EUR 3.5 billion, leaping EUR600 million in comparison to the outcome of last year’s first
half. Main drivers of this outstanding result were the high ocean freight tariffs which reflect the ongoing gap between transport demand and scarce capacity supply.
The management expects the bonanza to continue until at least the end of this year with a normalization of global supply chains taking place in Q1 of 2022 – at the earliest.
Is Hapag-Lloyd getting cocky? Supposedly stimulated by its incredible financial results, management has decided to become the main sponsor of the German first-division handball club Hamburger Sport Verein Handball (HSVH). Shortly after the half-year results had been announced, both partners signed a three-year contract that will cost H-L an estimated 400,000 euros a year. Compared to sponsoring prices in international soccer, that's not very much. For the Hamburg-based shipping company, known for its very conservative spending policy, it still sure is a lot of money.
In view of the outstanding half-year figures, the company can afford such luxuries. Especially since supporting a sports club in their hometown should also have a positive effect on their brand.
And that brand has been sparkling even more since last week due to the achievement of EUR 2.7 million profit in H1. "In a market with very strong demand for container transports, we have benefitted from significantly improved freight rates and look back on a very good first half year. Among other things, we were able to reduce our net debt by USD 1.5 billion, although we paid out a significantly higher dividend compared to the prior year," said Rolf Habben Jansen, CEO of Hapag-Lloyd.
Earnings Are Expected to Remain High
Revenues increased in the first half year of 2021 by approximately 51 percent, to EUR 8.8 billion (USD 10.6 billion), mainly because of a 46% higher average freight rate of 1,612 USD/TEU (H1:2020: 1,104 USD/TEU). Volumes were up to 6,004 Transported Twenty-foot Equivalent Units (TTEU) and thereby 4% higher than the comparable figure for the previous year, which was impacted by a slump in demand in the second quarter due to the C-19 pandemic. In addition, a roughly 6% lower average bunker consumption price, which amounted to USD 421 per ton the first half year of 2021 (H1 2020: USD 448 per ton), had an additional positive impact on earnings.
While demand remains high in the current congested market environment, it is leading to a shortage of available weekly transportation capacity. For this reason, Hapag-Lloyd expects earnings to remain strong in the second half of the financial year. EBITDA for the full year is expected to be in the range of USD 9.2 to 11.2 billion EUR 7.6 to 9.3 billion(USD 9.2 to 11.2 billion) and EBIT to be in the range of EUR 6.2 to 7.9 billion (USD 7.5 to 9.5 bn).
Ningbo Closure Causes Further Delays
The management expects the bottlenecks in the supply chain to last, leading to enormous strains, sailing delays, and inefficiencies for all market participants. “Looking at the market environment today, we do not believe that the situation will return to normal any time soon,” commented CEO Rolf Habben Jansen.
Shortly after this statement was made, it became known that the port of Ningbo would be closed for a period of time, due in part to a Corona related incident. This directly affected Hapag-Lloyd, specifically 8 vessels calling Ningbo, which were subsequently rerouted to other Chinese ports and delaying their arrival / departure times.
We always welcome your comments to our articles. However, we can only publish authenticated senders.