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Hapag Lloyd losses due to one-off effects and drop in freight rates 27 March 2015

Hapag Lloyd losses due to one-off effects and drop in freight rates

In terms of results, 2014 was undoubtedly an extremely disappointing year for Hapag-Lloyd. At the same time, however, the successful merger with CSAV also made it a highly significant, ground-breaking year.

Hapag-Lloyd’s transport volume grew by 7.5% to 5.9 million TEU in the past financial year. The average freight rate was down 3.2% year-on-year at US$1,434/TEU, while revenue rose by 3.7% to €6.8 billion. EBITDA came to €98.9 million (previous year €389.1 million), down 74.6% and the operating result to €-112.1 million (previous year €67.2 million).

The Group net result of €-603.7 million (previous year €-97.4 million) was heavily influenced by one-off effects, primarily the costs of acquiring and integrating CSAV’s container liner shipping activities and an impairment recognised for a portfolio of old ships.

The plummeting price of oil eased the cost situation slightly, but only towards the end of the year as falling fuel prices at liner shipping companies take several months to be reflected in the figures. The average bunker consumption price for 2014 as a whole stood at US$575/t (previous year US$613/t).

The merger with CSAV’s container business and the associated capital measures have improved Hapag-Lloyd’s capital structure. Equity of €4.2 billion and an equity ratio of 41.2% are testament to the Company’s healthy balance sheet. With a liquidity reserve of over €920.0 million, the Company is well positioned for the future.

The merger will bring annual savings of at least US$300.0 million. Integrating CSAV’s container business is running on schedule. The Company has already been able to exploit the first synergies, with many joint projects currently under way. CSAV’s services are being incorporated into Hapag-Lloyd’s global network, with the integration set to be complete by June.

As well as the integration, a number of other measures have been introduced to target a substantial improvement in earnings. These include optimising sales processes and costs as well as modernising the fleet. Hapag-Lloyd is currently in negotiations with several shipyards in this regard and will be ordering new ships over the coming weeks.

Together with Hamburg Sud, CMA CGM and other shipping companies, Hapag-Lloyd will be offering new products between Asia and the western and eastern coasts of Latin America from July onwards. These services will employ over 50 ships in all, with Hapag-Lloyd contributing 20 of them. This includes CSAV’s seven efficient 9,300 TEU newbuildings. Five from this series are already in service, with the final two set to be delivered in early May and early June.