Hapag-Lloyd full-year earnings leap $384 million

Hapag-Lloyd said Wednesday it had improved its year-over-year operating results by a whopping 80%.

Hapag-Lloyd’s earnings before interest and taxes (EBIT) for 2019 “significantly increased” to 811 million euros (US$908 million) from 444 million euros ($524 million) in 2018, according to preliminary figures released Wednesday. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to 1.98 billion euros ($2.22 billion) from 1.14 billion euros ($1.34 billion) in 2018.

The 2019 results include effects from the first-time application of the IFRS 16 accounting standard, which amount to approximately 31 million euros for EBIT and about 467 million euros for EBITDA.

Both EBITDA and EBIT in the fourth quarter of 2019 also were above prior-year levels. EBITDA in Q4 2019 was 475 million euros ($526 million) compared to 327 million euros ($375 million) in 2018. EBIT in Q4 2019 was 169 million euros ($186 million) compared to 144 million euros ($167 million) in the same period in 2018.

Frode Morkedal, managing director of equity research for Clarksons Platou Securities AS, said Hapag-Lloyd’s fourth-quarter results were better than expected. The Q4 EBITDA of 475 million euros beat analysts’ consensus of 432 million euros.

Revenues increased in the 2019 financial year by approximately 9%, to 12.6 billion euros ($14.1 billion) from 11.6 billion euros ($13.7 billion) in 2018. Hapag-Lloyd attributed this to an improved average freight rate of $1,072 per twenty-foot equivalent unit (TEU), a 2.6% increase year-over-year “due to a stronger focus on more profitable trade lanes and active revenue management.”

“In addition, a 1.4% year-on-year increase in transport volumes to more than 12 million TEU and a stronger U.S. dollar exchange rate against the euro also made a positive contribution to revenues,” the company said in the earnings release.

Lower expenses for the handling and inland transport of containers as well as a slightly lower average bunker consumption price of $416 per tonne, compared to $421 per tonne in 2018, had a positive effect on transport expenses, which increased to 9.7 billion euros in 2019 from 9.6 billion euros in 2018, Hapag-Lloyd said.

Morkedal said Hapag-Lloyd “remains a top earner in the industry, with leading EBIT margins, which were 5.4% in 4Q and 6.4% for the full year.”

According to Morkedal, Hapag-Lloyd’s “strategic targets remain unchanged, highlighting their focus on profitability, rather than market share, and further deleveraging of the balance sheet.”

Hapag-Lloyd is expected to announce a savings program when it presents its 2019 annual report and outlook for the current financial year on March 20.

Morkedal said Hapag-Lloyd expects “stable market growth going forward,” with 3.1% container volume growth in 2020 and 3.3% in 2021.

“It further says the historically low orderbook of less than 10% of existing fleet combined with an expected increase in scrapping further indicates a healthier outlook for the industry,” Morkedal said.

Hapag-Lloyd has a fleet of 231 container ships and container capacity of about 2.6 million TEUs. The company has approximately 13,000 employees and 392 offices in 129 countries.