Hapag-Lloyd full-year earnings leap $384 million

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.