Hapag-Lloyd latest to report extraordinarily strong results


Hapag’s profits more than quadrupled in 2021 (file photo)

Posted on February 1, 2022 at 5:04 p.m. by

The Maritime Executive

Hapag-Lloyd has become the next major carrier in the container shipping industry to report record results, continuing the tone of outstanding results coming from across the industry in both the fourth quarter and all of 2021. Affirming that it had achieved “extraordinarily strong operating results,” The world’s fifth-largest container shipping company by volume released preliminary results with significantly better year-over-year performance, but its stock was still down more than 4% in trading today.

“The main drivers of these positive business developments were significantly improved freight rates resulting from very strong demand for goods exported from Asia,” Hapag wrote. However, they cautioned: “At the same time, major disruptions to global supply chains have led to a significant increase in transport spending.”

However, increased spending did little to dampen the results. For the full year, Hapag recorded an 80% increase in total revenue thanks to an equally significant increase in freight rates. Fares more than doubled in the fourth quarter, generating revenue of $8.4 billion. Nearly a third of the carrier’s total revenue of $26.4 billion was produced in the last quarter of 2021.

Strong markets more than quadrupled Hapag’s full-year profit to $12.8 billion (EBITDA). Fourth quarter earnings were exceptionally strong, reaching $4.7 billion.

The carrier, which ended the year with a fleet of 257 container ships and a capacity of 1.8 million TEUs, however operated at full capacity for most of 2021. Shipping volumes for the whole of the year were flat in 2021 compared to 2020 and posted a 6.5% decline in the fourth quarter compared to the previous year, likely due to port congestion.

Hapag promised to provide more details as well as its outlook when it publishes the final results for 2021 on March 10. The preliminary report, however, continued the tone set in the container shipping industry and again underlined analysts’ expectations that the sector will report back. an exceptionally strong performance for 2021 as it enters a still strong earnings cycle in 2022.

Maersk set the tone for the industry two weeks ago when it released preliminary unaudited financial results for the fourth quarter of 2021 ahead of expectations, prompting the shipping giant to again increase its forecast for the whole year. Maersk was already on track to report the biggest profit ever by a Danish company. Like Hapag, Maersk also reported an 80% increase in freight rates in the fourth quarter and a slightly lower 4% decline in ocean volumes in the quarter.

Between reports from Maersk and Hapag, other major carriers, including several Asian companies, COSCO, OOCL and Ocean Network Express (ONE), also released their results. For example, OOCL said that despite port congestion, it achieved record revenues and strong results in the fourth quarter. As ONE works on a fiscal year, it announced results in the last quarter (its Q3 of the fiscal year) above a 400% increase in profits to $4.9 billion. They also raised their profit forecast to $15.4 billion for the full year.

The major carriers are all reporting that port congestion is impacting volumes, but at the same time demand and congestion continue to drive up fares, producing the current extraordinary cycle for the industry.


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