Hapag-Lloyd Pledges to Address Costs as Nine-Month Profit Drops 50%
German container shipper Hapag-Lloyd posted a 50% drop in nine-month net profit to 846 million euros ($989 million) on Thursday and lowered the top end of its full-year earnings forecast, blaming volatile markets and pledging to be strict on costs.
The company revised its full-year earnings before interest and taxes (EBIT) projection to between 500 million and 1 billion euros, trimming the upper end from a previous range of 200 million to 1.1 billion euros announced in its August earnings.
Security concerns in the Red Sea that necessitated longer re-routings and frequent shifts in U.S. trade policy have contributed to unstable demand and port congestion in the shipping industry, a bellwether of global economic trends.
"We have to ensure that we will maintain strict cost discipline," Chief Executive Rolf Habben Jansen said on a call with analysts.
Shares in the company, in a small free float of 3.6%, fell 4.6% by 1140 GMT.
Habben Jansen said that the company was seeing the first cost advantages from its new Gemini cooperation with rival Maersk that covers major East-West trades, helping to recoup start-up expenses and due to bring more savings in 2026.
Transported volumes increased 9% to 10.2 million twenty-foot equivalent units (TEU) in the January to September period, but its transport costs rose by 10.8% to 10.5 billion euros.
Average freight rates, although 5% higher in the third quarter than in the second, fell 4.8% to $1,397 per TEU over the nine months.
"We are looking at a freight rate environment that is under pressure right now, volume growth is slowing slightly down, let's see what the last weeks of the year will bring," Chief Financial Officer Mark Frese said.
Hapag-Lloyd's nine-month EBIT slumped 55% year-on-year to 809 million euros.
($1 = 0.8575 euros)
(Reuters)