Hapag-Lloyd Continues on Path for Profits
Merger with CSAV is expected to deliver $100 million higher synergies than targeted, strong operating results, significant increases in transport volume and revenue driven by the merger
Container shipper Hapag-Lloyd said it has increased transport volumes and revenue as well as earnings in the first half of 2015 as volume growth was driven by a merger with Compañía Sud Americana de Vapores (CSAV) that made Hapag-Lloyd the fourth largest carrier globally by capacity.
The transport volume increased to around 3.7 million TEU in the first six months of 2015, up 29.4 percent compared to the same period in 2014 and mainly due to the merger with CSAV, the shipper said. The average freight rate in the first half of 2015 came in at $1,296/TEU, 9 percent below the same period of 2014.
Hapag-Lloyd’s revenue increased by €1.5 billion to €4.7 billion in the first half of 2015. Earnings increased as a result of initial synergies from the CSAV merger and additional cost savings from the OCTAVE program. In the first half of 2015, Hapag-Lloyd achieved an EBITDA of €493.3 million (prior year period: €67.2 million) and an operating result of €267.7 million (prior year period: -€101.5 million). Hapag-Lloyd recorded a profit of €157.2 million (prior year period: -€173.3 million).
In the first six months of 2015, transport expenses went up significantly less than the transport volume – as Hapag-Lloyd realized initial synergies and cost savings from the OCTAVE program. The transfer of CSAV’s services and ship systems into the various trades of Hapag-Lloyd was completed in the second quarter of 2015, slightly ahead of the original plan. Now that the integration is almost completed, Hapag-Lloyd targets net annual synergies of around $400 million fully realized by 2017 – $100 million higher than originally anticipated.
The cost and efficiency program OCTAVE initiated in 2014 is expected to deliver annual improvements of approximately $200 million as of 2016. OCTAVE includes improvement initiatives in several areas such as procurement and further fleet modernization.
“After a solid start into 2015, we are satisfied with our results in the first half of 2015,” said Rolf Habben Jansen, CEO of Hapag-Lloyd. “Our results prove that the merger with CSAV was the right decision and an important milestone in the development of Hapag-Lloyd, as we already benefit from the integration – and also see the first results of the OCTAVE program. We are well on track to achieve clearly positive full year operating results in 2015. The market environment remains very challenging, but we are well positioned in the market and remain highly resilient due to Hapag-Lloyd’s well-balanced portfolio of trades and services.”
