Hapag-Lloyd Reports 2Q Numbers

Maritime Activity Reports, Inc.

August 11, 2011

Operating in an ever more competitive environment, Hapag-Lloyd achieved sales of €1.5 billion (over $2.1 billion) and a positive adjusted EBIT of €26 million (almost $36.7 million) in the 2nd quarter of 2011. This was slightly up on the previous quarter (€16.1 million/$22.8 million), while in the record year 2010 the comparable figure was €211.3 million (almost $298.9 million). EBIT came to €42.1 million (over $59.5 million) in the first half of 2011 (previous annual period: €218.1 million/$308.5 million). Profitability was depressed above all by a declining freight rate and significantly higher fuel costs (bunker). At the same time, demand for transport services in Japan declined in the wake of the environmental catastrophe. Moreover, the weak dollar compared with the euro had a negative impact.

Pressure on rates rose during the first half of the year, with routes from and to Asia being particularly affected. The average freight rate in the 1st quarter of 2011 was $1563/TEU but only $1531/TEU in the 2nd quarter, resulting in an average freight rate of $1546/TEU (+ 4.4%) for the first half of 2011. However, this was only partially offset by the high bunker prices and other energy-related cost increases. The price of one metric ton of bunker surged from approx. $480 in January to over $630 by June.

In the first half of the year, Hapag-Lloyd transported a total of 2.5m standard containers (TEU), 3.3% more than in the comparable period of the previous year. The North Atlantic accounted for 582000 TEU (+ 1.5%), Latin America 559000 TEU (+ 7.0%), Far East 549000 TEU (- 2.6%), Trans Pacific 560000 TEU (+ 8.3%) and Australasia 284000 TEU (+ 2.9%).

Cash flow from operating activities was significantly higher at €145.8 million (about $206.2 million) in the first half of 2011, despite the weaker performance. Compared with the end of the year, the net financial position improved by more than €100 million ($141.44 million) to -€1.023 million (almost $1.45 million). The equity ratio increased slightly to 53.3%. Hapag-Lloyd had a workforce of 6845 as of June 30th 2011.

The industry services forecast continued good growth for container shipping in the medium to long term. In the short term, however, the development of the sector will be influenced by high crude oil prices and pressure on freight rates as a result of tougher competition particularly in the Asia-related trades.

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