Hapag-Lloyd's Loss Widens
Company says freight rates remain under pressure; blames tough competition, weak U.S. dollar. Pins hopes on G6 alliance, container merger with CSAV.
German shipping company Hapag-Lloyd's first-quarter loss widened as its revenue declined, hit by tough competition which depressed freight rates and a weak dollar.
Shipping groups have been struggling through the worst slump on record, as they grapple with low freight rates caused by overcapacity and a weak global economy.
Hapag-Lloyd's first-quarter operating loss increased to 63.2 million euros ($86.9 million) from 53.2 million euros in the same period a year ago, even though transport volumes rose 5.5 percent to 1.4 million twenty-foot-equivalent units (TEU).
Its net loss widened from 93.6 million to 119.1 million euros, which included one-off costs from the takeover of Chilean shipping Compania SudAmericana de Vapores's (CSAV) container business.
Earnings were hit by "persistently aggressive competition" and freight rates remained under pressure, the company said on Tuesday.
Chief Executive Michael Behrendt said the expansion of the G6 shipping alliance so that it would cover all east-west trades, as well as the integration of CSAV's container segment would "significantly improve" the company's ability to compete.
The G6 alliance - comprising Hapag-Lloyd, APL, Hyundai Merchant Marine, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Orient Overseas Container Line - was formed in late 2011 and began operation in March 2012 on Asia-Europe and Mediterranean trade routes.
Hapag-Lloyd also separately signed a binding deal with Chile's CSAV last month to create the world's fourth-largest container-shipping company.
First-quarter revenue fell 6 percent to 1.55 billion euros. When adjusted for exchange rate fluctuations as a result of the weaker dollar, the revenue decline was 2.3 percent.
Hapag-Lloyd did not make any specific financial forecast for 2014 but said the goal for this year continued to be improving the overall freight rate, which stood at $1,482/TEU last year.
In the first quarter, the firm said the average freight rate was $1,422/TEU, down by $124/TEU on a year ago.
Reporting by Marilyn Gerlach