Despite other shipping lines maintaining that 2020 is now the year that no one can predict, Hapag-Lloyd is to stand by its profit predictions from the start of the year.
This was laid out in the shipping line’s report of its first quarter results in which it saw an increase in transport volumes and freight rates in the first quarter of 2020, bosting its revenues. However, it is clear that uncertainties remain for the rest of 2020 because of the COVID-19 crisis.
Commenting on social media, Lars Jensen, CEO at SeaIntelligence Consulting, noted that for carriers the first quarter results will only be affected by the China outbreak of COVID-19, with the rest of the globe affected later in the year. He said though, “even in this light, Lloyd’s results are strong.”
Jensen also noted other carriers reluctance to make full 2020 predictions of profits Hapag-Lloyd maintains its view from the annual report a few months ago.
In March A.P. Møller – Mærsk suspended its 2020 full year guidance on earning because of the sever impact of COVID-19 on the global transport market.
However, Hapag-Lloyd states that taking into account the prevailing uncertainties and building on the planned cost cutting measures as well as based on the premise that the pandemic will peak in the second quarter and give way to a gradual recovery in the global economy in the second half of the year, the Executive Board has substantiated its earnings forecast from the start of 2020.
This means that Hapag-Lloyd continues to expect EBITDA of €1.7 to 2.2 billion ($1.8 to $2.4 billion) and EBIT €0.5 to 1.0 billion ($0.6 to 1.1 billion) for the current financial year.
Reflecting on the first quarter results, Rolf Habben Jansen, CEO of Hapag-Lloyd AG, said: “Although we were able to pick up a bit of tailwind at the beginning of the year, we anticipate that the coronavirus pandemic will have very significant impacts in 2020, beginning in the second quarter.”
The tailwind he speaks of is the increased revenues in the first quarter of 2020 by around 6 percent, to $3.7 billion. This can primarily be attributed to a 4.3 percent increase in transport volumes, to more than 3 million TEU, and an improved average freight rate of USD 1,094 per TEU.
Overall, the shipping line reported recorded earnings before interest and taxes (EBIT) of $176 million, which is below the corresponding prior-year figure of $243 million. The Group net result declined to approximately $27 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased slightly to $517 million.
“The financial result is below the first quarter of the previous year as we faced higher bunker prices after the new IMO 2020 rules on 1 January and we had a significant negative bunker stock valuation after the decline in crude oil prices at the end of the first quarter,” said Habben Jansen.