German shipping giant Hapag-Lloyd takes $600M hit from Middle East conflict
Baku, August 13, AZERTAC
German container shipping company Hapag-Lloyd incurred around $600 million in additional costs in the second quarter due to the conflict in the Middle East, Anadolu Agency reported citing the company.
Hapag-Lloyd's group profit fell to $83 million in the April-June period from $306 million a year earlier, according to its quarterly earnings statement.
Group earnings before interest, taxes, depreciation and amortization (EBITDA) edged up to $829 million from $820 million, while operating profit declined to $176 million from $189 million.
The company said strong exports from Asia and improved demand in the US helped partially offset cost pressures stemming from the Middle East conflict.
In its Liner Shipping segment, operating profit fell to $153 million from $167 million, primarily as the blockage of the Strait of Hormuz generated additional costs for bunker fuel, insurance, storage, service rerouting and inland transportation.
Segment revenue rose to $5.7 billion, supported by higher transport volumes and freight rates.
Transport volume increased to 3.5 million twenty-foot equivalent units (TEUs) from 3.4 million a year earlier, while the average freight rate climbed 9% to $1,475 per TEU.
"The second quarter was better than the first, driven by significantly higher spot rates and robust demand," CEO Rolf Habben Jansen said.
The company raised its full-year outlook in July, forecasting group EBITDA of between $2.7 billion and $3.7 billion and operating profit of $100 million to $1.1 billion.
Hapag-Lloyd cautioned that its outlook remains subject to considerable uncertainty due to volatile freight rates and the Middle East conflict.
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