Hapag-Lloyd posts operating result for 2016 financial year
Hapag-Lloyd closed the 2016 financial year with EBITDA of EUR 607.4 million (previous year: EUR 831.0 million) and an operating result (EBIT) of EUR 126.4 million (previous year: EUR 366.4 million). These figures are taken from the 2016 annual report, which was published today. The Group net result came in at EUR -93.1 million (previous year: EUR 113.9 million).
In 2016, Hapag-Lloyd’s transport volume rose by 2.7% year on year to 7.6 million TEU. The average freight rate was USD 1,036/TEU, which was 15.4% lower than in the previous year (USD 1,225/TEU). Revenue fell from EUR 8.842 billion in the previous year to EUR 7.734 billion in 2016, mainly due to the significant decline in rates.
In 2016, Hapag-Lloyd managed to reduce its transport expenses significantly by 12.3% to EUR 6.364 billion (previous year: EUR 7.259 billion). However, this reduction did not fully offset the decline in the average freight rate. The noticeable improvements in transport expenses were due to the lower average bunker price in 2016 of USD 210/tonne (previous year: USD 312/tonne) as well as a 6.3% reduction (compared to 2015) in bunker consumption brought about by the use of larger and more efficient ships.
Despite an increase in transport volume, Hapag-Lloyd successfully reduced the costs of purchased services (e.g. hinterland container transport costs; chartering and leasing costs; and port, canal and terminal costs) by 8.3% (compared to 2015). This was primarily due to synergy effects achieved through the merger with CSAV and the OCTAVE cost-cutting programme but also due to market driven cost reductions (e.g. bunker) which will not necessarily be sustainable going into 2017.
Based on forecasts for global trade growth (IMF: 3.8%) and global container ship capacities, Hapag-Lloyd anticipates a moderate increase in the average freight rate and transport volume in 2017 (excluding UASC). The preparations for the closing of the merger with UASC are in their final stages. From 2019 onwards, the merger is expected to result in annual synergies of USD 435 million.
This is offset by one-off expenses of around USD 150 million resulting from the transaction and the integration of UASC into Hapag-Lloyd. Final synergy effects from the CSAV merger as well as positive effects from the OCTAVE cost-cutting programme and the Compete to Win project designed to improve revenue quality are also expected for 2017. Under these circumstances, Hapag-Lloyd expects a better EBITDA and EBIT year on year.
With equity almost unchanged year on year at EUR 5.058 billion and an equity ratio of 44.6% Hapag-Lloyd possesses a solid balance sheet. With liquidity reserves of around EUR 760 million (including unused credit lines), Hapag-Lloyd is securely financed for the future (as at 31 December 2016).