Hapag-Lloyd continues momentum after strong 2020

German container shipping giant Hapag-Lloyd saw a significant earnings surge in 2020 despite the negative effects of the coronavirus pandemic.

The carrier’s earnings before interest, taxes, depreciation and amortisation (EBITDA) increased to more than $3 billion, while earnings before interest and taxes (EBIT) rose to roughly $1.5 billion, Hapag-Lloyd’s annual report with audited business results for the 2020 financial year shows.

What is more, the group’s net result improved to around $1.1 billion.

As explained, the main drivers were cost savings of more than $500 million as well as slightly improved freight rates and lower bunker prices.

“In 2020, our business was strongly influenced by the coronavirus pandemic. But we took early countermeasures on the cost side and successfully implemented our Performance Safeguarding Program,” Rolf Habben Jansen, CEO of Hapag-Lloyd AG, said.

“After transport volumes plummeted in the second quarter, we were able to benefit from unexpectedly strong demand for container transports in the second half of the year. Therefore, we have concluded the year with a much better result than that of 2019, and after the significant improvements achieved in previous years, we have been able to earn our cost of capital for the first time in a decade.”

Revenues increased in the 2020 financial year by around 3 percent, to roughly $14.6 billion. This is mainly owed to a roughly 4 percent increase in the average freight rate, to 1,115 USD/TEU (2019: 1,072 USD/TEU). The transport volumes at the end of the year were slightly below the level of the previous year, at 11.8 million TEU (2019: 12.0 million TEU) or minus 1.6 percent, but clearly above the level anticipated at the beginning of the pandemic, according to Hapag-Lloyd.

Expectations for 2021

The company has got 2021 off to a very positive start due to exceptionally strong demand which resulted in a significant increase in freight rate levels.

Looking ahead, Hapag-Lloyd expects that the EBITDA and EBIT for the 2021 financial year will clearly surpass the prior-year level, assuming that the transport volume can be slightly increased and the average freight rate significantly increased compared to the previous year.

Moreover, the shipping company anticipates a significant increase in the average bunker consumption price.

However, the forecast remains subject to considerable uncertainty due to a number of factors, including the above-average volatility of freight rates at this time and operational challenges, such as those caused by infrastructural bottlenecks. In addition, the further course and corresponding economic impacts of the coronavirus pandemic cannot be predicted at present.

“2021 will also be dominated by the global coronavirus pandemic, and the current supply chain bottlenecks will presumably only abate significantly in the second half of the year,” Rolf Habben Jansen noted.

“Thanks to continuing strong demand for consumer goods, we have gotten the current financial year off to a very positive start. However, the pandemic-related risks will remain for the time being, even if vaccination campaigns across the world hint at the first steps towards normalisation.”

Preparing for further growth, Hapag-Lloyd yesterday unveiled the acquisition of Dutch container shipping specialist NileDutch. With this move, the German liner company aims to strengthen its footprint in the African region.

Hapag-Lloyd controls a fleet of 237 containerships with a total transport capacity of 1.7 million TEU and operates in the Transatlantic, Middle East, Latin America and Intra-America trades.