Hapag-Lloyd anticipates harder blow due to coronavirus in second quarter

In the first quarter of 2020, Hapag-Lloyd recorded EBITDA (earnings before interest, taxes, depreciation, and amortization) of US$517 million (EUR 469 million), and a net income of approximately USD 27 million (EUR 25 million).

“Despite the coronavirus pandemic, 2020 got off to a good start. An increase in throughput and better freight rates increased our revenue. Our financial result is below that of the first quarter of last year, as we have faced higher bunker prices due to the new rules introduced by the IMO in 2020. We also had a devaluation in bunker stocks after a drop in crude oil prices at the end of the first quarter,” says Rolf Habben Jansen, CEO of Hapag-Lloyd AG.

Hapag-Lloyd’s revenue increased during the first quarter of 2020 by about 6%, totaling US$3.7 billion (3.3 billion euros). This can be attributed mainly to a 4.3% increase in throughput, more than 3 million TEUs, and an improved average freight rate of US$1,094 per TEU. Transport expenses increased by almost 10% mainly due to the increase in bunker price from US$98 to US$523 per ton as a result of the transition to oil with lower amounts of sulfur which was required by IMO 2020. This had a negative impact on profits, as well as a devaluation of bunker stocks equivalent to US$64 million (approximately € 58 million) due to the rapid decline in oil prices that started at the end of the first quarter.

“We anticipate that the coronavirus pandemic will have a very significant impact in 2020, starting in the second quarter. Our main focuses will continue to be the safety and well-being of our employees, as well as our customers’ supply chains. We have adopted a wide range of measures designed to save on costs and to safeguard our profitability and liquidity. We have adjusted our service network accordingly with the lower amount of demand and seek to save in all categories, from terminals, transportation, equipment, and network costs to general expenses”, concludes Rolf Habben Jansen.

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