News / First financials since CSAV takeover see Hapag-Lloyd steam back into the black

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A $144m net profit in the first full quarter following its integration of CSAV’s container business was evidence that the takeover was “off to a good start”, said Hapag-Lloyd chief executive Rolf Habben Jansen yesterday, adding that the carrier was on course for the promised $300m of annual savings.

Indeed, he said, the integration of CSAV into Hapag-Lloyd was proceeding “slightly ahead of plan”, and was budgeted to achieve cost savings in the “low three-digit million dollar figure” this year.

In a teleconference presentation of first-quarter 2015 results, Mr Habben Jansen, sitting alongside newly-appointed chief financial officer Nicolas Burr, confirmed that the final sailing under the CSAV flag would be on 31 May, and thereafter all services would be under the Hapag-Lloyd banner.

The restructure of the new entity was almost complete, added Mr Habben Jansen. Marine and shore-based personnel have been combined and trimmed to around 10,600 from approximately 13,000 in the two separate businesses. This downsizing will continue with a further 10% of staff set to lose their jobs before the end of the year.

Quarter-on-quarter Hapag-Lloyd revenue and volume comparisons are impossible, given the now combined activities, but turnover reached $2.6bn from liftings of 1.8m teu during the period.

The average freight rate was $1,331 per teu, down by $91 on the same period of 2014, due in part to the “lower average rate of the newly-acquired CSAV”, but even stripping the Chilean carrier from the comparison, average rates were down 1.9%.

There was also a significant drop in the average rate obtained on Asia-Europe, which fell to $1,086 per teu in the quarter, versus the $1,201 average the year before.

The now fourth-biggest container carrier increased its Q1 Asia-Europe volumes to 333,000 teu, from 278,000 teu in 2014, suggesting that, unlike Maersk Line, the German line was not “hesitant” to join the freight rate battle on the route, and in fact increased its market share.

Nevertheless, given the CSAV integration – which with 34% of equity is the single largest shareholder – Latin America is now the biggest trade for Hapag-Lloyd, accounting for over 30% of its business in the first quarter. This also explains its recent order of five 10,500 teu ships, incorporating 2,100 reefer slots, which it will deploy on South American trades.

As he confirmed to The Loadstar last week at the Transport Logistic event in Munich, Mr Habben Jansen is positive about the future of the G6 alliance. He said: “As we speak, the members are discussing a five-year vessel deployment plan”.

He also confirmed that the next step for the alliance was to explore – within the bounds of competition legislation – landside co-operation, although he did not specify as to whether this could include the use of so-called ‘grey boxes’.

Mr Habben Jansen conceded that with some help from the strong dollar, much of the turnaround of Hapag-Lloyd’s fortunes – the carrier lost $654m in 2014 – could be attributed to the considerable fall in fuel prices, which in the first quarter averaged $377 per tonne, compared with $595 in the same period of 2014.

But, he added, the 1 January 2015 IMO ECA regulations now required Hapag-Lloyd ships to burn more-expensive low-sulphur fuel in 13% of its bunker consumption, compared with just 3% a year ago.

On the future of slow-steaming, Mr Habben Jansen said he was “more confident than ever” that ships would not be speeded up.

“Where the rates are at the moment, you probably should not be steaming at all,” he added wryly.