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Europe's fourth-largest container shipping line, Hapag-Lloyd AG, says its financial results were hindered by soaring bunker prices during the second quarter of 2012, as rising fuel costs offset increases in freight rates.

After deducting interest and taxes, Hapag-Lloyd posted a net loss of EUR 7.3 million. EBITDA came in at approximately EUR 102 million (Q2 2011: EUR 85 million).

The German container carrier generated an operating profit of EUR 30.8 million (adjusted EBIT) in the April-June period, thereby improving on last year's second quarter performance by 18%.

Transport volume totalled 1.36 million TEU in the three months to June, approximately 2% higher than during the corresponding period last year. Hapag-Lloyd also recorded a sharp increase in revenue, which amounted to around EUR 1.8 billion in the second quarter, an increase of some 21% on Q2 2011.

In the second quarter, Hapag-Lloyd said it had to cope with a massive rise of EUR 330 million in transport expenses (+26%) as against the same period last year. This stemmed particularly from soaring marine fuel prices. At USD 694 per tonne, the company's average bunker consumption price in Q2 was well above the previous year's figure of USD 609 per tonne. It was also substantially up on the previous years’ average prices (USD 605 per tonne in 2011 and USD 453 per tonne in 2010). Rising energy prices also impacted on services provided by terminal operators and carriers using inland waterways, rail and road networks.

“Hapag-Lloyd increased the rate level very successfully in the second quarter. Following on from Q1 - which is always seasonally weak - this means that we returned to operating profitability because we have a highly efficient cost management system and have consistently prioritised price quality over transport volume. However, the further increase in expenses for bunker and other energy costs prevented us from posting an even better result,” said Michael Behrendt, Chairman of the Executive Board of Hapag-Lloyd .

“High bunker prices in particular cause our expenses to increase dramatically - they are by far the biggest cost factor for our business. Further rate increases are crucial to compensate for these elevated external costs. The cargo on board our vessels has to cover the cost of transportation. Otherwise, we will be unable to operate our reliable, global maritime shipping networks sustainably - something which the globalised economy relies on.”

First Six Months

In the first six months of 2012, revenue increased by more than 14% compared to the first half of 2011, coming in at EUR 3.4 billion.

Hapag-Lloyd transported more than 2.68 million TEU – an increase of 5.8%. Transport expenses for the first half were up by a total of EUR 561 million on last year, largely due to higher energy costs. This was equivalent to a 22% rise.

EBITDA totalled EUR 80.9 million in the six months to June, while the adjusted EBIT stood at EUR -68.7 million, due to the seasonally weak first quarter.

Investments of EUR 494.6 million were made in the first half of the year, with most of the funds going towards ships and containers. Hapag-LLoyd said long-term financing has been secured successfully for the vessels on order and all the investments in containers which have been made and are planned. Equity stands at EUR 3.26 billion and the equity ratio exceeded 47% as at 30 June.

Following a slight decrease in bunker prices at the end of the second quarter, the current trend is pointing upwards again. Hapag-Lloyd pointed out that it was for this reason that rate increases were recently announced for a number of trades, and that further price hikes will be 'unavoidable'.

At present, Hapag-Lloyd has around 6,970 employees at 300 sites in 114 countries. The fleet consisted of 147 vessels with a total capacity of 667,000 TEU on 30 June. On 5 July, Hapag-Lloyd also took delivery of the first of ten 13,200 TEU newbuilds. The vessel will be named ‘Hamburg Express’ at a ceremony in Hamburg on 17 August.