Cost reductions and high demand in the second half of the year provided the impetus that has seen Hapag-Lloyd record a significant increase in profits for 2020 – with more of the same expected for the year ahead.
That’s according to its annual report, published today, which reveals that earnings before interest, taxes, depreciation and amortisation (Ebitda) increased to more than US$ 3 billion. Earnings before interest and taxes (Ebit) rose to roughly US$ 1.5 billion. The Group net result improved to around US$ 1.1 billion.
The main drivers are identified as cost savings of more than US$ 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 Programme,” said CEO Rolf Habben Jansen. “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%, to roughly US$ 14.6 billion. This is largely attributed to a roughly 4% increase in the average freight rate, to 1115 US$/TEU (2019: 1 072 US$/TEU). The transport volumes at the end of the year were slightly below the level of the previous year, at 11.8 million TEUs (2019: 12.0 million TEUs) or minus 1.6%, but above the level anticipated at the beginning of the pandemic.
Looking ahead, the line expects that the Ebitda and Ebit for the 2021 financial year to surpass the prior-year level. This is based on the assumption that transport volumes can be slightly increased and the average freight rate significantly increased compared to the previous year, according to the report. “Moreover, a significant increase in the average bunker consumption price is anticipated. This 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. Accordingly, a detailed earnings outlook is not possible at this time.”
Habben Jansen believes 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. “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. Overall, we are sticking to our existing course,” he said.
