Lines’ fortunes plummet in first half

Varied financial results of the top container shipping firms in the first half of the year could have a detrimental effect on the sector’s recovery. According to Paris-based analyst Alphaliner, the financial fortunes of container shipping companies varied widely in the first half and operating margins among the top 20 carriers ranged from 8-19%. In its report, Alphaliner says that due to weak operating conditions, only four carriers (Maersk, Hapag-Lloyd, CMA CGM and OOCL) achieved positive operating results for the period. Cumulative operating losses of the 16 carriers that published their first half results reached US$0.29 billion (R2.11bn), a significant deterioration from the $3.77 billion (R27.52bn) in operating profits recorded in the same period last year. A majority of the carriers have already warned their investors to expect a full-year loss. Although the results are not as bad as the $6.25 (R45.63bn) billion of operating losses that the same 16 carriers posted for the first half of 2009, they include a number of nonrecurring items that helped boost the margins of those carriers that reported positive results. Maersk’s results included gains from shipping asset sales, which if excluded would have pushed its ebit margin down from 3.3% to 2.4%. Hapag-Lloyd’s ebit included hedging gains, which if excluded would have transformed the line’s positive operating margins of 1% to -1.7%. CMA CGM did not provide a detailed breakdown of its operating results but is believed to have booked gains from both asset sales and hedging.