Hapag-Lloyd Posts Second-Quarter Net Loss After Fuel Costs Soar

Hapag-Lloyd AG, Europe’s fourth- largest container-shipping line, reported a second-quarter loss after soaring fuel costs offset increases in freight rates.

The net loss narrowed to 7.3 million euros ($9 million), from 10.6 million euros reported a year earlier. Operating profit rose 18 percent to 30.8 million euros in the three months through June, the Hamburg-based company said in an e-mailed statement today.

The world’s biggest container lines, including A.P. Moeller-Maersk A/S (MAERSKB) and CMA CGM SA, made losses last year because of a jump in fuel costs, an oversupply of ships and a price war on routes between Asia and Europe. While shipping lines have since raised freight rates, the increases haven’t fully offset the rising energy prices and further increases are therefore “unavoidable,” Hapag-Lloyd said today.

“High bunker prices in particular cause our expenses to increase dramatically -- they are by far the biggest cost factor for our business,” Chief Executive Officer Michael Behrendt said in the statement. “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.”

The company’s transport expenses rose 26 percent, or by 330 million euros, in the second quarter compared with a year earlier, after the average fuel price jumped 14 percent to $694 per ton, Hapag-Lloyd said. The weighted average freight rate in the second quarter increased 7.4 percent to $1,594 when compared with the first three months of this year and was 4.1 percent higher than in the second quarter of 2011.

Earnings Target

Hapag-Lloyd fared better than its main competitors last year and was the only major container shipping company that reported an operating profit in all four quarters of 2011, Behrendt said on March 20. The German company “is striving to post positive operating earnings again for the current financial year, provided that there is no fundamental escalation of the risks and assuming it proves possible to implement further rate increases in the course of 2012,” Hapag-Lloyd said today.

TUI AG (TUI1), owner of Europe’s largest travel company, has sold a 17.4 percent stake in Hapag-Lloyd to investor group Albert Ballin for 475 million euros to focus on tourism. TUI may divest its remaining 22 percent holding in an initial public offering or sell the stake to third-party investors, it said on Feb. 14. The company postponed a planned IPO for Hapag-Lloyd last year because of turmoil in global equity markets.

Albert Ballin, which comprises the city-state of Hamburg’s government, Klaus-Michael Kuehne, Signal Iduna, Hanse-Merkur, M.M. Warburg & Co. and HSH Nordbank AG, is Hapag-Lloyd’s majority shareholder and owns 78 percent of the company.

Hapag-Lloyd’s sales advanced 21 percent to 1.8 billion euros in the second quarter, while transport volumes increased 2 percent to 1.36 million standard containers.

To contact the reporter on this story: Niklas Magnusson in Hamburg at nmagnusson1@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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