Hapag-Lloyd Posts Quarterly Profit on Spending Cuts, Fuel

Hapag-Lloyd AG cut costs amid falling fuel prices to deliver a profit in the second-quarter as Europe’s fourth-largest container-shipping line reiterated its forecast of positive full-year operating earnings.

Group profit was 20.9 million euros ($27.8 million), compared to a loss of 7.3 million euros a year earlier, while the average price for fuel, or bunker, showed a “slight” drop of 10 percent to $622 a metric ton, the Hamburg-based company said in a statement.

The world’s biggest container lines, which also include A.P. Moeller-Maersk A/S’s Maersk Line and Mediterranean Shipping Co, have been trying to push up freight rates. The industry has yet to recover from a downturn, now in its fifth year, as growth in global trade remains subdued and an overcapacity of vessels persists.

“The intense competition in the second quarter meant that, unlike last year, it was almost impossible to implement announced rate increases in the market,” Hapag-Lloyd said.

The average freight rate fell about 6 percent to $1,499 per standard container, or TEU, in the quarter. Revenue fell 4.9 percent to 1.71 billion euros, while transport volume gained 2.3 percent to about 1.39 million TEU.

Hapag-Lloyd, which invested 463.6 million euro in the first six months, mostly in ships and containers, has announced further price increases in recent days, including on the Transatlantic trade route between Europe and the U.S.

Small Increases

“While we managed to implement small rate increases at the start of July, it is still not enough,” Chief Executive Officer Michael Behrendt said in the statement.

Hapag-Lloyd said it continues to target a operating profit this year.

“Equity of 3.1 billion euros and an equity ratio of about 44 percent clearly illustrate that Hapag-Lloyd’s financial structure remains sound,‘‘ it said.

To contact the reporter on this story: Nicholas Brautlecht in Hamburg at nbrautlecht@bloomberg.net

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

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