German container firm Hapag-Lloyd has posted an 84% drop in first-quarter net profit but raised the lower end of its 2024 outlook amid rising demand and freight rates.
"Even though our results are significantly below the exceptionally strong figures from the previous year owing to the normalisation of supply chains, we are pleased to have got the new year off to a good start," said CEO Rolf Habben Jansen.
Net profit at the world's number five container shipping operator fell to €299 million from €1.893 billion a year earlier. Revenue fell 24% to €4.26 billion.
EBITDA Expectations
However, for 2024 the company said it now expects earnings before interest, taxation, depreciation and amortisation (EBITDA) of €2 billion to €3 billion euros versus a forecast of €1 billion to €3 billion it issued on March 14.
It said it expects earnings before interest and taxes (EBIT) of between zero and €1.0 billion euros, up from a forecast of minus €1 billion to €1 billion.
Red Sea Disruption
Revenue is expected to be supported by disruption caused by the situation in the Red Sea, where commercial shippers are avoiding the Suez Canal because of attacks on shipping vessels by Yemen-based Houthi militants.
The crisis has pushed up freight rates because alternative trips around the southern tip of Africa are longer and therefore more costly and this is being passed on to customers.
Also, Hapag-Lloyd, in anticipation of numerous vessels joining the world fleet, has launched measures to keep costs in check. Its first-quarter transport expenses were unchanged from a year earlier at 3.0 billion euros.
Transport volumes, meanwhile, increased by 6.8% to 3 million twenty-foot equivalent unit (TEU) containers, reflecting healthy demand, especially on transpacific routes where it is a strong player.
