10 July (Lloyd's List) - HAPAG-LLOYD has become the latest container line to make a significant change to its outlook for the full-year on the back of a strong set of preliminary results for the second quarter.
“Because recent strong demand and increased short-term freight rates have exceeded expectations, earnings momentum for the second half of the year is likely to be above previous expectations,” the company said.
“Therefore, the executive board of Hapag-Lloyd is raising its earnings outlook for the financial year 2024.”
Hapag-Lloyd now expects earnings before interest and tax to be in the range of $1.3bn-$2.4bn, well ahead of the $0-$1.1bnbn it had previously forecast.
This previous outlook, which dates from its first-quarter results in May, was itself an upgrade from initial full-year guidance released in March, which projected ebit of -$1.1bn to
$1.1bn, with a range midpoint of zero.
The fortunes of Hapag-Lloyd and other container lines continue to be swayed by the ongoing disruption to sailings caused by the Red Sea crisis, and record high volumes, which in May stood at 15.9m teu globally, according to Container Trades Statistics.
Delays to schedules, combined with an early peak season and port congestion, have seen freight rates rise at their fastest level since the pandemic.
Hapag-Lloyd reported ebit of $500m for the quarter, taking half-year ebit up to $900m.
This remains a far cry from previous levels; last year it earned $900m in second quarter alone, and $2.8bn in the first half of 2023.
But the Red Sea crisis continues to dominate shipping headlines, with little indication of a resolution, so further strong quarters are expected this year.
“It will come as no surprise that carriers are revising their financial expectations for the year upwards, though observers might have expected an even greater uplift from Q1 to Q2,” said analysts at Alphaliner.
“The higher forecast was mainly due to earnings momentum for the second half of the year.”
But Hapag-Lloyd also warned that its forecasts were subject to “a high uncertainty” due the backdrop of volatile freight rates and “major geopolitical challenges”.
Hapag-Lloyd will publish its audited accounts for the second quarter and first half of the year on August 14.
