German container shipper Hapag-Lloyd has posted a net profit of €2.9 billion for the first half of 2023, down by 67% from a year earlier, but maintained its forecasts for full-year earnings.
The €2.9 billion compared with €8.7 billion in 2022 when shipping, a proxy for global trade, enjoyed a boom in the post-pandemic economic growth rebound and in light of logistics disruptions.
But now, the global economic slowdown and the clearing of supply log-jams have sent freight rates back down, which has also harmed Hapag-Lloyd's rivals Maersk and CMA CGM.
'Weaker demand and lower freight rates are having a very noticeable impact on our earnings,' the company said in a statement.
Transport volumes were down 3.4% at 5.8 million twenty-foot equivalent units (TEU), while freight rates were down 38% at $1,761 per TEU.
Some relief came from lower transport expenses, mainly due to lower tanker fuel prices.
"In a challenging market environment, we can look back on a successful first half year overall, in which we were able to expand our terminal portfolio while also significantly boosting our customers’ satisfaction thanks to our focus on quality," commented Rolf Habben Jansen, CEO of Hapag-Lloyd AG. "In the second half of the year, we will continue to focus on formulating our ‘Strategy 2030’."
Hapag-Lloyd, the world's fifth-largest shipping line, upheld its May guidance - which itself had repeated a March guidance - for its 2023 full-year earnings before interest and taxes (EBIT) to be in a €2 billion to €4 billion range.
EBITDA is expected to be in a range of €4 billion to €6 billion.
However, the ongoing war in Ukraine, geopolitical uncertainties, persistent inflationary pressures and high inventory levels are creating risks that could negatively impact the forecast, it said.
A.P. Moller-Maersk last week said global container trade volumes might fall by up to 4% this year as companies reduce inventories while higher interest rates and recession risks in Europe and the United States drag on global economic growth.
Additional reporting by ESM