Hapag-Lloyd Has ‘Optimism’ After Merger Costs Cause Wider Loss

By Nicholas Brautlecht

(Bloomberg) — Hapag-Lloyd AG, Germany’s greatest container- transport line, mentioned it’s trying to the longer term “with optimism” after prices from merging with a unit of Cia. Sud Americana de Vapores SA led to the corporate’s greatest loss in 5 years.

The web loss in 2014 widened to 604 million euros ($654 million) from 97 million euros a yr earlier, Hamburg-based Hapag-Lloyd mentioned in a press release on Friday. Charges from disposing of older ships additionally damage earnings.

“In terms of results, 2014 was undoubtedly an extremely disappointing year,” Chief Executive Officer Rolf Habben Jansen mentioned within the assertion. “We are now looking ahead and focusing our efforts on returning Hapag-Lloyd to profitability and achieving a clearly positive operating result in 2015.”

Hapag-Lloyd agreed final April to take over container- transport property from Valparaiso, Chile-based CSAV to create the world’s fourth-largest line with about 200 vessels, taking over trade leaders that embody A.P. Moeller-Maersk A/S.

The web end in 2014 compares with a pro-forma lack of 677 million euros in 2009, when tour operator TUI AG offered its majority stake in Hapag-Lloyd to Hamburg-based funding group Albert Ballin GmbH, spokesman Rainer Horn mentioned by cellphone. TUI plans to promote its remaining 14 p.c holding in Hapag-Lloyd, probably as a part of an preliminary public providing that the container provider is concentrating on for late this yr or in 2016.

Prices Fall

The adjusted loss earlier than curiosity and tax final yr was 112 million euros, in contrast with revenue of 67 million euros a yr earlier, Hapag-Lloyd mentioned. The common freight price fell 3.2 p.c to $1,434 per normal container amid lingering overcapacity from the supply of vessels coinciding with a commerce hunch triggered by the worldwide monetary disaster in 2008.

Hapag-Lloyd raised 370 million euros in December from two of its greatest shareholders after finishing the CSAV takeover. Billionaire Klaus-Michael Kuehne supplied 111 million euros and CSAV one other 259 million euros, primarily to permit the provider to modernize its fleet.

“Hapag-Lloyd is currently in negotiations with several shipyards in this regard and will be ordering new ships over the coming weeks,” the corporate mentioned Friday.

The German container shipper is unlikely to be worthwhile on a web foundation earlier than 2016, Habben Jansen mentioned in January. Cost cuts will “significantly” exceed $100 million this yr, from enhancements in inland cargo providers and boosting vessel utilization, along with annual financial savings of not less than $300 million anticipated from the CSAV merger, the CEO mentioned on the time.