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Hapag-Lloyd slumped to a 42.8-million-euro ($48.8 million) net loss in a “very challenging” first quarter from a 128.2-million-euro profit in the previous year, as sharply lower freight rates outweighed lower fuel costs.

The German carrier, which today unveiled details of a global shipping alliance with five Asian shipping lines, managed to scrape a 4.8-million-euro operating profit, down from 174.3 million euros last time.

Earnings before interest, tax, depreciation and amortization more than halved to 123.4 million euros from 283.6 million euros.

Revenue dipped to 1.93 billion euros from 2.3 billion euros as lower freight rates negated the impact of a 2.1 percent increase in traffic to 1.81 million 20-foot equivalent units from 1.77 million TEUs in the year earlier period.

The average freight rate fell to $1,067 per TEU from $1,331 during the first three months of 2015.

The negative effects of the difficult market environment were partly offset by the cost-cutting and efficiency measures implemented under the Octave program launched in 2015 and a “significantly lower” average bunker consumption price of $178 per tonne (1.1 tons), the Hamburg-based carrier said.

“In the seasonally weak first quarter we recorded an acceptable result with a small operating profit and an EBITDA margin of 6.4 percent,” said Rolf Habben Jansen, chief executive officer of Hapag-Lloyd.

“This was due in no small part to the synergy effects that have been achieved so far as a result of the merger with (Chilean carrier) CSAV and the improvements to our cost base under the Octave program.”

“Both factors together represent around $600 million in annual long-term earnings effects compared to the cost base in 2014,” Habben Jansen said.

Hapag-Lloyd reiterated its forecast of a “moderate” increase in EBITDA for the full year and a “clear” rise in operating profit.

Talks over a potential merger with United Arab Shipping Company are progressing according to plan, although an agreement has not yet been reached and will be subject to regulatory approvals, the carrier said in announcing its alliance with the five Asian lines.

 

 

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