Hapag-Lloyd suffers from lower rates, weak U.S. dollar

Lower freight rates and the weak U.S. dollar contributed to Hapag-Lloyd posting an underlying second quarter earnings before interest, taxes, depreciation and amortization (EBITA) loss of 15 million euros ($20 million) from container shipping and cruise operations, parent company TUI said today.

Hapag-Lloyd's 2006 underlying EBITA in the second quarter 2006 was a positive 5 million euros ($7 million). The latest result also took into account special costs related to the takeover of CP Ships without which Hapag-Lloyd had an EBITA of 13 million euros ($18 million).

The division's quarterly turnover amounted to 1.54 billion euros ($2.10 billion), down 4.2 percent year-on-year from 1.60 billion euros. Container shipping accounted for about 1.45 billion euros ($1.98 billion) of the division revenue, a drop of 4.6 percent.

TUI said Hapag-Lloyd's container volume in the period rose 7.4 percent to 1.38 million TEUs but its average rate was down 5.6 percent to $1,350 per TEU.

Looking forward, TUI expects its shipping division to prosper from the upturn in the container industry witnessed in the last few months.
"The shipping sector was characterized by strong volume growth and a recovery of freight rates in the second quarter. Against the background of freight rates currently continuing to rise, positive operating earnings contributions are expected for the second half of the year," TUI said.

After six months, TUI's shipping unit posted an underlying EBITA loss of 68 million euros ($94 million), from a profit of 27 million euros in the first half 2006. Revenue declined 6.4 percent to 3.04 billion euros ($4.16 billion), compared to 3.24 billion euros last year.