Hapag-Lloyd moves into profit making from loss making

TUI, the parent company of Hapag-Lloyd, has reported that third quarter earnings before interest, taxes, depreciation and amortization (EBITA) from its shipping division came to EUR103 million (US$148 million), a big improvement on the EBITA loss of EUR25 million last year.

Turnover from the shipping division rose by 6.3 per cent to EUR1.6 billion in the third quarter of 2007, despite the persistently weak US dollar. The group's Hapag-Lloyd container shipping line, which accounts for the largest portion of turnover in the group's shipping division, enjoyed sales growth of 5.5 per cent in the third quarter.

The improvement in turnover was attributed to "considerable growth in container shipping volumes, and to the recovery in freight rates", a statement from the TUI group said. This signifies that Hapag-Lloyd is beginning to recover from a string of weak results suffered in the wake of acquiring CP Ships in late 2005.@FAXTEXT ="The greater earnings from our shipping division are partly the result of an increase in efficiency achieved by the takeover of CP Ships," said TUI's chief executive Michael Frenzel in a statement.

For the first nine months of the year, TUI's shipping division recorded EBITA of EUR257 million, a sharp improvement on the loss of EUR91 million posted for the corresponding period a year ago.

January to September saw revenue for the shipping division decline 2.3 per cent year on year to EUR4.64 billion against EUR4.76 billion for the corresponding prior year period. Container Shipping suffered a 2.8 per cent decline in revenue during the first nine months of the year, with its revenue at EUR4.51 billion.

This is despite the Hapag-Lloyd container line achieving volume growth of 12.4 per cent in the third quarter, and the total volume of boxes transported during the first nine months of the year being up 9.9 per cent to total 4.09 million TEU.

The shipping line's Europe-Far East trade reported the highest growth of all trade routes served, carrying 1.04 million TEU from January to September, up 20 per cent over the corresponding prior year period.

The German group said average freight rates in the third quarter were for the first time this year at a level above that of the equivalent period the previous year. But rates from January to September were 4.2 per cent behind overall year-on-year.