Hapag-Lloyd delivered a good first half result despite the pandemic but warned that the coronavirus is and will remain a "major source of uncertainty" for the entire logistics sector.

The German international shipping company reported that it concluded the first half of the year 2020 with earnings before interest and taxes (EBIT) of US$563 million, surpassing the prior-year figure of US$ 440 million although revenues in the first half — which stood at US$7 billion was less than 1% compared to the year-ago level.

Hapag Lloyd said this can be primarily be attributed to the fact that transport volumes decreased by approximately 4% to roughly 5.8 million TEUs during the period.

Good first-half performance 

“After the year got off to a decent start, transport volumes significantly declined in the second quarter as a result of the COVID-19 pandemic. We benefitted from the sudden drop in bunker prices, the adjusted capacity to lower demand and took additional cost-cutting measures as part of our Performance Safeguarding Program. On the whole, we have a good first half-year behind us despite the coronavirus crisis,” said Rolf Habben Jansen, chief executive officer of Hapag-Lloyd AG.

While transport volumes were still slightly increased in the first quarter, Hapag Lloyd saw the second-quarter decline of roughly 11% compared to the prior-year period as a result of the pandemic, although the average freight rate in the first half slightly improved to US$1,104/TEU. 

“Thanks to the wide range of measures we have introduced in recent months, we are still on track. Our focus will remain on the safety and health of our employees, but naturally also on safeguarding the supply chains of our customers worldwide. We will continue to advance our Performance Safeguarding Program and to implement our Strategy 2023. While doing so, we will keep a close eye on the future course of the COVID-19 pandemic and flexibly react to market changes," said Jansen.

“On the whole, the pandemic is and will remain a major source of uncertainty for the entire logistics industry,” he added.

Looking ahead, the results forecast remains unchanged, according to the German shipper. For the current financial year, Hapag-Lloyd expects an EBITDA of EUR 1.7 to 2.2 billion and an EBIT of EUR 0.5 to 1.0 billion.

It said given the COVID-19 pandemic and the economic repercussions it has had in many parts of the world, the forecast will remain subject to considerable uncertainty.

In addition to the development of transport volumes, the development of freight rates and a further potential increase in bunker prices, in particular, should have a significant impact on Hapag-Lloyd’s results in the second half of the 2020 financial year, it added.