German shipping company Hapag-Lloyd AG Tuesday said its full-year operating profit fell in 2016 but rose significantly in the final quarter, reflecting cost cuts in a challenging market environment.
Quarterly earnings before interest and taxes rose almost sixfold to EUR100 million ($106 million) from EUR17.8 million. For the full year, EBIT fell 66% to EUR126 million and revenue was down 13% at EUR7.73 billion.
Hapag-Lloyd didn’t provide quarterly revenue figures, but based on the nine-month and full-year results, revenue fell 0.8% to around EUR2.02 billion in the final quarter, according to a Dow Jones Newswires calculation.
Hapag-Lloyd will announce its net profit in late March. It has yet to announce its dividend plans for 2016, its first full year of listing.
In July, Hapag-Lloyd had cut its earnings guidance, when it announced plans to merge with United Arab Shipping Co. S.A.G..
It said then 2016 operating profit will be well below 2015 because of sinking freight rates and potential merger costs.
Container shipping companies have been hard hit by low freight rates and slow demand for ocean transport services amid sluggish economic growth in parts of the world. This has triggered a wave of consolidation. Korea’s Hanjin Shipping Co. became the industry’s latest, and biggest, casualty. In mid-February, a Seoul court declared it bankrupt and ordered its liquidation.