German shipping group Hapag-Lloyd said on Tuesday it expected a significant rise in transport volumes and kept its forecast for higher earnings in 2017 after operating profits in the first nine months rose more than tenfold.
Fresh from its merger with Arab rival UASC, which helped it to reach the number five position in global shipping, the Hamburg-based company said that both earnings before interest and tax (EBIT) and earnings before interest, taxes, depreciation and amortisation (EBITDA) should grow in the full year.
This would override rising shipping fuel costs, which are linked to strong crude oil prices, and mostly unchanged average freight rates for the full year, it said.
“We have already been able to realise the first synergies resulting from the (UASC) merger, which will help us to further solidify our position in the sector,” chief executive Rolf Habben Jansen said.
Shipping has struggled with overcapacity, price wars and freight rates far below break-even levels but industry analysts say the worst may be over, thanks to an improving global economy and reduced competition following a series of mergers.
Hapag-Lloyd’s operating profit before interest and tax (EBIT) in the first nine months of the year amounted to 267.9 million euros, compared with 25.9 million euros in the same period of 2016 and EBITDA increased to 721.9 million from 381.3 million previously.
Transport volumes increased by 24.4 percent in the first nine months to 7.03 million twenty foot equivalent units (TEU) and freight rates improved by $23 to $1,060 per TEU year-on-year, it said.
Net profit in the third quarter amounted to 54.3 million euros after 8.2 million in third quarter 2016, and net profit in the nine months-period swung to a positive 8.2 million euros after a previous-year loss of 133.9 million.
Last month, the company successfully completed a 352 million euros capital increase to cut debt and fund corporate activities
Global market leader Maersk, which this year completed its purchase of Hapag-Lloyd’s German rival Hamburg Sud, earlier this month cut its profit forecast for 2017 after weaker than expected third quarter income from freight rates.