Hapag-Lloyd has plunged into the red for 2016 – but UASC merger will give a huge boost with annual synergy savings of millions
Hapag-Lloyd has reported a 2016 net loss of €93 million versus a profit of €114 million in 2015 – despite being able to improve revenue significantly in the second half of the year.
The average freight rate was 15.4% lower than 2015 and revenue fell from €8.8 billion in the previous year to €7.7 billion in 2016, mainly due to the significant decline in rates. But despite the challenging environment, the carrier still managed to generate a positive operating result of EBIT €126.4 million.
The challenging conditions and net loss underlines the need for its merger with UASC, which will hopefully have a strong effect; Hapag-Lloyd said that from 2019 onwards, the UASC merger is expected to result in annual synergies of USD435 million.
It also bodes well when you look at the positive effect that its acquisition of CSAV has had. Hapag-Lloyd said in its statement announcing its 2016 results that it had made substantial earnings contribution from synergies from the CSAV acquisition, with this being a major reason behind the reduction in purchased services costs of 8.3%.
The importance of the merger of UASC to the carrier is seen by Hapag-Lloyd CEO Rolf Habben Jansen’s words: “We will continue to work hard to make Hapag-Lloyd even more competitive and to build on our strong position. Our efforts will be supported by the expected synergies and the further diversification of our product portfolio due to the merger with UASC.”