Hapag-Lloyd bears the cost of its merger with CSAV as profits fall in 2014

Hapag-Lloyd’s has announced its operating results for 2014. It reported that transport volume grew by 7.5% to 5.9m TEU over the course of 2014. However the company reported that the average freight rate was down by 3.2% year-on-year at $1,434 per TEU. These factors led to a rise in revenue of 3.7% over 2013’s result, to €6.8bn. Hapag-Lloyd’s 2014 EBITDA came to €98.9m, a fall of 74.58% year-on-year. Accordingly the company’s margin stood at 1.45%.

The decline in EBITDA was heavily influenced by one off effects, primarily the costs of acquiring and integrating CSAV’s container liner shipping activities and an impairment recognized for a portfolio of old ships. The plummeting price of oil eased the cost situation slightly, but only towards the end of 2014. The average bunker consumption price for 2014 as a whole stood at $575/t a fall of 6.20% from fuel costs in 2013.

“In terms of results, 2014 was undoubtedly an extremely disappointing year. At the same time, however, the successful merger with CSAV also made it a highly significant, ground-breaking year for Hapag-Lloyd. We are now much more competitive and fit for the future, to which we are looking with optimism,” said Hapag-Lloyd’s CEO, Rolf Habben Jansen.

CSAV’s services are being incorporated into Hapag-Lloyd’s global network and the company expects the process, set to be complete by June, to save $300m a year. “Integrating CSAV’s container business is running on schedule. We have already been able to exploit the first synergies, with many joint projects currently under way,” said Jansen.

The merger with CSAV marks the opening of a new chapter in Hapag-Lloyd’s 168-year history. We are now looking ahead and focusing our efforts on returning Hapag-Lloyd to profitability and achieving a clearly positive operating result in 2015,” Habben Jansen concluded.