|Bid||180.90 x 52700|
|Ask||181.40 x 9900|
|Day's Range||172.40 - 185.10|
|52 Week Range||40.90 - 205.80|
|Beta (5Y Monthly)||1.02|
|PE Ratio (TTM)||15.09|
|Earnings Date||Aug 12, 2021|
|Forward Dividend & Yield||3.50 (1.99%)|
|Ex-Dividend Date||May 31, 2021|
|1y Target Est||39.80|
Rating Action: Moody's upgrades Hapag-Lloyd AG's rating to Ba2; outlook stableGlobal Credit Research - 23 Mar 2021Stockholm, March 23, 2021 -- Moody's Investors Service (Moody's) has today upgraded the corporate family rating (CFR) of Hapag-Lloyd AG ("Hapag-Lloyd") to Ba2 from Ba3, its probability of default rating (PDR) to Ba2-PD from Ba3-PD as well as the senior unsecured rating to B1 from B2. Concurrently, Moody's has assigned a B1 rating to the company's proposed E300 million senior unsecured bond.
Hapag-Lloyd Group's (OTC: HPGLY) 2020 net profit was up a staggering 155.4% to $1.06 billion from $418 million the previous year. "2020 has been exceptional, with stellar performance in the industry," Chief Financial Officer Mark Frese said during Hapag-Lloyd's presentation of its 2020 annual report with audited financial figures on a call Thursday morning. The figures were not surprising as they were in line with the preliminary numbers released in January, but they reinforced just how good the second-half performance was for the world's ocean container carriers. Full-year 2020 earnings before interest, taxes, depreciation and amortization (EBITDA) were $3.08 billion, a 38.6% hike from the $2.23 billion posted in 2019. Earnings before interest and taxes (EBIT) took a 65.3% leap from $2.22 billion in full-year 2019 to $1.5 billion in 2020. Hapag-Lloyd said the main drivers of the "improved" results were cost savings of more than $500 million as well as "slightly improved freight rates and lower bunker prices." The cargo surge of the third and fourth quarters was not the case in Q2, when "transport volumes plummeted" and full-year transport volumes were down 1.6% from 12 million twenty-foot equivalent units (TEUs) in 2019 to 11.8 million TEUs in 2019. Despite the revenue surge of the third and fourth quarters, full-year revenue was up only 3.3%, from $14.11 billion in 2019 to $14.57 billion in 2020. The average freight rate full the full year was up 4% from $1,072 per TEUs in 2019 to $1,115 in 2020. Because of the "very successful financial year," Hapag-Lloyd said it was able to pay down about $1.3 billion in debt and proposed to pay out a dividend of 3.50 euros (about $4.18) per share. Frese said Thursday, "In spite of COVID-19, we were able to improve our profitability, strengthen our balance sheet and earn our cost of capital for the first time in a decade." Port congestion Habben Jansen said congestion, particularly in San Pedro Bay as container ships wait at anchor for days before berthing at the ports of Los Angeles or Long Beach, remains a problem. "That will take some time to get that resolved. We see a slight improvement — or a reduction of the number of ships waiting outside ports — but we also still see dwell times are really long and it takes a lot of time to get the boxes back out," he said. "I don't think that the congestion there is going to go away very soon. It's going to take a couple of months before things settle down. I hope we're going to be back to a bit more normal situation towards the end of Q2 to the latest early Q3." Habben Jansen said port backups are not limited to Southern California. "The port congestion has been very significant. A lot of people talk about LA/Long Beach and yes, it's an issue there, but it's definitely not the only place. If we look at the average delay we have seen in our voyages, in December we had three days. When we look ahead to January and February, it actually deteriorated further," he said. Hapag-Lloyd has tried "to provide additional flexibility if and where that is possible. We've offered discounted detention rates for all shippers. And then we've also had a number of initiatives to improve the customer service in our quality service promises," Habben Jansen said, adding that the "service quality is getting back up, even if I do believe we can get even better than where we are today. " Strategic investments Hapag-Lloyd announced Wednesday that it was acquiring NileDutch, a container shipping company that specializes in the African market. Habben Jansen said Hapag-Lloyd was lucky to acquire NileDutch as "options out there are limited" and that it was a good addition to the portfolio. "If you look at global trade and if you try to look ahead to the future five or 10 years, I think that one of the markets that for sure is going to grow above average is the African market. If you want to grow with the global market, then you need to make sure that you are also present in those markets that are growing above average," he said. Habben Jansen said NileDutch has a little over 300 employees and moves about 200,000 TEUs annually. He expects the deal to close in the next three months. Idle fleet is ‘basically zero' Adding to the Hapag-Lloyd fleet through newbuilds is another strategic investment. "We invested for the first time in quite a few years into new ships, where we've chosen to go dual fuel" to help achieve sustainability goals, he said. Hapag-Lloyd announced in December that it had ordered six ultra large container ships for delivery between April and December 2023. "We have chosen to go dual fuel energy. We've also chosen to go for large ships, which has a lot to do with the composition of our fleet. We are underrepresented in that large segment and as such I think it's a question of time before we would go to the yards to order those ships, so we are very happy we managed to sign that contract and I look forward to getting those ships from 2023 onwards," he said. "The orderbook is creeping up a little bit compared to the all-time low that it reached last year. "The idle fleet is down to basically zero these days," Habben Jansen said. "In terms of our fleet, all ships that we have are sailing. We have invested significantly in making more boxes available. ... We deployed many more extra loaders than we normally do and in terms of our network, we've certainly moved ships around to try and accommodate demand in those places where demand is the strongest and then where possible we try to avoid congested ports, but that's not all that easy." Regarding equipment, Habben Jansen said, "We've certainly seen a container shortage as well, driven by the fact that it took us about 20% longer the last couple of months to get the boxes back compared to a normal time, which means you need about 20% more boxes to move the same amount of cargo." Hapag-Lloyd CEO: COVID, congestion, container shortage form ‘perfect storm' Hapag-Lloyd's earnings ‘significantly higher' despite uncertainty of 2020 Hapag-Lloyd, ONE order ultra large container ships Click for more American Shipper/FreightWaves stories by Senior Editor Kim Link-Wills. See more from BenzingaClick here for options trades from BenzingaBaidu Chip Unit Reported At B Valuation; China Dominates AI, Report FindsInvestor Activism Alters 5 Seats On Forward Air Board© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
If you take a direct hit from a Category 3 hurricane, the fallout is far more severe if the storm stalls over your house than if it quickly passes by. The same goes for supply chains. When demand is super-hot, port and transport infrastructure can deal with short spikes, but eventually, they buckle.Backlogs in the U.S. are mounting in the face of surging imports. Container equipment in China is running out. When could the supply chain get some relief? Next month or next year?Hapag-Lloyd Aktiengesellschaft (OTC: HPGLY) CEO Rolf Habben Jansen commented on timing on Friday's quarterly conference call, after the German carrier reported net income of 252.5 million euros for Q3 2020, up 68% from 150.4 million euros in Q3 2019.Habben Jansen's short answer was: Strong volumes and equipment constraints will last through year-end if not longer.The more nuanced answer from Habben Jansen — who struck a conservative tone — was that today's cargo pace won't last forever, there could always be a big fall around the corner, and equipment shortages will ease.Demand high through Chinese New Year "We have seen a very strong recovery — probably stronger than anyone anticipated," said Habben Jansen. "If we look ahead, the market looks pretty strong at least until Chinese New Year [in mid-February]," he reported.Asked whether he thought fresh consumer demand or inventory restocking is driving volumes, he replied, "Based on what we see right now, [the market] is indeed being driven by demand, not so much by restocking.Hapag-Lloyd CEO Rolf Habben Jansen (Photo: Hapag-Lloyd)"I would expect there would be more restocking going into 2021. And on top of that, people may decide to have more safety stock in their supply chains. Those are certainly positive factors [for] what's going to happen in the upcoming couple of quarters."Yet Habben Jansen also warned, "There is certainly a fair amount of uncertainty in the market if you look a little bit further ahead. More than usual."The market is very, very strong today ... but it is not logical that it will just continue like this for the next couple of years."Unexpected things will come our way over the upcoming three, four, five quarters. We need to be prepared to move quickly," he said.Industry struggles with equipment shortfalls Exceptionally strong cargo demand has pushed container equipment out of position, away from Asian loading sites. Simultaneously, liners like Hapag-Lloyd don't have the ability to charter in more ships to handle extra loads."The idle fleet is pretty much zero," said Habben Jansen. "Every ship that's available today is sailing."Boxes are out of position (Photo: Hapag-Lloyd)Regarding container equipment, he said, "The entire market is struggling to get the boxes back to where they need to be. We have hired [leased] a record number of boxes this year, but we also face tightness. "Because of the unexpected surge in demand, a lot of the infrastructure is just clogged up, which prevents us from moving containers back."We are working to incentivize people to use other types of boxes," he continued, referring to surcharges. "They may be able to work with a 40-foot general container rather than a [40-foot] high cube. We also built a lot of new reefers we are trying to fill with [unrefrigerated] cargo at a discount, to release some of the pressure on equipment."I do think the situation is going to get a little bit better over the next six to 10 weeks, although today it is certainly a fairly big challenge," he said.On a positive note, Habben Jansen's comment implies a light at the end of the tunnel. On a negative note, when you do the math, he's referring to improvements in Q1 2021.What if demand plunges again? Given how high demand is today, it's hard to imagine cargo volumes falling off a cliff.But no one expected that to happen in April — and it did. European countries are now enforcing COVID lockdowns yet again. In the U.S., more states are now closing businesses back down.Carriers "blanked" (canceled) an unprecedented number of sailings to cut costs and maintain rates during the lockdowns earlier this year. In a worst-case scenario, could this happen again?According to Habben Jansen, "If demand all of a sudden breaks away, you have to cut costs. If you look at the month of April, all the sudden we saw demand come down 20%. In our case, that meant a sudden loss of $200 million of revenue per month."If we do not sail a ship, we can cut about 60% of the cost. If I miss $200 million in revenue and I can avoid $120 million in cost by adjusting my capacity to demand, I have to do that."That is the fully rational thing to do. I can only speak for Hapag-Lloyd. But for the last 10-12 years, this industry has not made any money. It has never earned its cost of capital. And at some stage, one would expect that people start to behave more rationally."You have to react," he said, referring to sudden demand drops. "You cannot just continue. Because if you do, you will go bankrupt very, very quickly." Click for more FreightWaves/American Shipper articles by Greg Miller MORE ON THE TRANS-PACIFIC TRADE: Containers are the ‘new gold' amid ‘black swan' box squeeze: see story here. LA. box signal spikes and charter rates go ‘through the roof': see story here. Holiday ‘shipageddon' update: Container sector scrambling: see story here. Hapag-Lloyd quarterly results: (All charts: Hapag-Lloyd)See more from Benzinga * Click here for options trades from Benzinga * Atlas Air Refuses To Repay US Bailout Funds * Carriers Reigning Supreme This Peak Season(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.