Korea’s sea flag carrier HMM heralds red-hot earnings streak amid heyday in maritime transportation due to heated global demand and soaring shipping rates after a pandemic lull.
The company’s operating profit for April-June is estimated at 1.4 trillion won ($1.2 billion), according to analysts` consensus, which would be a new quarterly high by exceeding the last record of 1.02 trillion won in the first quarter by 30 percent. Against a year ago, it would be 10 times bigger.
On Tuesday, HMM shares closed 1.98 percent lower at 47,150 won.
HMM’s strong earnings are backed by skyrocketing container shipping rates in the second quarter due to overwhelming demand in key markets of America and Europe.
The Shanghai Containerized Freight Index, the spot freight rate benchmark for the industry, added 119.7 points in a week to hit a historic high of 3,905 last Friday, 52 percent higher than three months ago.
The Korean container shipper has managed to respond to the sudden surge in global commerce better than its peers thanks to its proactive measures to secure eight new 16,000-twenty-foot equivalent unit (TEU) vessels in the first half this year on top of the addition of 12 units of 24,000-TEU vessels last year. With the latest additions, HMM ranks as the eight largest container shipping company with a combined carrying capacity of 850,000 TEUs.
HMM is expected to stretch its winning streak throughout the year.
Rising shipping rates and shortage of shipping containers would likely continue, forecast Yang Ji-hwan, analyst at Daishin Securities. The brokerage firm recently revised upwards its second-quarter earnings projection for HMM to 1.4 trillion won from the earlier estimate of 1.2 trillion won.
Moreover, the third quarter is a traditionally peak season for the shipping industry, with demand jumping ahead of year-end holiday shopping seasons, such as Thanksgiving and Christmas, in the U.S. and Europe.
German shipping company Hapag-Lloyd AG’s latest decision to raise freight rates would also positively affect HMM. Hapag-Lloyd leading THE Alliance shipping alliance, of which HMM is a member, announced last month to increase rates sharply to $2,400 per TEU for all-water shipments from Asia to the West Coast North America. Hapag-Lloyd also plans to charge additional $1,000 per TEU for peak season from this month.
Source: Pulse