HMM Cuts Net Loss, Expects Losses until Mid-2018
- Business & Finance
South Korea’s container carrier Hyundai Merchant Marine (HMM) has managed to narrow its net loss in 2016, mainly due to a number of asset sales undertaken during the year.
HMM’s net loss for the full year shrunk to KRW 4.4 billion (USD 3.8 million) from a net loss of KRW 627 billion (USD 545.3 million) seen in the previous year, the company said in a stock exchange filing.
Although Hyundai Merchant Marine cut its net loss, the carrier’s operating loss widened by 198 percent year-on-year as it stood at KRW 833.3 billion at the end of 2016, compared to an operating loss of KRW 279.3 billion reported a year earlier.
Additionally, HMM’s revenue for the period dropped by some 18 percent to KRW 4.58 trillion from KRW 5.64 trillion seen in fiscal year 2015.
The company said that the rise in operating loss and the decreased in revenue are mainly attributed to low freight rates recorded during the year.
HMM was earlier cited as saying that the company will continue posting losses through the first half of 2018 as the container shipping market continues struggling to recover from the huge gap between supply and demand, as well as Hanjin Shipping’s bankruptcy, according to Bloomberg.
In an effort to return to profitability, the company reportedly said that it is looking to invest in container terminals in Southeast Asia, after which it would consider ordering new vessels which would comply with the IMO’s regulations on the use of low sulphur fuel oil scheduled to enter into force in 2020.
In a separate announcement, Hyundai Merchant Marine said that Korea Investor Service upgraded the company’s credit rating from the default rating D to a stable BB.
“HMM has successfully overcome all the challenges through debt for equity swap and changing conditions,” the shipping firm said, adding that reduced financial burden, benefits from Korean government supports, a possibility of support from its largest shareholder, and merits as Korea’s main national flag carrier led to the change in credit rating.
In early December 2016, the company reached an agreement to enter into a strategic cooperation with the members of the 2M alliance, the Danish shipping giant Maersk Line and Swiss-based Mediterranean Shipping Company (MSC).
Scheduled to begin in April 2017 subject to regulatory approval, the deal includes a combination of slot exchanges and slot purchases between the three parties, as well as Maersk Line and MSC taking over a number of charters and operations of vessels currently chartered to HMM.
Covering key East-West trades, the agreement has an initial term of three years with extension options.
World Maritime News Staff