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FRANKFURT, March 24 German container shipping
company Hapag-Lloyd expects increased operating
earnings this year, it said on Friday, citing a rise in freight
rates as market conditions improve.
The shipping industry has been grappling with a prolonged
downturn brought about by overcapacity in a faltering global
economy, but Hapag Chief Executive Rolf Habben Jansen pointed to
signs of upward momentum.
"We expect some market improvement in 2017, but our success
will largely depend on our ability to achieve more sustainable
freight rates," he said.
"Supply and demand are getting a bit closer to each other,"
he added, citing the idling of ships across the sector.
The Hamburg-based group said it should achieve a moderate
increase in freight rates and transport volumes in 2017 and that
preparations for the completion of its much-vaunted proposed
merger with United Arab Shipping Company (UASC) are in their
Last year's core profit was down 27 percent at 607.4 million
euros ($656.4 million), Hapag-Lloyd said, confirming preliminary
earnings published on Feb. 28. That led to a net loss of 93.1
million euros from a profit of 113.9 million euros in 2015.
However, Habben Jansen said that, after a challenging first
six months of 2016, revenue and results improved significantly
in the second half of the year and that the momentum is being
"We have got off to a good start," he said.
Hapag-Lloyd is still reaping benefits from its merger with
Chilean peer CSAV, the Octave cost-cutting programme and the
Compete to Win project aimed at improving revenue quality.
But its greatest hopes lie with the UASC deal, which would
give Hapag access to bigger ships on the Asia to Europe trade
route and cement its position as the global market's
fifth-biggest operator in terms of capacity.
The merger is also expected to generate annual savings of
$435 million from 2019.
Shares in Hapag gained 4.5 percent on Friday to 28.92 euros,
having been knocked back over the previous two days by the
company's inclusion in a U.S. Justice Department antitrust
($1 = 0.9254 euros)
(Reporting by Vera Eckert; Editing by Maria Sheahan and David