Hanjin Shipping Loses 170 billion Won

Hanjin Shipping announced its 2011 2Q business results with total sales of KRW 2,392.3 billion and an operating loss of KRW 170 billion.

Hanjin Shipping explained, “Despite the uncertainty of the global economy, total sales jumped 5.2% quarter over quarter owing to increased cargo transport volumes. Our container division saw a 6.6% upturn to KRW 1,925.6 billion thanks to a 14.3% rise in cargo volume. On the other hand, the bulk division recorded KRW 397.1 billion, similar to the previous quarter, despite a volume increase of 17.1%.

For the container division, operating loss recorded KRW 172.0 billion despite the strong growth in cargo transport volume: 13.2% up year-on-year and 14.3% up quarter-on-quarter.

The main reasons for such deterioration are found to be the increased fuel and logistics costs with the delayed recovery in freight rates on the trans-Pacific and Asia-Europe trades. The bulk division went into the red quarter-on-quarter and recorded an operating loss of KRW 150 million due to deteriorated profitability caused by the continuing market decline.

In particular, due to comparatively larger exposure to the Asia-Europe trade, of which freight rates were most affected by the deployment of mega-sized vessels, the quarter-on-quarter operating loss for the container division also showed larger results.

In this regard, Hanjin Shipping is putting its utmost effort on improving the profitability of its container business by suspending unprofitable routes, reorganizing calling ports and rotations, and restructuring deployed vessels.

Regarding the third quarter ahead, Hanjin Shipping commented, “The container business is expected to experience an increase in cargo transport in line with the peak season. Profitability is also expected to improve as shipping carriers are proactively working to recover freight rates and reduce costs.

For the bulk business, there are a few positive factors that will gradually better the market. Those factors include the settlement in the Australian coal supply, increasing demand for raw materials in the Chinese housing market and the ongoing national reconstruction in Japan.” <Korea Shipping Gazette>