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Terminal Modernisation Burdens Quarterly Results, Structural Changes Improve Earnings Prospects

  15.05.2012    

Hamburger Hafen und Logistik AG (HHLA) increased its container throughput to 1.7 million standard containers (TEU) in the first quarter of 2012. Revenue decreased by 1.0 percent to € 286.8 million including a change in consolidation. Based on lower earnings quality and expenses for the reorganisation of a terminal in the Container segment, the operating result (EBIT) decreased by 22.6 percent to € 34.0 million. For the full year 2012, HHLA nevertheless expects EBIT of at least € 200 million and Group revenue of € 1.1 billion, not least thanks to the realignment of its intermodal activities. 
“We got off to an unsatisfactory start in the financial year 2012 in terms of the operating result. This was mainly due to a number of factors that burdened earnings in the Container segment. We are nevertheless optimistic of increasing our operating profitability in the course of the year and reaching an operating result of at least € 200 million. The realignment of our intermodal activities will make a significant contribution”, said Klaus-Dieter Peters, Chairman of the HHLA Executive Board, presenting the HHLA interim report for January to March 2012.
 
Throughput growth at HHLA container terminals
The HHLA container terminals continued on their course of growth in the first three months of 2012, with an increase of 4.7 percent to 1.7 million standard containers (TEU). This further strengthens HHLA’s position in relation to the large competitors, Rotterdam (throughput down by 3.8 percent) and Antwerp (throughput up by 0.7 percent). The companies for container transport in the seaports’ European hinterland defended last year’s strong performance in the first quarter of 2012 with transport volumes of 454 thousand TEU. Revenue and earnings were not able to keep up with this trend, however. In comparison with last year, revenue decreased by 1.0 percent to € 286.8 million. This was due not only to lower revenue in the Container segment, but also to a change in the consolidation method for the fruit logistics companies, which resulted in a lower amount in revenue in a medium single-digit million range. The decrease of 22.6 percent in the operating result (EBIT) to € 34.0 million stems from adverse effects in the Container segment. The Intermodal and Logistics segments were able to improve their operating result noticeably in comparison with the same period last year.
 
Various factors weighed on the Container segment
The marked decrease of 29.2 percent, or € 11.8 million, to € 28.7 million in EBIT for the Container segment in the first quarter of 2012 is down to several factors:
- the higher proportion of low-margin European feeder traffic in the handling mix,
- the decline in storage fees compared with the first quarter of 2011, when the long freeze in the Baltic Sea caused a container tailback in Hamburg,
- the delay in dredging the river Elbe, which causes substantial additional costs in ship handling and
- the temporarily high additional costs at the HHLA Container Terminal Burchardkai, where the restructuring and change in the terminal management system enter a decisive phase in 2012, in which large sections of the facility will be partially automated for the first time, with running operations.
 
Realignment of transport companies
An improvement in HHLA’s earnings quality is expected from the unbundling of the shares held by Deutsche Bahn (DB) and HHLA, announced at the end of April 2012. As soon as the approval of the applicable antitrust authorities has been obtained, DB will hand over its shares in the intermodal operators Polzug (33.3 percent) and Metrans (35 percent) to HHLA. In return, HHLA’s existing 50 percent stake in TFG Transfracht will be transferred to DB. Once the transactions have been completed, HHLA will hold 86.5 percent of Metrans and, including a capital increase, 74.5 percent of Polzug Intermodal, while TFG Transfracht will be wholly owned by DB Mobility Logistics AG. The reorganisation will make it possible to align HHLA’s European hinterland container transport even more consequently with the needs of maritime logistics thanks to greater use of own production resources.
 
Earnings forecast for the full year 2012
In view of the structural changes ensuing from the realignment of its intermodal activities and the change in the consolidation method for the fruit logistics companies, HHLA is now targeting a Group revenue of € 1.1 billion and an operating result (EBIT) at Group level of at least € 200 million for the full year 2012. Compared with last year’s figures, this represents an almost comparable operating result from a lower revenue base and therefore an increase in operating profitability.
 
Changes in key Group figures at a glance (January to March 2012)
- Revenue declined by 1.0 % to € 286.8 million compared with the same period last year including a change in consolidation methods.
- The operating result before depreciation and amortisation (EBITDA) was 14.7 % down on the previous year at € 64.0 million.
- The operating result (EBIT) decreased year-on-year by 22.6 % to € 34.0 million.
- Profit after tax and minority interests declined by 40.8 % to € 9.7 million, because the costs of the ongoing terminal reorganisation affected a company wholly owned by HHLA and therefore not earnings attributable to minority interests. 
At € 280.2 million for the period from January to March 2012, the revenue generated by HHLA’s core business – operated by the publicly listed Port Logistics subgroup – declined by 1.2 % compared to the first quarter of 2011. The subgroup’s operating result (EBIT) declined 22.6 % to € 31.5 million. This meant that the Port Logistics subgroup generated 98 % of Group revenue and 93 % of Group EBIT.


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