Go to Contents Go to Navigation

Lower freight rates hit HMM's Q3 earnings: market tracker

All News 08:46 November 01, 2022

SEOUL, Nov. 1 (Yonhap) -- South Korean container shipper HMM Co.'s third-quarter earnings probably edged down from three months earlier due to lower freight rates, a market tracker said Tuesday.

The operating income of HMM, the country's top industry player, is estimated to reach 2.55 trillion won (US$1.8 billion)
for the July-September period, up 12.3 percent from a year earlier, according to a market consensus compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency.

The shipping firm's sales are projected to stand at 4.61 trillion won, up 14.8 percent from a year ago.

Yet the estimates fall below HMM's operating income and top line for the previous quarter. HMM's operating profit and sales came to 2.94 trillion won and 5.03 trillion won, respectively, in the April-June period

HMM is slated to announce its third-quarter earnings report next week.

A container vessel operated by HMM Co. (PHOTO NOT FOR SALE) (Yonhap)

A container vessel operated by HMM Co. (PHOTO NOT FOR SALE) (Yonhap)

Market watchers said HMM's performance is certain to trend lower down the road, given that it had renewed record earnings for six quarters running since the fourth quarter of 2020.

A downturn in shipping rates is cited as the main culprit.

The Shanghai Containerized Freight Index (SCFI), a short-term barometer of global freight rates, dipped for the 19th straight week to a yearly low of 1,697.65 on Friday, down a whopping 63 percent from a year earlier.

Analysts said falling freight rates are a testament to the global economic slowdown as the SCFI serves as a leading indicator of the world economy.

The impact of the SCFI's decline on HMM could be limited as the company usually signs long-term shipping contracts and benefits from the weakness of the Korean currency against the U.S. dollar, they added.

But HMM is widely expected to suffer a full-fledged earnings shock beginning next year in light of the slowing world economy.

The downturn in HMM's earnings is feared to come as a drag on government efforts to put the shipping giant into private hands.

In early October, the country's oceans minister said the privatization of HMM may depend on the stock market and situations in the shipping sector.

HMM, formerly known as Hyundai Merchant Marine, has been under a creditor-led debt restructuring scheme since 2016, when it lapsed into a credit crunch following years of losses.

There have been growing calls for its swift privatization in light of the recent improvement in the global shipping industry and the company's stellar performance.

State institutions hold a controlling stake in HMM, with the state-run Korea Development Bank holding the largest stake of 20.69 percent. The Korea Ocean Business Corp. has a 19.96 percent share, and the Korea Credit Guarantee Fund holds 5.02 percent.

Send Feedback
How can we improve?
Thanks for your feedback!