HMM doubling Q2 profit result in Q3
South Korea’s leading container carrier HMM Co. reported its highest quarterly operating profit in a decade in the third quarter thanks to a hike in freight rates from a vessel shortage and improved efficiency with reduced costs.
HMM in its regulatory filing on Friday posted a consolidated operating profit of 277.1 billion won ($250.3 million) in the July-September period, reversing from a loss of 46.6 billion won a year earlier and doubling from the previous quarter.
It marked the best operating profit since the third quarter of 2010 and the second-best result in its history.
HMM swung to a net profit of 24.6 billion won from a loss of 124.2 billion won a year ago, while sales added 18.7 percent on year to total 1.72 trillion won.
HMM posts first positive results in 21 quarters
But the result did not meet market expectations of about 350 billion won in operating profit for the third quarter. The company attributed the lower-than-expected profit to a rise in long-term contracts that exceeded spot contracts.
HMM shares fell 2.08 percent to close Monday at 14,100 won in Seoul.
The profit surge was driven by improved efficiency with the deployment of the world’s largest container vessels and the membership in one of the world’s largest shipping alliances, as well as cost reduction from low oil prices and surging freight rates, said industry sources.
HMM, formerly known as Hyundai Merchant Marine, swung to profit for the first time in 21 quarters in the April-June period after joining The Alliance, one of the world’s largest shipping alliances, in April. The membership has broadened its coverage in Europe.
HMM putting additional capacity on the Asia Pacific trade
It also has deployed all 12 of its 24,000 twenty-foot equivalent unit (TEU) super-large container vessels to its route, which ramped up its cargo handling capacity significantly.
Industry insiders now expect the container carrier could extend the profit until the first half of next year on a continuous rise in shipping rates with a vessel shortage amid increasing orders in upcoming shopping blowouts like Black Friday, Christmas and Chinese New Year.
On the back of the robust demand, HMM plans to expand its support for domestic exporters by deploying additional one or more vessels on its route between Busan and Los Angeles every month until February next year. It has run four additional vessels for them to expand the cargo capacity on U.S. routes by 15,944 TEU since August.
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