UPDATE 1-Hapag-Lloyd posts 83% lower net profit in 2023, cuts dividend by 85%

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FRANKFURT, March 14 (Reuters) – German container shipper Hapag-Lloyd on Thursday posted a net profit of 3.0 billion euros ($3.28 billion) for 2023, down 83% from a year earlier, and cut its dividend by 85% in what it called a challenging market environment.

“We achieved the third-best Group profit in the history of our company – even if it is significantly lower than it was in the exceptionally strong year 2022 due to the normalisation of global supply chains,” said Chief Executive Rolf Habben Jansen.

“We … expect to see an overall decrease in earnings in 2024,” he said, citing the crisis in the Red Sea, where commercial shippers have been skipping the Suez Cana after Yemen-based Houthi militants began attacking ships.

Hapag-Lloyd, the world’s fifth-biggest container liner, had benefited from soaring prices in 2022 as global trade faced hiccups during its recovery from the coronavirus crisis, but a return to more secure logistics has cut freights sharply.

The dividend proposal will be 9.25 euros per share, down from 63 euros previously.

The company forecast 2024 earnings before interest, taxation, depreciation and amortisation (EBITDA) in a range of 1.0 billion to 3.0 billion euros, compared with 4.4 billion euros achieved in 2023, when it was down by 76.8%.

Earnings before interest and taxes (EBIT) this year will likely be between minus 1.0 billion to 1.0 billion euros, it said.

This will follow a 2.5 billion euros EBIT in 2023, already only a fraction of 2022’s 17.5 billion.

The forecast remains subject to considerable uncertainty given the volatile development of freight rates and geopolitical challenges, the company said.

Transport volume rose 0.5% to 11.9 million twenty-foot equivalent unit (TEU) containers, but freight rates fell 48% to $1,500 per TEU, contributing to a near halving of revenue to 17.9 billion euros.

Bigger competitor Maersk last month said industry overcapacity would hit profit this year more than it previously expected.

($1 = 0.9143 euros) (Reporting by Vera Eckert; Editing by Miranda Murray and Christopher Cushing)

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