HMM's decline in operating profit due to lower freight rates

HMM's Hamburg container ship [YONHAP]

HMM, Korea's largest container shipping company, reported a 94.5 percent decline in its second-quarter operating profit to 160.2 billion won ($122 million) due to a pronounced decrease in freight rates in the aftermath of Covid-19.

The figure fell short of the market consensus of 266.9 billion won compiled by market tracker FnGuide.

The principal driver behind this downturn is the decrease in freight rates, although HMM reiterated that its performance needs to be understood within the context of the distinct situation posed by the pandemic.

"With the resolution of the Covid-19 pandemic between 2020 to 2022, global freight rates have returned to pre-pandemic levels, starting this year," the company said.

"Despite the persistent global economic challenges and a downward trend in freight rates, we have enhanced our operational capacities through strategic measures, including the integration of eco-friendly vessels and ultra-large ships," it added. "This resulted in a first-half net profit margin of 14.5 percent, placing us ahead of other global shipping companies."

HMM's revenue for the second quarter reached 2.13 trillion won, a 57.7 percent decline compared to the same period last year. The figure still exceeded the market consensus of 2.11 trillion won.

The net profit for the April-June period decreased 89.4 percent on-year to 312.8 billion won. It was below the market consensus of 361.8 billion won.

Meanwhile, state-owned Korea Development Bank (KDB) and the Korea Ocean Business Corporation (KOBC) have initiated the sale process for HMM, with the preliminary bidding deadline set for Aug. 21. Several corporate groups from the shipping, trading and food industries — including SM Group, LX Holdings, Dongwon Group, and Harim — have reportedly expressed interest.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]