HMM Records Highest Operating Profit Ever With 85% Revenue Growth In Q1 2021
The revenue rose 84.9% to KRW 2428.0 billion in Q1 2021 from KRW 1313.1 billion in Q1 2020. The operating profit was KRW 1019.3 billion with a margin of 42% in Q1 2021 against a loss of KRW 2.0 billion in Q1 2020. The first-quarter performance surpassed KRW 980.8 billion, the earnings for the whole of 2020.
The net profit was KRW 154.1 billion in Q1 2021 against a loss of KRW 65.6 billion in Q1 2020. Container handling volumes increased 6.7% to 0.95 million TEU in Q1 2021 compared to 0.89 million TEU in Q1 2020.
HMM significantly improved earnings in Q1 2021, mainly driven by efficient fleet operations including twelve 24,000 TEU containerships, higher freight rates, and increased container handling volumes.
1. Financial Results (Consolidated)
※ The gap between operating income and net profit primarily results from the incurrence of loss from the valuation of derivatives under the IFRS-16 accounting standard. That is a paper loss without an impact on the actual cash flow of the company. The loss on valuation of derivatives will last through June 2021 and will no longer be reflected in HMM’s financial results as of July 2021.
2. Outlook & Plans
- The highly elevated freight rates will last through at least the first half of this year. Supply chain disruptions primarily caused by port congestions, the shortage of both vessel space and containers, and increased cargo demand are not on course to be relieved over the short term.
- The widespread COVID-19 and insufficient vaccination program in many countries can lead to considerable uncertainty, negatively affecting container volumes on certain trade lanes.
- Since August last year, to handle an upsurge in cargo demand, HMM has deployed a total of 24 extra-loader vessels, consisting of 18 to the Asia-North America trade, 2 to the Asia-North Europe trade, 3 to the Eastern Russia trade, and 1 to the Korea-Vietnam route. HMM will continue to deal with market changes flexibly and will contribute to stabilising the logistics flow worldwide.
- In 2021, HMM will add 120,000 TEU of dry containers to alleviate the current shortage of container equipment. Around 42,000 TEU of containers have already been delivered and HMM plans to acquire the remainder until July.
- HMM is taking delivery of eight 16,000 TEU newly-built containerships, and five of them have been already deployed on the Asia-North Europe route. It will enable HMM to form an enhanced cost structure and secure greater operational efficiency.