Korean sea carrier HMM projected to have earned its 2020 income in Q1
South Korea’s sea flag carrier HMM Co. is projected to have earned over 1 trillion won ($887 million) in the first quarter – exceeding last year’s total income – and expect to do equally well in the following months, given the strengthening in sea delivery rates on U.S. and European routes.
According to revised estimates from brokerage houses, HMM could report an operating profit of over 1 trillion won on revenue of 2 trillion won in the first quarter ended March 2021, surpassing its hitherto best profit of 980 billion won for full 2020.
KTB Investment & Securities Co. adjusted up profit forecast 32.9 percent to 1.2 trillion won and revenue by 14.8 percent to 2.25 trillion won. Earlier estimates had put first-quarter profit at 695.4 billion won and revenue at 2.15 trillion won compiled by financial information services provider FnGuide.
Given the strengthening in freight rates and global commerce, the shipper can expect exceptionally strong numbers in the bottom and top lines for this year.
Shares of HMM ended 0.9 percent higher at 28,050 won on Friday in Seoul.
The Shanghai Containerized Freight Index (SCFI), widely cited metric on market freight quotations, averaged at 2,780 points in the first quarter, up 40.8 percent from the previous quarter and 198.6 percent from the same period last year. Such strong freight rates are due to congested ports in the U.S. where shipping demand has been concentrated. This has driven up cargo servicing rates to the U.S. since last year, leading to hikes in freight rates in other markets including Europe starting this year.
The spike in rates in long-term contracts, which take up more than half of HMM’s shipping tonnage, is also boding well for the company because HMM are assured with same high freight rates even when rates soften.
Aggressive deployment of large container ships has helped HMM in competitiveness.
It plans to add eight 16,000 twenty-foot equivalent unit (TEU) super-large container vessels additionally this year after it successfully deployed 12 units in the world’s biggest 24,000 TEU container ship last year. Last month, its first 16,000 TEU vessel HMM Nuri set on its maiden voyage on the Far East Europe4 route.