Hapag-Lloyd, the German shipping company, has issued a warning stating that it may face difficult quarters ahead if spot freight rates fail to recover. The company has also narrowed its earnings guidance for 2023 towards the lower end of its previous range.
For the full year, Hapag-Lloyd now expects its earnings before interest, taxes, depreciation, and amortization to be between 4.1 billion and 5 billion euros ($4.39 billion to $5.36 billion). Additionally, its earnings before interest and taxes are projected to fall between EUR2.2 billion and EUR3.1 billion.
Previously, the company had forecasted EBITDA between EUR4.0 billion and EUR6.0 billion, and EBIT between EUR2.0 billion and EUR4.0 billion.
Hapag-Lloyd attributes its gloomy outlook to the current subdued market environment, which has negatively impacted its results. Despite a slight recovery in transport volumes during the third quarter, the decline in freight rates has overshadowed any improvements.
To counteract these challenges, Chief Executive Rolf Habben Jansen has announced cost-cutting measures, including savings on procurement and adjustments to the service network.
In the last quarter, Hapag-Lloyd's net profit dropped significantly from EUR5.12 billion to EUR257.6 million. Moreover, revenue more than halved to EUR4.10 billion, while EBITDA plummeted to EUR678.8 million from EUR6.34 billion.
Hapag-Lloyd's results follow a similar trend experienced by its larger peer, A.P. Moller-Maersk, which recently announced plans to cut over 10,000 jobs as they adjust to a new normal in the industry after the cargo boom fueled by the pandemic.