South Korea’s two largest container carriers posted massive losses in the first quarter, hard hit by plummeting freight rates, the already troubled firms reported.
Both Hanjin Shipping Co. and Hyundai Merchant Marine Co. are struggling to stay afloat amid a drawn-out slump in the global industry, seeking creditors’ help to buy time for self-restructuring programs and avoid court receivership.
Hanjin, the bigger carrier by revenue, said in a regulatory filing that it swung to a consolidated net loss of KRW261 billion (US$221 million) in the first three months of this year.
Its revenue fell 25.1% year-on-year to KRW1.59 trillion, as it sustained an operating loss of KRW115.7 billion.
Hanjin turned to profit of KRW155 billion last year after its operating loss narrowed to KRW66.2 billion in 2014 from KRW99.1 billion in 2013.
“The container sector swung to a reduction in sales and operating loss, compared with the same period last year, due to declines in freight rates that started in the latter half of last year and worsened demand situation,” a Hanjin official said, as quoted by Yonhap. “Cargo rates are recovering in the second quarter of 2016, however, on peak-season effects.”
Hyundai also recorded a net loss amounting to KRW276.1 billion, with sales declining 18% to KRW1.2 trillion. Its operating loss also widened to KRW163 billion, the company announced.
It reaped KRW4.2 billion in operating income last year after posting KRW128 billion and KRW61.7 billion in losses in 2013 and 2014, respectively.
Hyundai officials said the company’s liquidity is expected to improve when the sale of Hyundai Securities Co. is completed. Hyundai Group has agreed to sell a controlling stake in the local brokerage to KB Financial Group for KRW1.25 trillion in a bid to help save the shipping line.
