Hanjin Shipping said it had a net loss of 224.5 billion South Korean won ($219 million) in the first quarter of 2014, compared to a net loss of 34.7 billion won in the same 2013 period.
The company’s operating loss was 62.2 billion won in the first quarter, compared to 99.1 billion won in the first quarter of 2013. The company said the operating loss came in the current quarter "because of an increase in container transport volume and fuel cost savings." It added that operating results are “expected to improve in the second quarter through proactive rate recovery and cost-reduction efforts.”
Hanjin’s first quarter sales were 2.15 trillion won, 7.6-percent less than the 2.33 trillion won recorded in the first quarter of 2013. The company’s container transport volume in the first quarter was 1,117,357 TEU, 0.7-percent more than in the first quarter of 2013. However, container freight rates fell 2 percent, and container sales were 6.4-percent lower — 1.93 trillion won in the first quarter, compared to 2.06 won in the first quarter of 2013.
The company’s bulk business unit’s revenues were 171.8 billion won, which was 0.5-percent lower, year-over-year, due to an 8.1-percent decrease in freight volume, even though bulk freight rates rose by 5.8 percent.
"Although deliveries of mega vessels are being made in container market, carriers are continuing their various efforts such as service rationalization, slow steaming, early return of chartered-in vessels, and scrapping of old vessels, thus profitability is expected to improve," the company said. "Additionally, rate increase during the coming peak-season and a stable oil price is also likely to contribute to an increase in profitability. As for the bulk sector, the global bulk freight volume is expected to rise back up due to the recovery of the Chinese construction business, the resumption of Columbia’s coal exports, etc.”
Rate restoration and efforts to cuts costs will improve the operating profit, the company said. "We also expect to secure liquidity as financial structure improvement plans, such as the liquidation of the long-term contract-based bulk and LNG business and the capital increase, bring about tangible results," it continued.
On April 29, Cho Yang Ho was appointed as chairman and chief executive officer of Hanjin Shipping, but Min Park, a spokeswoman for Hanjin based in Korea, said Suk Tai Soo will also retain the title of CEO. An article by the Yonhap news agency said Cho is promising "every effort will be made to transform Hanjin into a global leader in the seaborne cargo field
Yonhap quoted Cho as telling board members, "Ongoing corporate normalization efforts will be followed through according to existing plans, so the shipping company can become an integral and productive part of the conglomerate."
Mike Radak, senior vice president sales/marketing and operations at Hanjin's U.S. office, said the changes "will strengthen our operations as a global leader in the ocean carrier industry."
Hanjin Shipping has disposed all its shares of Hanjin Logistics to Hanjin Shipping Holdings, and Hanjin Logistics will be separated from Hanjin Shipping and become part of Hanjin Shipping Holdings, said Park.
Radak said the relationship between Hanjin Logistics and Hanjin Shipping "remains unchanged, with both working together for the common well being for the group."