Hyundai Merchant Marine (HMM), the nation’s largest container ship carrier, posted more than 7 trillion won in operating profit last year on the back of rising maritime fares.
The shipping company is predicted to top 10 trillion won in operating profit this year, thanks to rising trends of maritime fares.
Provisional figures, released on Feb. 14, showed that HMM logged 13,794.1 billion won in sales and 7,377.5 billion won in operating profit last year.
The figures represent a 115 percent year-on-year surge in sales and a 652.2 percent year-on-year jump in operating profit. Operating profit margin (OPM) stood at 53.4 percent.
HMM suffered around 500 billion won in operating loss between 2011 and 2019 due to the recession of the global maritime industry.
HMM’s operating profit for last year was more than enough to offset cumulative losses the shipping company had sustained so far.
Generally speaking, the fourth quarter of each year is off season for the maritime industry, as cargo volumes decline at that time compared to the high season in Q3.
HMM saw a departure from the conventional way as the Shanghai Containerized Freight Index (SCF) stood at 4,980.93 on Feb. 11, almost twice more than 2,825.75 a year ago.
An HMM official said that amid the U.S. port congestion, cargo volumes on the routes to the United States were on the rise, and the market situation improved with rising fares.
HMM shares closed at 25,000 won on Feb. 14, a 2.7 percent surge over the previous day. They are predicted to continue surging on the back of the best-ever outcomes.
Securities companies shared the view HMM will see its operating profit for this year surpass 10 trillion won.
The reason is that the global maritime quagmire is expected to continue due to global trade uncertainties, caused by the COVID-19 pandemic and U.S.-China conflicts.
Even though maritime fares are expected to decline after peaking, HMM’s business results for this year are unlikely to be affected, since the shipping company has already signed long-term deals.
The biggest variable facing HMM is the privatization of the shipping company. HMM’s biggest shareholder is Korea Development Bank (KDB) with a 20.7 percent stake, followed by Korea Ocean Business Corp. (KOBC), which has a 20 percent interest.
HMM had been put under joint management by KDB and KOBC until last year, but the shipping company is put on a sole management by KOBC.
KDB takes the view HMM’s stake will be disposed of on a gradual basis to build smooth conditions for an M&A.
In a meeting with reporters in January, KDB Chairman Lee Dong-gull said conversion of convertible bonds owed by HMM will raise KDB and KOBC’s combined stake to 70 percent.
Under the current situation, privatizing is almost impossible, so it is desirable to sell their stake on a gradual basis, he added.
KDB and KOBC would not elaborate on who will acquire HMM. KDB and KOBC seem to have a different view on the privatizing of HMM.
The Ministry of Oceans and Fisheries (MOF), which manages and supervises KOBC says now is not proper time to be privatized.
Former President Kim Kyung-bae of Hyundai Globis, named as new HMM president, is to take office on March 20. His term is three years.
While serving as president of Hyundai Globis, Kim had been credited with diversifying businesses to catapult it to the nation’s biggest logistics company.
