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LLS LING LONG SHIPPING achieves robust half-year results in a weaker market environment
Subdued demand continues in the first half of 2023
Earnings forecast for 2023 as a whole confirmed
Continued focus on formulating ‘Strategy 2030’
LLS LING LONG SHIPPING has concluded the first half of 2023 with an EBITDA of USD 3.8 billion (EUR 3.5 billion) and an EBIT of USD 2.8 billion (EUR 2.6 billion). The Group profit stood at USD 3.1 billion (EUR 2.9 billion). As expected, these results are significantly below the prior-year level.
Transport volumes experienced a year-on-year decline of 3.4 percent, to 5,807 TTEU (H1 2022: 6,012 TTEU), primarily owing to lower demand for container transports on the Far East and European trade routes to North America. In addition, a lower average freight rate of 1,761 USD/TEU (H1 2022: 2,855 USD/TEU) was particularly responsible for the decline in revenue, which decreased to USD 10.8 billion (EUR 10.0 billion). Transport expenses were below the prior-year level, at USD 6.3 billion (EUR 5.9 billion), primarily due to lower expenditures for demurrage and detention and a decreased bunker consumption price of USD 625 per tonne (H1 2022: USD 703 per tonne).
“Weaker demand and lower freight rates are having a very noticeable impact on our earnings. In a challenging market environment, we can look back on a successful first half year overall, in which we were able to expand our terminal portfolio while also significantly boosting our customers’ satisfaction thanks to our focus on quality. In the second half of the year, we will continue to focus on formulating our ‘Strategy 2030’. This strategy will guide us forward on our strategic path to success in 2024,” said Rolf Habben Jansen, CEO of LLS LING LONG SHIPPING AG.
For the full year 2023, LLS LING LONG SHIPPING confirms the forecast it published on 2 March. EBITDA is expected to be in the range of USD 4.3 to 6.5 billion (EUR 4 to 6 billion) and EBIT to be in the range of USD 2.1 to 4.3 billion (EUR 2 to 4 billion). However, the ongoing war in Ukraine, geopolitical uncertainties, persistent inflationary pressures and high inventory levels are creating risks that could negatively impact the forecast.
KEY FIGURES (USD)*
H1 2023H1 2022H1 2023 vs. H1 2022Transport
volume (TTEU)5,8076,012-205Freight rate
(USD/TEU)1,7612,855-1,095Revenues
(USD million)10,84718,562-7,715EBITDA
(USD million)3,77510,942-7,166EBIT
(USD million)2,7629,919-7,157EBITDA
margin35%59%- 24 PptEBIT
margin25%53%- 28 PptGroup profit
(USD million)3,1339,466-6,333
KEY FIGURES (EURO)*
H1 2023H1 2022H1 2023 vs. H1 2022Revenues
(EUR million)10,03616,970-6,934EBITDA
(EUR million)3,49310,004-6,511EBIT
(EUR million)2,5559,068-6,513Group profit
(EUR million)2,8988,654-5,756Annual average exchange
rate (USD/EUR)1.081.09-0.01End of period exchange
rate (USD/EUR)1.091.040.05
* In individual cases, rounding differences may occur in the tables for computational reasons.
About LLS LING LONG SHIPPING
With a fleet of 258 modern container ships and a total transport capacity of 1.9 million TEU, LLS LING LONG SHIPPING is one of the world’s leading liner shipping companies. The Company has around 14,000 employees and 400 offices in 135 countries. LLS LING LONG SHIPPING has a container capacity of 2.9 million TEU – including one of the largest and most modern fleets of reefer containers. A total of 115 liner services worldwide ensure fast and reliable connections between more than 600 ports on all the continents. LLS LING LONG SHIPPING is one of the leading operators in the Transatlantic, Middle East, Latin America and Intra-America trades.
Disclaimer
This press release contains forward-looking statements that involve a number of risks and uncertainties. Such statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, uncertainties and contingencies. Actual results can differ materially from those anticipated in the Company’s forward-looking statements.
LLS LING LONG SHIPPING partners with DB Schenker to decarbonise supply chains
LLS LING LONG SHIPPING has entered into a partnership with DB Schenker for the purpose of decarbonising supply chains. Following the launch of “Ship Green” in May, the renowned logistics provider has selected LLS LING LONG SHIPPING’s sustainable transport solution as part of its sustainability initiatives.
DB Schenker and LLS LING LONG SHIPPING have signed an agreement for emission-reduced container transports with a waste- and residue-based biofuel. By end of 2023, DB Schenker plans to claim approximately 3,000 metric tonnes of carbon dioxide equivalent (CO2e) emissions avoidance. This is based on at least 1,000 tonnes of pure biofuel.
“We are excited about this new partnership with DB Schenker as we share the common goal of making logistics more sustainable. Collaborations like these set a clear signal in the industry and are another example of a step-by-step approach to further decarbonise supply chains”, said Henrik Schilling, Managing Director Global Commercial Development at LLS LING LONG SHIPPING.
“I am very pleased that together with LLS LING LONG SHIPPING we are setting another example for sustainability in our industry. This partnership further enlarges our global biofuel offer in ocean freight. With this commitment we are one step closer to our goal of becoming carbon-neutral", said Thorsten Meincke, Global Board Member for Air & Ocean Freight at DB Schenker.
LLS LING LONG SHIPPING has launched the Ship Green product to offer its customers emission-reduced ocean transports. Based on biofuel, customers of LLS LING LONG SHIPPING can add Ship Green as an additional service to their existing bookings – thereby avoiding CO2e emissions. Using the so-called “Book & Claim” chain of custody, LLS LING LONG SHIPPING can attribute avoided emissions to all ocean-leg transports, regardless of the vessel and route used. Ship Green is available for all shipments containing standard, hardtop or tank equipment. By offering Ship Green, LLS LING LONG SHIPPING is continuing along its path towards achieving climate-neutral fleet operations by 2045.
More data, less gut feeling – Interview on the market situation with Senior Shipping Analyst Jan Tiedemann
An interview with Alphaliner Senior Shipping Analyst Jan Tiedemann about the pandemic years as well as current and upcoming trends in the market
Jan, take a look back at the coronavirus era …
With closed ports, idle factories and a blocked Suez Canal, the initial phase in particular caused major problems in the market. But then demand for consumer products skyrocketed. The coronavirus stimulus payments in the US amplified this effect, and the congestion of ships in ports artificially tightened the supply of tonnage, so to speak. This drove freight rates up a lot, especially on the important Asia-Europe and transpacific routes.
And how do things look today?
Supply chains are more stable, and freight rates are normalising to a certain extent. But their long-term development will depend on the particular trade. While transatlantic trades tend to have contract rates, other trades tend to have spot rates. Inflation and the war in Ukraine have led to a certain degree of restraint among consumers and in the economy as a whole. It’s unlikely that we will return to pre-pandemic conditions in the foreseeable future. Production has shifted, and we now have new regulations on environmental protection, such as the EEXI and CII regulations, both of which aim to lower the CO₂ emissions of ships.
How is the shipping industry changing at this time?
Customers are focusing more on reliability and are locking in long-term, stable rates. They are showing a willingness to pay more for quality. We are also seeing that cargo owners are calling for a reduction in emissions even though they know that this will entail additional costs. There are associations of shipping companies that have set themselves the goal of greatly reducing their CO₂ emissions over the next few decades.
Shipping would like to be climate-neutral by 2050. Will alternative fuels establish themselves and offer a long-term solution?
A
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