HHLA Reports Positive Development in the First Half of 2022

The Hamburger Hafen und Logistik AG (HHLA) recorded a positive revenue and earnings development in the first half of 2022. The company primarily benefited from a further increase in storage fees in the Container segment due to above-average long dwell times of containers at HHLA’s facilities, as well as a renewed increase in the rail share of the total volume of HHLA intermodal transports.

(Hamburg) Revenue in the HHLA Group increased by 9.9 percent to €779.5 million (previous year: €709.2 million). The Group’s operating profit (EBIT) rose by 11.9 percent to €101.3 million (previous year: €90.5 million). The EBIT margin was 13.0 percent (previous year: 12.8 percent). The profit after taxes and after shares of other shareholders exceeded the previous year’s figure by 13.1 percent, reaching €43.9 million (previous year: €38.8 million).

Angela Titzrath, Chairwoman of the HHLA Executive Board: “We have been experiencing how volatile logistics can be for more than two years. The restrictions to combat the Corona pandemic, weather influences, construction work in rail and road traffic, and finally the war in Ukraine with the resulting sanctions against Russia – all of this has a massive impact on global supply chains. Although HHLA successfully completed the first half of 2022, the disruptions in the supply chains continue to pose significant operational challenges for us. It is currently unclear when the situation will normalize again and what consequences the global crisis will have for the economy and society. HHLA is doing everything possible to contribute to a reliable supply for companies and consumers. Even in these troubling times, we are focused on resolutely implementing our strategy aimed at growth and sustainability.”

Container Handling at Previous Year’s Level

The publicly listed sub-group Port Logistics achieved a revenue increase of 9.6 percent to €761.9 million in the first six months (previous year: €695.1 million). The operating profit (EBIT) rose by 9.4 percent to €91.7 million (previous year: €83.8 million). The EBIT margin remained at 12.0 percent, the same level as the previous year. The profit after taxes and after shares of other shareholders increased by 10.1 percent to €38.4 million (previous year: €34.9 million). The earnings per share amounted to €0.53 (previous year: €0.49).

In the Container segment, container handling at all HHLA terminals remained stable at 3,368 thousand standard containers (TEU), comparable to the previous year (previous year: 3,369 thousand TEU). The suspension of seaward handling at the Ukrainian terminal in Odessa due to government orders at the end of February, as a result of the Russian war of aggression, was largely offset by a strong increase in volume at the Estonian container terminal TK Estonia in Tallinn and an increase in cargo volumes from the Far East at the Hamburg container terminals.

The handling volume of the three Hamburg container terminals was 3,167 thousand TEU, 3.1 percent above the previous year’s figure (previous year: 3,073 thousand TEU). The positive development was primarily driven by an increase in the Far East shipping area – particularly China. Additionally, feeder services that were first processed in the third quarter of 2021 and the first quarter of 2022 contributed to a strong growth in feeder traffic. The decline in volumes bound for Russia since March 2022 due to the imposed EU sanctions was significantly offset. The feeder share of seaward handling was 20.9 percent in the first six months of 2022 (previous year: 19.8 percent).

The international container terminals recorded a decline in handling volume of 31.9 percent to 202 thousand TEU (previous year: 296 thousand TEU). The cause was a significant decrease in cargo volumes at the terminal in Odessa compared to the previous year. A strong increase in volume at the container terminal TK Estonia due to increased use of the terminal as an alternative to Russian ports, as well as additional handling volume at PLT Italy in Trieste, could not fully compensate for the decline.

Revenue increased significantly in the first half of 2022 by 8.4 percent to €438.8 million (previous year: €404.9 million). This was primarily due to the strong increase in storage fees at the container terminals in Hamburg, Tallinn, and Trieste, which was particularly attributed to the longer dwell times of containers as a result of bottlenecks in the supply chain. Additionally, extra revenue from RoRo and breakbulk handling at PLT Italy contributed to the positive development. The operating profit (EBIT) increased by 26.6 percent to €80.2 million (previous year: €63.4 million) against the backdrop of temporarily increased average revenues due to storage fees. The EBIT margin rose by 2.7 percentage points to 18.3 percent (previous year: 15.6 percent).

Rail Transport Increases by 4.6 Percent

In the Intermodal segment, container transport overall increased by 2.2 percent to 851 thousand TEU (previous year: 832 thousand TEU). Rail transport rose by 4.6 percent compared to the previous year to 709 thousand TEU (previous year: 678 thousand TEU). In addition to moderate growth in traffic with the northern German seaports, a strong increase in Polish traffic and in the DACH region contributed to this development. However, road transport recorded a significant decline in the first half of 2022. The transport volume decreased by 8.2 percent to 142 thousand TEU (previous year: 155 thousand TEU) in a persistently difficult market environment.

Revenue was €281.6 million, 11.4 percent above the previous year’s figure (previous year: €252.9 million), thus increasing more than the transport volume. This was due to the further increased rail share of the total volume of HHLA intermodal transports from 81.4 percent to 83.3 percent, as well as temporary surcharges that were necessary to partially compensate for the sharply increased energy prices.

The operating profit (EBIT) decreased by 7.1 percent to €42.8 million (previous year: €46.0 million). The EBIT margin fell by 3.0 percentage points to 15.2 percent (previous year: 18.2 percent). The weak EBIT development was mainly due to operational impairments from storm damage, ongoing disruptions in the supply chains, and a sharp increase in energy costs, which could only be passed on to the market with a delay.

Positive Development in Real Estate

The HHLA real estate in the historic warehouse district and on the fish market area recorded a positive development with nearly full occupancy in the first six months.

Revenue increased during the reporting period by 17.2 percent to €21.5 million (previous year: €18.4 million). In addition to further increased revenues from revenue rental agreements, higher rental income from newly developed properties in the warehouse district also contributed to this.

The cumulative operating profit (EBIT) rose by 43.7 percent to €9.4 million (previous year: €6.6 million) against the backdrop of the achieved revenue increases and with nearly constant maintenance volume.

Profit Expectations for the Current Financial Year Confirmed

The economic development of HHLA in the first half of 2022 largely corresponded to the expected development described in the 2021 annual report, which was based on the knowledge available at that time regarding the possible impacts of the Russian invasion. The information in the annual report regarding the expected business performance in 2022 is therefore fundamentally still valid. However, the expectations for container handling and the earnings expectations in the Intermodal segment have been gradually lowered. In contrast, the expectations for revenue and EBIT development in the real estate sub-group have been raised.

For the Port Logistics sub-group, in light of the ongoing disruptions in international supply chains, a value at the level of the previous year is expected for container handling (previously: moderate increase). For container transport, a moderate increase compared to the previous year is still considered possible.

Taking into account a reduced volume development in the Container segment in the second half of the year and the simultaneous delayed flattening of average revenues, a moderate revenue increase for the Port Logistics sub-group is still expected.

The EBIT expectation in the Port Logistics sub-group remains in the range of €160 to €195 million (previous year: €213 million). However, in the Intermodal segment, due to the ongoing supply chain disruptions and their impact on operational processes, an EBIT contribution at the level of the previous year is anticipated (previously: moderate increase).

For the real estate sub-group, a significant increase in revenue and EBIT compared to the previous year is considered possible (previously: each moderate increase).

At the Group level, taking into account the diverging developments between the segments, a moderate revenue increase and an operating profit (EBIT) in the range of €175 to €210 million (previous year: €228 million) is still expected.

Investments of €300 to €350 Million

To further increase productivity and capacity in the Container and Intermodal segments, investments at the Group level in a range of €300 to €350 million are still expected for the year 2022. Of this, €270 to €320 million will continue to be allocated to the Port Logistics sub-group.

Photo: © HHLA