HMM Forecasts Record High Performance... Annual Operating Profit Margin Expected to Exceed 50%

Improved Cost Structure Amid High Freight Rates
Operating Profit Estimated to Increase 594% This Year

HMM's annual operating profit margin is expected to surpass 50% for the first time since its founding in 1976.

According to financial information provider FnGuide on the 16th, HMM's annual sales this year are estimated at KRW 13.2529 trillion, and operating profit at KRW 6.8114 trillion, representing increases of 106.6% and 594.4% respectively compared to the previous year. As a result, the operating profit margin is expected to rise significantly from 15.29% last year to 51.4% this year, an increase of 36.11 percentage points. This figure is 2.7 times the estimated operating profit margin of Samsung Electronics this year (19.02%) and is considered exceptional even in the global shipping industry.

The factors behind HMM achieving its highest-ever operating profit margin include not only the high freight rates caused by COVID-19 but also cost structure improvements due to the proactive acquisition of ultra-large container ships. The cost ratio in HMM's cumulative sales for the third quarter this year was 48.1%, improving by 34.5 percentage points compared to 82.6% in the same period last year.

As part of the government's five-year shipping reconstruction project, HMM received 12 of the world's largest container ships with a capacity of 24,000 TEU (1 TEU = 6-meter container) last year and deployed them on the Asia-Europe route. This year, HMM further realized economies of scale by adding eight 16,000 TEU container ships. Ultra-large container ships can carry more than twice the cargo of the existing main vessels of 13,000 TEU at the same fuel cost per voyage, significantly improving the cost structure.

The prolonged high freight rates due to COVID-19 also drove the operating profit margin. The Shanghai Containerized Freight Index (SCFI), a representative global shipping freight rate indicator, reached a record high of 4,810.98 points as of the 10th, breaking the previous record within a week.

However, the securities industry expects HMM's performance to peak this year and then decline from next year. This is based on the judgment that the unusual increase in cargo volume due to COVID-19 and congestion at major West Coast North American ports will ease from the first half of next year. Accordingly, HMM's operating profit margin is forecasted to decrease to 46.76% in 2022 and 29.47% in 2023.

This content was produced with the assistance of AI translation services.