10 Trillion → 580 Billion... HMM Ends Record-Breaking Operating Profit Streak, Returns to Pre-COVID Levels

HMM's operating profit last year amounted to around 580 billion KRW, marking the end of the record-breaking streak of operating profits that had approached 10 trillion KRW. The 'COVID-19' boom has disappeared, returning results to previous levels. In fact, excluding the COVID-19 special period, it is evaluated that the company recorded strong performance with improved operating profit margins.

On the 14th, HMM announced preliminary results showing consolidated sales of 8.401 trillion KRW and operating profit of 584.9 billion KRW for the previous year. Compared to the same period last year, sales decreased by 54.9% and operating profit by 94.1%. Net profit also fell by 90.1% to 1.0063 trillion KRW.

This is interpreted as the end of the COVID-19-related boom. The Shanghai Containerized Freight Index (SCFI), a global shipping freight rate indicator, had steadily remained between 700 and 900 since recording 414.13 in March 2016. However, due to logistics difficulties caused by COVID-19, it surged to the 5000 range in May 2022. Last year, it dropped to an average of 100, leading to a decline in freight rates and shrinking performance.

Excluding this boom period, the company achieved solid results compared to average years. Operating profit was close to the pre-COVID-19 peak of 601.7 billion KRW in 2010. The operating profit margin was 7.3%, ranking among the top in global shipping companies. Net profit of 1.0063 trillion KRW is the highest excluding the COVID-19 special period. However, it is understood that a significant portion of net profit came from financial income such as interest generated from retained earnings within the company, which amounted to 10.6585 trillion KRW (as of the end of Q3 2023).

HMM plans to continue investments to prepare for uncertainties such as delayed economic recovery in China, global consumption contraction, Middle East conflicts, and restrictions on Suez Canal passage, as freight rate volatility remains high.

An HMM official explained, "We plan to take delivery of 12 ultra-large container ships of 13,000 TEU (1 TEU equals one 20-foot container) ordered in 2021 this year, which will bring total fleet capacity to about 1 million TEU. We will continuously strive to stably generate profits through cost reductions from deploying ultra-large vessels, efficiency improvements from structural reforms, and strengthening sales of high-profit cargo."

As the HMM acquisition battle officially begins, the HMM headquarters located in Park One Tower, Yeouido. Photo by Jo Yongjun jun21@

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