HMM Posts 56.2% Drop in Q1 Operating Profit to 269.1 Billion Won..."Impact of Middle East Crisis"

Freight Rates on U.S. Routes Drop 38%

On May 13, HMM announced that it recorded sales of 2.7187 trillion won and an operating profit of 269.1 billion won in the first quarter of this year. Compared to the same period last year, sales declined slightly by 4.8%, while operating profit plummeted by 56.2%. Net profit for the period was 353.6 billion won, down 52% year-on-year.

This deterioration in performance was attributed to the decline in the Shanghai Containerized Freight Index (SCFI). The average SCFI fell from 1,762 points in the first quarter of last year to 1,507 points in the first quarter of this year. The impact was particularly significant in HMM's main routes, with freight rates on the US West Coast and East Coast dropping sharply by 38% and 37%, respectively.

The first quarter is typically a seasonal off-peak period with low demand for major container cargoes such as consumer goods. HMM analyzed that the situation was further aggravated by sales losses caused by the Middle East crisis and increased costs such as fuel expenses. In particular, the average oil price rose by 9%, from 486 dollars per ton in the first quarter of last year to 530 dollars per ton in the first quarter of this year.

HMM expects increased market uncertainty due to rising supply from the delivery of new container vessels, as well as higher costs stemming from the Middle East crisis and U.S. tariff policies.

In the container vessel market, HMM plans to optimize fuel costs to prepare for a prolonged period of high oil prices and to open new routes to regions such as Africa by introducing a hub-and-spoke strategy. The company is also working to secure new demand in Southeast Asia and other regions. For bulk carriers, HMM will enhance profitability by strategically operating VLCCs (Very Large Crude Carriers) and will continue to secure long-term contracts for strategic cargoes both domestically and internationally.