HMM reports robust earnings in Q3 but braces for downturn in Q4

[Provided by HMM]

South Korea’s sea flag carrier HMM Co. extended its earnings growth streak in the third quarter despite a plunge in freight rates but it is bracing for a possible industry slowdown onwards from weakening demand amid ongoing aggressive rate hiking moves by central banks across the world.

HMM in its regulatory filing on Wednesday said its consolidated operating profit for the quarter ended September reached 2.60 trillion won ($1.9 billion) after gaining 14.5 percent from a year ago. Net profit rose 13.3 percent on year to 2.61 trillion won, while sales added 27.1 percent to 5.11 trillion won.

Operating margin stood at a whopping 50.9 percent in the quarter.

For the first three quarters of the year, HMM’s consolidated operating profit came to 8.69 trillion won on sales of 15.06 trillion won, extending record earnings results. Net income amounted to 8.67 trillion won.

The company reported the upbeat results for the quarter despite a rise in costs from higher oil prices. Its solid performance was owed to still stable freight rates and its aggressive promotion to secure orders from major ship owners, HMM said.

HMM shares were trading 1.71 percent higher at 20,850 won in the morning trade Thursday after closing the previous session 0.73 percent lower at 20,500 won.

But analysts expect port traffic will sharply decrease from the fourth quarter of this year with subdued consumption from rising interest rates and rising inventory levels at large retailers.

The weaker demand is expected to further drag down freight rates that have plummeted this year. The Shanghai Containerized Freight Index (SCFI), widely cited metric on market freight quotations, plunged to this year’s lowest of 1,579.21 on Nov. 4 after losing 118.44 points from the previous week. Compared to this year’s peak of 5,109.6 in the beginning of the year, the index slid almost 70 percent.

HMM should survive through an anticipated industry slump with its cash assets that have piled up thanks to its hot earnings streak since 2020.

By Oh Soo-hyun and Lee Ha-yeon