HMM posts strong Q3 earnings on high freight rates

(HMM)

HMM Co., South Korea’s largest shipping company, saw its operating profit exceed 1 trillion won ($714 million) in the third quarter despite an increasingly challenging environment.

HMM disclosed on Wednesday that its third-quarter operating profit stood at 1.46 trillion won, up 1,827.5 percent from a year ago. Sales reached 3.55 trillion won, up 67 percent during the same period.

Net profit also soared by 17 times to 1.74 trillion won.

HMM’s robust performance stems from sustained high freight rates, bolstered by elevated geopolitical risks, including the Red Sea crisis that began late last year.

The Shanghai Containerized Freight Index (SCFI), a global container freight benchmark, averaged 3,082 for the first three quarters of this year, more than triple the average rate of 986 last year.

In the shipping industry, an SCFI of 1,000 is generally considered the breakeven point for profitability, suggesting that HMM and other shipping companies are experiencing a significant boost in profitability.

The company’s profitability was also supported by the launch of a new Asia-Mexico route and the deployment of 13,000-TEU mega-container vessels.

However, the strong performance has also raised concerns about HMM’s privatization process.

With the company’s rising valuation, potential buyers such as Hyundai Motor, POSCO, and Hanwha groups have reportedly shown little interest in acquisition, citing the high price tag and a lack of synergy with their existing businesses.

Critics also question the commitment of creditors and government agencies that are responsible for overseeing HMM‘s privatization, saying there may be a lack of genuine intent to advance the sale.