South Korea’s largest line, Hyundai Merchant Marine HMM, increased its group net profit by 89% to KRW 10.1 trillion ($7.9 billion) in 2022, but saw a steeper-than-average drop in container earnings in the fourth quarter. In other words, HMM reports a net profit of USD 8 MM in 2022, halving in 4Q, says Alphaliner.
Operating income from container activities reached KRW 1.2 trillion (USD 975 million) during the last three months of the year, less than half the KRW 2.6 trillion recorded in the previous quarter.
It was the third straight quarterly decline in container profit for the line. Average profit fell to $1,620 per teu from $2,862 in the third quarter, while fourth-quarter container operating margin was 39%, the lowest since late 2020.
Despite the favorable conditions, HMM noted an overall 12.2% increase in freight rates for the year, driven by more long-term contract business, although volumes fell 3.5%.
The Seoul-based line will continue its previously announced strategy of expanding contract business and exploring niche markets, including more refrigerated businesses. HMM said it expected the future direction of the market to be dictated by ship supply as global trade recovers and environmental regulations come into force.
Falling profits may put renewed pressure on the state to privatize HMM. The largest shareholder, the state-owned Korea Development Bank, was reported to have held meetings with potential buyers at the end of the year, but no further developments were announced. As of December 31, the Korea Development Bank held 20.7% of the shares, the Korea Maritime Promotion Corporation 19.9%, and the Credit Guarantee Fund 5.0%. It was reported that HMM could use some of its pandemic cash to buy back government-owned bonds which, if converted into shares, would give the state ownership of nearly 75% of the shares.