Discontinued Operations
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Discontinued operation
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Since the decision to separate container shipping from the Group, announced on 17 March 2008, this sector has been carried as a discontinued operation in accordance with IFRS 5. Apart from container shipping, it comprises the strategic interests in the Altenwerder and Montreal, Canada, container terminals (Montreal Gateway Terminals).
Discontinued operation – Key figures
| € million | Q1 2008 | Q1 2007 | Var. % |
|---|---|---|---|
| Turnover | 1,451.2 | 1,423.7 | + 1.9 |
| EAT | - 11 | 102 | n/a |
| Net interest result/taxes | 12 | 35 | n/a |
| EBITA by division | 1 | 137 | - 99.3 |
| Gains on disposals | 0 | - 196 | |
| Restructuring | 0 | 0 | |
| Purchase price allocation | + 19 | + 21 | |
| Other one-off items | - 2 | + 2 | |
| Underlying EBITA by division | 18 | - 36 | n/a |
| Investments | 128.6 | 105.2 | + 22.2 |
| Headcount (31 March) | 7,599 | 8,290 | - 8.3 |
Turnover and earnings
Turnover by the reclassified container shipping operations rose slightly by 1.9% to around € 1.5 billion in the first quarter of 2008. While volumes remained stable, this development resulted from a significant increase in freight rate levels. On the other hand, the US dollar weakened substantially by 14.4% against the euro.
Earnings declined by € 136 million to € 1 million. However, the previous year’s reference quarter had comprised gains on disposal from the divestment of the majority interest in Montreal Gateway Terminals of € 181 million and from the divestment of the minority interest of Hapag-Lloyd AG in Germanischer Lloyd AG of € 15 million, while one-off expenses of € 2 million were incurred in connection with the integration of CP Ships. The first quarter of 2008 included adjustments for expenses for the purchase price allocation and minor one-off income from the reversal of a provision for the integration of CP Ships. After adjustment of the one-off effects, earnings by container shipping totalled € 18 million in the first quarter of 2008. This corresponded to an increase in earnings of € 54 million against the 2007 reference quarter.
Development of the trade lanes
Transport volumes Hapag-Lloyd
| ‘000 TEU | Q1 2008 | Q1 2007 | Var. % |
|---|---|---|---|
| Far East | 330 | 335 | - 1.5 |
| Trans-Pacific | 265 | 243 | + 8.9 |
| Atlantic | 339 | 370 | - 8.3 |
| Latin America | 206 | 214 | - 3.7 |
| Australasia | 178 | 152 | + 16.6 |
| Total | 1,318 | 1,315 | + 0.3 |
Freight rates Hapag-Lloyd
| US-$/TEU | Q1 2008 | Q1 2007 | Var. % |
|---|---|---|---|
| Far East | 1,645 | 1,234 | + 33.3 |
| Trans-Pacific | 1,511 | 1,381 | + 9.4 |
| Atlantic | 1,653 | 1,466 | + 12.7 |
| Latin America | 1,506 | 1,392 | + 8.2 |
| Australasia | 1,203 | 1,179 | + 2.0 |
| Ø for all trade lanes | 1,539 | 1,346 | + 14.3 |
In the first quarter, Hapag-Lloyd only generated slight volume growth of 0.3% year-on-year. Although transport volumes rose in trade lanes Trans-Pacific and Australasia, volumes in trade lanes Far East, Atlantic and Latin America declined year-on-year. Freight rates rose substantially in all trade lanes, growing overall by a total of 14.3% year-on-year.
Far East
In the Far East trade lane, transport volumes declined slightly by 1.5% year-on-year. Besides the slow start of the export trade after the Chinese New Year, the extreme winter spell in China caused production losses, causing a decline in transport volumes to Europe. With growth of 33.3%, the Far East trade lane showed the highest rise in freight rates in the first quarter. Freight rates rose substantially, both on the routes from Asia to Europe and in the opposite direction. The rise in freight rates resulted primarily from an increase in basic freight rates and the increasing implementation of freight rate surcharges to account for higher bunker costs.
Trans-Pacific
Transport volumes rose by 8.9% year-on-year in the Trans-Pacific trade lane. This was attributable to the rise in transport volumes on the routes from North America to Asia. The weakening of the US dollar caused an increase in demand for American products in the Asian region. Freight rate levels also grew by 9.4% year-on-year in this trade lane. Freight rates were increased in particular on the routes from North America to Asia.
Atlantic
In the Atlantic trade lane, the average freight rate level was 12.7% up year-on-year. Higher freight rates were achieved in particular on routes from North America to Europe as demand for American products rose due to the weakening of the US dollar exchange rate against the euro. On the other hand, transport volumes were 8.3% down year-on-year. One of the key factors for this decline was the appreciation of the euro against the US dollar. In combination with the currently difficult economic situation resulting from the sub-prime crisis in the US, this development adversely affected demand by American consumers for European goods.
Latin America
In the Latin America trade lane, transport volumes in the first quarter fell by 3.7% year-on-year. This was due to a decline in transport volumes from Latin America to North America due to the weakening of the US dollar. Freight rate levels in the Latin America trade lane rose by 8.2% year-on-year due to an increase in freight rates for imports from Asia, Europe and North America.
Australasia
At 16.6%, the Australasia trade lane recorded the strongest volume growth, since inner-Asian transports grew significantly year-on-year. Freight rates for the Australasia trade lane rose by 2.0% year-on-year, a development primarily attributable to the increase in freight rates in inner-Asian transports.