Hanjin Shipping expects to earn a profit this year and boost sales 27 percent as world trade picks up and shipping lines cut back on their fleet expansion plans.
"The gap between demand and capacity is expected to narrow this year as demand recovers and ship deliveries are delayed," Chief Executive Officer Kim Young Min told reporters Monday in Seoul, according to Bloomberg News. "Our aim is to post a net income for the year."
Sales may reach $7.1 billion, Kim said. The company also aims to make an operating profit, or sales minus the cost of goods sold and administrative expenses, compared with a loss of $26 million last year, he said without giving a precise profit forecast.
Hanjin and other major liner companies have succeeded in raising rates since late last year as the global economy recovers from a recession. Global trade is expected to grow 5.8 percent this year after contracting 12.3 percent in 2009, according to the International Monetary Fund.
Hanjin Shipping posted a net loss of $243 million in the fourth quarter of last year, the company said Feb. 4. That was the first time it had reported results since being divided into two separate listed companies in December, one a holding company, and the other an operating company.
Higher rates helped Hanjin Shipping break even on moving cargo between Asia and Europe in the first quarter while the company is still losing money on the trans-Pacific trade, Kim said.
"Trade volume has increased since December and we are a bit hopeful that we may be able to raise rates for the trans- Pacific trade when the new contract year starts in May," Kim said.
Hanjin Shipping charged on average $1,360 per 20-foot container last year for Asia-U.S. routes and $1,700 per TEU for Asia-Europe, according to Jee Heon Seok, an analyst with NH Investment & Securities in Seoul.
Hanjin Shipping plans to save about $300 million in costs this year by reducing the speed of some of its vessels and cutting ship charter rates, said Kim, who is also the chairman of the 15-member Transpacific Stabilization Agreement. Fuel costs account for about 18 percent of Hanjin Shipping's operating expenses, he added.
The price of 380 Centistoke marine bunker fuel, used by ships, more than doubled last year. It traded at $461.50 a metric ton yesterday in Singapore, according to data compiled by Bloomberg.
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