Hamburg SŸd revenue struggles despite higher volume

Hamburg SŸd revenue struggles despite higher volume

Hamburg S?d said Tuesday that the performance of its container shipping division had fallen below expectations, and that overall results "did not quite equal" that of 2002, mostly due to Brazil's stagnant economy.

Although container volume climbed 44 percent in 2003 to 1.12 million TEUs from 775,000 TEUs in 2002, liner revenues grew by only 13 percent to 1.95 billion euros ($2.4 billion) from $2.1 billion. The group said volume grew faster than revenues on a weaker dollar, falling rates and capacity utilization of only 40 percent on its southbound service from Europe to the east coast of South America. It said rates and utilization on the northbound leg remained stable.

Revenues from the tramp division increased by 18.7 percent to $443 million from $374 million the previous year. Tramp revenues accounted for just under 20 percent of total revenues, thanks to booming charter rates.

Privately-held Hamburg S?d does not disclose earnings.

The company said volume benefited from the acquisitions of the Mediterranean services of Andrew Weir in 2002, operated under the Ellerman brand, and the Asia-South America services of Kien Hung in April 2003. But it noted that liner shipping fell short of expectations on the start-up losses of the acquired services. Hamburg S?d's volume has tripled in the five years since 1998.

The acquisitions boosted Hamburg S?d's fleet from 46 vessels with 90,800-TEUs capacity in liner services at the end of 2002 to 75 vessels and 142,500 TEUs by year-end 2003. Together with bulk ships and tankers, the shipping group deployed a total of 148 vessels. The group-owned fleet declined from 20 units in 2002 to 17 vessels following the sale of two bulk carriers and a reefer vessel in late 2003.

Hamburg S?d said it expects increased cargo growth in the South America trades in 2004 and accompanying high capacity utilization in the northbound services on improving economic forecasts for the region. It said it would seek the restoration of freight rates, and expects a "decent result" in 2004.