Hapag-Lloyd Faces Challenges as Shares Fall

Shares of Hapag-Lloyd, the German shipping company, have seen a decline after the company provided a cautious outlook for its full-year earnings. If spot freight rates do not recover, the company anticipates facing further challenges. As of 0846 GMT on Thursday, Hapag-Lloyd's shares traded at EUR112, marking a 4.5% decrease and resulting in a year-to-date loss of 37%.

Hapag-Lloyd now expects its full-year earnings before interest, taxes, depreciation and amortization (EBITDA) to fall between 4.1 billion and 5 billion euros ($4.39 billion-$5.36 billion), along with earnings before interest and taxes (EBIT) ranging from EUR2.2 billion to EUR3.1 billion. These revised figures represent a reduction from the company's previous forecast of EBITDA between EUR4.0 billion and EUR6.0 billion, and EBIT between EUR2.0 billion and EUR4.0 billion.

Analysts, on the other hand, currently project Hapag-Lloyd's full-year EBITDA to amount to EUR5.01 billion, with EBIT estimated at EUR3.03 billion, as per consensus estimates provided by FactSet.

Deutsche Bank Research analysts explained that the adjustments made to Hapag-Lloyd's earnings guidance reflect their anticipation of a significant decline in freight rates and a modest increase in transport volumes for the entire year. In addition, due to the current oversupply in the shipping industry, which is expected to persist for another two to three years, freight rates are likely to remain under pressure.