The start of 2023 was a challenging period for Hamburger Hafen und Logistik AG (HHLA) in the face of ongoing geopolitical tensions, EU economic sanctions and slower economic growth. The HHLA Group’s revenue fell by 5.6 percent to € 364.7 million in the first three months of the year (previous year: € 386.2 million). The operating result (EBIT) decreased year on year by 57.3 percent to € 22.9 million (previous year: € 53.7 million). The EBIT margin was 6.3 percent, down from 13.9 percent in the same quarter of the previous year. The main reasons for the fall in revenue and earnings were the reduced demand for container throughput, the decrease in storage fees at the Hamburg container terminals and the suspension of seaborne handling at the Odessa container terminal. Profit after tax and minority interests fell by 87.7 percent to € 2.8 million (previous year: € 22.8 million).
Angela Titzrath, HHLA’s Chief Executive Officer: “A significant weakening in the demand for logistical services was already evident at the end of 2022. Geopolitical tensions, the Russian war of aggression against Ukraine, high inflation and the corresponding reduction in consumption in Europe are reflected in an economically weak start to the year worldwide. As we expected, container throughput and transport in the first quarter of the year were weak at HHLA as well. We expect to see a market recovery in the second quarter. On the earnings side, however, the Intermodal segment showed stable development. Overall, HHLA’s strategy of positioning itself broadly along the logistical value chain and continuously expanding its network has proven its worth. Despite the challenging times, HHLA continues to implement its strategy based on sustainability and profitable growth. In the first quarter, this involved expanding the network of our rail subsidiary Metrans, advancing our hydrogen activities, and investing in innovative solutions via HHLA Next.”
The listed Port Logistics subgroup recorded a significant decrease of 5.9 percent in revenue to € 355.1 million in the first three months (previous year: € 377.5 million). The operating result (EBIT) fell year-on-year by 62.5 percent to € 18.5 million (previous year: € 49.2 million). The EBIT margin decreased by 7.8 percentage points to 5.2 percent (previous year: 13.0 percent). Profit after tax and minority interests came to 0.4 million (previous year: € 20.3 million).
In the Container segment, the throughput volume at HHLA’s container terminals decreased overall by 18.6 percent to 1,416 thousand standard containers (TEU) (previous year: 1,740 thousand TEU). At 1,360 thousand TEU, throughput volume at the Hamburg container terminals was down 15.9 percent on the same period last year (previous year: 1,618 thousand TEU). The main driver of this development was the strong decline in volumes in the Far East shipping region, particularly China. The positive momentum from North American cargo volumes was unable to compensate for this. Feeder traffic volumes were also significantly down from the previous year. In addition to the Swedish and Polish routes, Russian volumes in particular were sharply down year-on-year as a result of the EU sanctions. The proportion of seaborne handling by feeders decreased moderately year-on-year to 18.1 percent (previous year: 21.2 percent).
At the international container terminals, throughput volume fell by 53.9 percent to 56 thousand TEU (previous year: 122 thousand TEU). This was due to the significant decline in cargo volumes at the Odessa terminal after seaborne handling there was suspended by the authorities at the end of February 2022 following the Russian invasion. There was also an absence of extra calls at the TK Estonia container terminal as an alternative to Russian ports in the first quarter of 2023.
Revenue in this segment fell by 18.8 percent year-on-year in the first three months of 2023 to € 175.8 million (previous year: € 216.4 million). This was mainly due to decreased volumes and shorter container dwell times at the Hamburg container terminals, which had had a positive effect on revenue in the same period last year due to supply chain disruptions.
Against this background, the operating result (EBIT) decreased by 84.9 percent to € 5.7 million (previous year: € 37.8 million). The international terminals TK Estonia and PLT Italy each made positive contributions to the operating result. The EBITDA margin fell by 14.2 percentage points to 3.2 percent (previous year: 17.4 percent).
In the Intermodal segment, container transport decreased by a total of 5.4 percent to 408 thousand standard containers (TEU) (previous year: 431 thousand TEU). Rail transport fell year-on-year by 5.6 percent to 340 thousand TEU (previous year: 361 thousand TEU). All main routes were affected by the decrease. While northern German seaports recorded sharp declines, only Rotterdam traffic managed a significant increase, albeit at a comparatively low level. There was a moderate decrease in road transport of 4.2 percent to 68 thousand TEU (previous year: 71 thousand TEU).
With a year-on-year increase of 13.4 percent to € 157.3 million (previous year: € 138.7 million), the development of revenue was positive compared with that of transport volumes. This was due to the rise in transport revenue in the previous year, which was adjusted to the increased costs for the purchase of services, in particular energy costs, at a later point in time.
The operating result (EBIT) decreased by 1.0 percent to € 21.4 million in the reporting period (previous year: € 21.6 million). The EBIT margin fell by 2.0 percentage points to 13.6 percent (previous year: 15.6 percent). The main reason for the downward EBIT trend was the decrease in transport volumes. The previous year’s result had been adversely affected by storm damage in February and disruptions to international supply chains.
According to Grossmann & Berger’s latest market report, supply and demand were balanced in the Hamburg market for office space in the first three months of the year, despite the rise in the vacancy rate from 3.5 percent in the previous year to the current figure of 4.0 percent. HHLA’s properties in the Speicherstadt historical warehouse district and the fish market area maintained their stable tenancy rate with almost full occupancy in the first quarter of 2023.
Revenue rose by 8.7 percent to € 11.6 million (previous year: € 10.7 million). In addition to increased income from revenue-based rent agreements, this growth in the first quarter of 2023 was due in particular to rising rental income from newly developed properties in the Speicherstadt historical warehouse district.
The growth generated in revenue was offset by a planned temporary vacancy of a building in the Speicherstadt historical warehouse district following a change of tenant and an increase in maintenance expenses. In addition, depreciation and amortisation rose as a result of capitalisations following the completion of project developments. Against this background, the cumulative operating result (EBIT) decreased slightly by 1.7 percent to € 4.3 million (previous year: € 4.4 million).
There were no new events of material importance in the first three months of the 2023 financial year. The disclosures made in the 2022 combined management report regarding the expected course of business in 2023 therefore continue to apply.
The economic development of HHLA in the first quarter of 2023 was largely in line with expectations. However, heterogeneous development on the segment level during the first three months has led to an adjustment in the forecast for the current financial year.
In view of the strong decline in throughput volumes caused by adverse macroeconomic conditions in the first three months of the year, only a slight year-on-year increase in container throughput is now predicted for the Port Logistics subgroup (previously: moderate increase). The situation is expected to improve in the second quarter of 2023 with a corresponding upturn in volumes, especially in the Far East shipping region. A moderate year-on-year increase is still forecast for container transport.
A slight increase in revenue is now expected for the Port Logistics subgroup (previously: at the previous year’s level). This forecast is based on a strong increase (previously: significant increase) in revenue in the Intermodal segment. By contrast, a moderate decrease (previously: slight decrease) is anticipated for the Container segment based on expected volumes.
The operating result (EBIT) for the Port Logistics subgroup is still expected to be in the range of € 145 million to € 175 million. This is based on the assumption that the adjusted forecast for volume development can be partly offset by a set of measures implemented to stabilise earnings. Within this range, a strong decrease in segment EBIT continues to be expected in the Container segment and a moderate increase in the Intermodal segment.
For the Real Estate subgroup, revenue is still expected to remain at the prior-year level with a significant decline in the operating result (EBIT). Overall, a slight increase in revenue is forecast at Group level (previously: same level as in previous year). An operating result in the range of € 160 million to € 190 million is still considered possible.
Capital expenditure at Group level is still expected to be in the range of € 250 million to € 300 million. With anticipated investments of € 220 million to € 270 million, the Port Logistics subgroup will account for the majority of this expenditure.
However, against the backdrop of the ongoing war in Ukraine and further geopolitical tensions as well as the effects of high inflation, the outlook is subject to considerable uncertainty.