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Hapag-Lloyd cites freight and exchange rates for H1 loss

HAMBURG: Hapag-Lloyd has reported revenue of €3.2 billion and a loss of €173.3 million for the first six months of 2014 (H1) compared to the previous year.

Hapag-Lloyd ProvenceRevenue for the second quarter (Q2) fell €46 million to €1.66 billion to produce a net loss of €54.2 million for the period. HI contracts were completed for approximately 15,600 customers - down from 17,100 in the same period last year.

Despite an a six percent increase in TEU volume, the shipping group said H1 was "characterised by persistently strong competition and the associated pressure on freight rates, as well as by negative exchange rate effects as a result of the weak US dollar against the euro". At US$1,424 per TEU, the average rate in the first half-year remained 6.4 percent below the same period in 2013.

In its outlook for the rest of the year, the company says H1 losses and the pressure on rates will result in a "positive operating result (adjusted EBIT) for 2014 as a whole, albeit clearly lower than in 2013".

The integration of CSAV's container business into Hapag-Lloyd remains on schedule for a closing during the fourth quarter of 2014 following approval from "key jurisdictions". Once the deal is complete, CSAV will hold an initial 30 percent stake that will increase to 34 percent after a capital injection of €370 million in cash.

Noting container shipping will remain a growth industry in the long term, Hapag-Lloyd has now completed the addition of 10 13,200 TEU vessels to its network that helped reduce H1 transport expenses by €79.1 million to €2.87 billion. The average bunker price for the epriod was US$594 per tonne, down US$30 in the prior year.

Notwithstanding the risks associated with the lasting economic impact of the Eurozone debt crisis, sanctions imposed on Russia and the present slowdown in emerging markets, the company says it "seeks to actively participate in industry consolidation, if promising transactions present themselves".

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