Asia/Pacific News
HMM Merger with Hanjin Would Boost Chances of Survival: Drewry
Drewry Maritime Equity Research (Drewry) says a Hyundai Merchant Marine (HMM) merger with compatriot Hanjin Shipping would boost their chances of survival.
HMM is currently seeking to restructure its debt obligations and raise money through asset sales after a tough period, and as it gets ready to release its full-year 2015 financial results, looks on course to report five consecutive years of operating losses.
Accumulated losses in its container division in the period between 2008 and the first nine months of 2015 amount to $352 million.
Drewry says of the embattled carrier's predicament, and various attempts to stay afloat including the sale of non-core assets, that it will likely survive but that a merger with Hanjin Shipping is a very real possibility.
Hanjin is, itself, "no model of financial well-being" Drewry analysts note, but it has managed to turn profits in the container market in the last two years.
HMM, as a result of asset sales, has seen its container division grow in importance; container sales now account for approximately three-quarters of HMM revenue, up from two-thirds in 2008 according to the report.
Now that HMM is a more purely focused on the container business it is a good candidate for a merger with Hanjin, according to Drewry.
"Consolidation between liner operators is not a panacea to the industry's woes because it doesn't remove the excess number of ships, but notwithstanding that it does seem that HMM and Hanjin would stand a better chance of surviving together than they do on their own."
Last month Ship & Bunker reported that asset sales at HMM were buoying the price of the company's stock.
