Hanjin: Q2 Operating Profit Swells Due to Cost Saving Efforts, Lower Bunker Costs

Hanjin has credited "continuous cost saving efforts" for an operating profit of $54 million in 2015's second quarter.

Hanjin Shipping Co Ltd (Hanjin) has announced that, despite decreased sales, the company’s operating profit has grown due to “continuous costs saving efforts,” lower bunker prices, and rationalised service lanes.

While Hanjin’s total sales decreased by 6.3 percent to KRW 1.99 trillion (USD 1.81 billion), compared to the same period in the previous year, the company’s overall operating profit was KRW 59.2 billion (USD 54 million), a 147.7 percent year-on-year increase.
 
Commenting on the company’s posted overall net profit of KRW 104.3 billion (USD 94 million), Hanjin stated that “overall net profit successfully turned black compared to the result of second quarter last year, with KRW 104.3 billion ($90 million), contributed by the appreciation of KRW against USD and sale of TTI Algeciras (Spain) shares.”

Hanjin’s container line division, in the face of a “drastic drop of freight rates,” is said to have seen a 5.4 percent year-on-year decrease in sales, ending Q2 with KRW 1.83 trillion ($1.56 billion).

However, despite the shrinking sales, the division’s operating profit, “driven by rationalised service lanes and lower bunker costs,” saw growth of 66.9 percent year-on-year, rising to KRW 62.6 billion ($53.29 million).
 
Meanwhile, Hanjin’s bulk business division saw an operating loss of KRW 22.8 billion ($19.41 million), an 8.4 percent fall year-on-year, which the company largely attributed to “China’s reduced import of coal and other seasonal effects.”

Hanjin notes that “other businesses including terminal division have experienced a substantial upturn in operating profit, which climbed 71.7 percent up to KRW 19.4 billion ($16.51  million).
 
Looking ahead to the last half of 2015, Hanjin stated, “trans-Pacific trade is likely to grow in terms of both freight rate and cargo volume as the annual peak season approaches along with the potential recovery of the U.S. market.” 

“As for Asia-Europe trade, oversupply situation is expected to gradually improve hence freight rate level will also stabilize.” 
 
Hanjin noted that they will “continue to promote various cost-saving measures while strengthening sales power to secure profitability."

In May, Hanjin reported a positive profit in the first quarter of 2015, marking the possibility of a turnaround for the company after years of quarterly losses.