Hanjin Had Record Sales, Continuing Loss in 2012

Hanjin said overcapacity will continue to be an issue in 2013

South Korea-based Hanjin Shipping (Hanjin) said it achieved sales of KRW 10.59 trillion ($10.39 billion) in 2012, the highest in its history, but still reported a net loss for the year.

The company had a net loss of KRW 638 billion ($587 million), largely due to currency translation issues, and an operating loss of KRW 109.8 billion (100.9 million).

The company's overall operating loss was driven by the KRW 162.8 billion ($149.5 million) operating loss in its container division, which the firm said was due to low freight rates and an oversupply of capacity in the market.

However, Hanjin said it reduced its operating loss by 78.6 percent compared with 2011 by raising freight rates on the main service lanes and reducing costs.

Hanjin said its shipment volume grew 7.4 percent year-on-year, and freight rates rose 5.3 percent.

The company's bulk division achieved a KRW 19.2 billion ($17.6 million) operating profit.

Looking ahead to 2013, Hanjin said it expects to make a net profit for the year as economic recovery in the U.S. and China, and stabilisation in Europe, helps raise shipment volumes.

It also predicts that the delivery of "mega-vessels" will maintain the overcapacity in the container market, but carriers will continue to control the market through scrapping, slow steaming, service rationalisation, idling, and temporary voyage cancellation.

"Hence, profitability is expected to improve because of timely rate restoration by maintaining high operating rate and because of cost-reduction efforts," the company said.

For the fourth quarter of 2012, the company had sales of KRW 2.6 trillion ($2.4 billion), an operating loss of KRW 60.9 billion ($56.0 million), and a net loss of KRW 251.1 billion ($230.8 million).

Shipping services company Clarkson Plc. has predicted that overcapacity in the container shipping market will increase in 2013.