Tui closer to firmer price for container unit

Germany’s Tui has strengthened its chances of achieving a good price for Hapag-Lloyd after the container shipping business announced the average price it received for shipping a container was 30 per cent up in the first half over last year.

The strong performance helped the container shipping division report underlying first-half pre-tax profits – adjusted for the effects of disposals, costs of purchases and other one-off transactions – of €133m ($196.7m) against a €31m loss last year, on turnover up marginally to €2.96bn, from €2.9bn in the first half last year.

Hapag-Lloyd’s profits helped to offset pre-tax losses for the group, which also operates substantial tourism operations, that deepened to €682m for the first half, against last year’s loss of €338m, on turnover of €8.38bn, up 31 per cent.

Under pressure from shareholders, Michael Frenzel, chief executive, earlier this year launched a strategic review of Hapag-Lloyd’s future in Tui. According to people involved, Tui is holding talks with two potential buyers – Singapore’s Neptune Orient Lines and a group of Hamburg-based businessmen. Mr Frenzel had been the leading champion of Tui’s “two pillar” strategy of investing in both tourism and shipping.

Container lines, which depend heavily on moving consumer goods from Asian manufacturing centres to consumers in Asia, North America and Europe, had been expected to suffer during the economic slowdown.

NOL last week announced second-quarter profits shar­ply down on last year’s.

The holding-up of Hapag-Lloyd’s prices in such a difficult environment is likely to underline the argument Tui has made to potential purchasers that the business is unusually strong and resilient to economic shocks.

The higher rates were struck by Hapag-Lloyd while container traffic saw a relatively modest increase, with traffic on some key routes declining. Hapag-Lloyd carried 1.43m 20-ft equivalent units (teu) of containers in the first half, 3.7 per cent up from 1.38m in the first half of 2007.

In most years recently, container volumes for many shipping companies have shown double-digit percentage point increases.

The main tourism operation – London-listed Tui Travel, of which Tui owns 51 per cent – reported underlying losses, adjusted for the same factors as the shipping business’s figures, of €169m for the first half on €213m last year.

Turnover rose to €8.05bn from €6.06bn last time. The increase resulted largely from last year’s merger between the business and the UK’s First Choice.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.