HMM achieves near $1 bn income milestone Q1 as it bulks up under state support

South Korea’s sea flag carrier HMM Co. achieved 1 trillion won ($884.25 million) milestone in three-month operating income in the first quarter as it benefited from a super cycle stemming from faster-than-expected global recovery and strengthened freight rates.

HMM in its regulatory filing on Friday posted a consolidated operating profit of 1.02 trillion won in the January-March period in a dramatic turn of fortune from a loss of 2 billion won in the same period a year earlier and outperforming its hitherto annual best of 980 billion own in 2020.

The shipbuilder swung to a net profit of 154 billion won from a loss of 65.6 billion won a year ago, while sales added 85 percent on year to 2.42 trillion won.

Shares of HMM closed Monday 1.95 percent lower at 42,850 won.

The profit surge was largely driven by the strengthening in freight rates as carriers could not keep up with soaring shipping demand due to faster-than-expected economic rebound from aggressive stimulus spending by major economies and the rapid rollouts of Covid-19 vaccines across the world.

HMM rode on the boom through fast increase in super large carriers to its major international routes on top of membership in The Alliance, one of the world’s largest shipping network.

It deployed all 12 of its 24,000 twenty-foot equivalent unit (TEU) super-large container vessels it secured in 2018 with the aid from the government.

HMM’s fortune could symbolize revival of the Korean maritime power after global No. 7 Hanjin Shipping went under in 2016 after a decade-long slump from weakened competitiveness against cheaper Chinese competition.

HMM was made a substitute for Hanjin through government-led bailout and support for the sea transportation and shipbuilding industry.

HMM and the Korean government are prepping to order 12 units of 13,000 TEU neo-panamax container ships, worth $1.4 billion in total, to bolster its competitiveness on American routes.

The Korean government is seeking to expand the country’s total share in the global shipping industry by 1 percentage point by carrying out additional investment that is twice larger than market average on top of the 13,000 TEU neo-panamax container ships, said Uhm, Kyung-ah, an analysts at Shinyoung Securities, expecting such investments would support the mid-to-long term growth of the country’s shipping industry.

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