South Korean financially-troubled container shipping companies Hanjin Shipping and Hyundai Merchant Marine (HMM) have concluded the first quarter of this year by booking more losses.
HMM’s operating loss for the quarter hit KRW 162.9 billion (USD 139 million) against KRW 253.5 billion from the corresponding period last year. Its net loss dived to KRW 276,1 billion further widening from KRW 44.5 billion loss from a year earlier. Sales totaled in KRW 1.22 trillion, compared with KRW 1.57 trillion in Q1, 2015.
Hanjin Shipping plunged to KRW 261.1 billion net loss (USD 221.67m) year-on-year from a profit worth KRW22.9 billion. The company’s operating loss totaled in KRW 116 billion, considerably slashed from the last year’s profit of KRW 155 billion. The company’s sales for the quarter amounted to KRW 1.59 trillion also a major fall from KRW 2.15 trillion a year ago.
Both companies are in talks with ship owners on potential freight rate cuts amid cost-cutting measures aimed at boosting their liquidity. The Korea Development Bank is leading the companies’ talks with creditors aimed at ensuring the survival of the duo.
Based on the most recent reports, HMM is to become a subsidiary of state-owned KDB within a debt-for-equity deal so as to avoid the company from going bust.
On the other hand, Hanjin Shipping has received approval from creditors at the beginning of May to move forward with its voluntary restructuring proceedings.
The restructuring is expected to facilitate the company’s push for normalization of operations along with discussions on charter rate reduction and alliance reorganization.
On that note, Hanjin managed to secure a spot in the new carrier alliance announced last week together with Hapag-Lloyd, “K”Line, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Yang Ming. HMM is still in talks on potential membership. However, the company believes that this is just a matter of time, pending completion of its business normalization process.
World Maritime News Staff