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Hapag-Lloyd debt balloons to $8.34bn post UASC merger

Hapag-Lloyd debt balloons to $8.34bn post UASC merger

Following it's merger with UASC Hapag-Lloyd’s debt has ballooned to $8.34bn and the line says it does not plan to newbuildings.

Hapag-Lloyd and UASC officially completed their merger in May this year making it the world’s fifth largest container line.

In its Q2 results Hapag-Lloyd reported what it described as a “considerable change” in its financial debt with a $3.92bn increase to $8.34bn. It said that $3.91bn of this increase as 30 June 2017 came from the inclusion of UASC’s debt.

“One area of concern is Hapag-Lloyd’s very high debt burden,” analyst Alphaliner commented in its weekly report.

UASC incurred its hefty debt position on the back of its investment in a series of 18,800 teu ultra-large containerships (ULCs).

The 18,800 teu boxships are the first ULCs in Hapag-Lloyd’s fleet and the company said on Tuesday it had no planned vessels investments in the coming years.

With improving container shipping markets Hapag-Lloyd was in the black in Q2 with a $17.6m profit compared to $110.9m loss in the same period a year earlier, and $66.1m loss in Q1 this year. Revenues for Q2 were up 26% year-on-year at $2.63bn.

Hapag-Lloyd is targeting $435m a year in savings from 2019 from realisation of synergies from the merger.

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