Alphabiz - HMM Reports 56% Drop in Q1 Operating Profit Amid Middle East Disruptions

Photo: HMM

[Alpha Biz= Paul Lee] HMM reported a sharp decline in first-quarter earnings, with operating profit falling by more than half year-on-year due to reduced revenue and rising costs linked to Middle East disruptions.

The company announced on May 13 that its Q1 revenue totaled KRW 2.72 trillion, down 4.8% from KRW 2.85 trillion a year earlier. Operating profit dropped 56.2% to KRW 269.1 billion from KRW 613.9 billion in the same period last year.

The average Shanghai Containerized Freight Index (SCFI), a key benchmark for shipping rates, fell 14% year-on-year to 1,507 points in the first quarter. Although freight rates on Middle East routes surged due to geopolitical tensions, HMM suspended operations on those routes, resulting in lower revenue.

Freight rates on HMM’s core trans-Pacific routes also declined significantly, with rates on U.S. West Coast and East Coast routes falling 38% and 37%, respectively, compared to a year earlier.

Meanwhile, rising global oil prices increased cost pressures. The price of bunker fuel, used for shipping vessels, rose 9% year-on-year during the quarter. As a result, HMM’s operating margin declined to 9.9% from 21.5% a year earlier.

Looking ahead, the company expects continued volatility in the second quarter due to prolonged Middle East tensions, increased global shipping capacity from newly delivered vessels, and uncertainties surrounding U.S. tariff policies.

HMM said it plans to implement fuel optimization measures to mitigate the impact of sustained high oil prices.

Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)