Hapag-Lloyd Shares Drop on Lower Freight Rates

Shares of Hapag-Lloyd, a German shipping company, fell after the company reported disappointing preliminary fourth-quarter earnings due to significantly lower freight rates. The company's results were below analysts' expectations.

As of 0947 GMT on Tuesday, Hapag-Lloyd shares were trading 9.6% lower at EUR140. However, they have still managed to remain up 3.7% since the beginning of the year.

For the fourth quarter, Hapag-Lloyd recorded a loss before interest and taxes of approximately 200 million euros ($216.7 million), compared to a profit of EUR3.3 billion in the same period the previous year.

Revenue for the quarter dropped to EUR3.8 billion from EUR7.8 billion, while earnings before interest, taxes, depreciation, and amortization fell to about EUR300 million from EUR3.8 billion.

Analysts had expected Hapag-Lloyd to report a quarterly operating loss of EUR16.2 million, earnings before interest, taxes, depreciation, and amortization (EBITDA) of EUR471.2 million, and revenue of EUR3.83 billion, according to consensus estimates provided by Visible Alpha.

UBS analysts commented in a research note that the increase in Hapag-Lloyd's share price, compared to that of Danish shipping giant A.P. Moeller-Maersk, is unjustified considering the disruptions in the Red Sea and heightened freight rates.

As of the close on Monday, Hapag-Lloyd shares had gained almost 15% since the beginning of the year, whereas Maersk was up 3%.