Hyundai Merchant Marine (HMM) saw its losses widen in the first quarter of 2018, posting a net loss attributable to the owners of the parent of 175.8 billion won (U.S. $162.3 million) compared with a KRW 735.2 billion loss in the same quarter a year ago, according to the company’s most recent regulatory filings.
South Korea’s largest ocean carrier reported a smaller loss per diluted share, however, of KRW 921 compared with a 4,142 per share loss in the first quarter of 2017.
Revenues slid 14.6 percent year-over-year to 1.11 trillion won for the quarter, primarily due to excess supply, low shipping rates and high fuel costs, a company spokesperson told the South Korean media outlet Yonhap.
The latest swath of red ink for HMM comes just over a month after the carrier confirmed an order for 20 new containerships, 12 with more than 20,000 TEUs of capacity and eight 14,000-TEU vessels, as part of the company’s plan to grow its fleet to a carrying capacity of more than 1 million TEUs.
HMM said at the time the massive newbuild order would allow it to take advantage of increased economies of scale, as well as to meet looming environmental regulations set to come into effect in 2020.
Container freight rates have stabilized somewhat in recent weeks after a precipitous post-Lunar New Year decline, but analysts have questioned whether introducing another 350,000-plus TEUs into an already saturated market will only serve to perpetuate, and possibly even exacerbate, the imbalance of supply and demand that caused pricing to sink to below operating expenses in 2016.
According to a separate regulatory filing, HMM also plans to purchase the remaining stake it does not already own in a container terminal at the Port of Busan along with Singapore-based terminal operator PSA International.
HMM and PSA will acquire 40 percent and 10 percent shares, respectively, from private equity firm IMM Investment, bringing each company’s stake to 50 percent.
Under the new ownership structure, the terminal will change its name from the Hyundai Pusan New-Port Terminal to Korea Shipping Partnership Pusan Newport Terminal.
HMM said the move would help lower the carrier’s port handling costs and boost underlying profits.