Hyundai Merchant Marine (HMM) announced a third-quarter loss on 17 November amid ongoing speculation of a merger with its bigger compatriot Hanjin Shipping.
South Korea’s second-biggest shipping company said it incurred a KRW24 billion (USD20.46 million) loss for the third quarter of 2015, reversing a KRW204 billion net profit for the third quarter of 2014.
The company blamed intense competition and an imbalance of demand and supply in the container shipping trades for its poor results.
HMM said it would continue to work on profitability by reducing costs.
Its balance sheet continues to be a source of concern even as HMM informed IHS Fairplay in November that its divestments of assets and shareholdings in related companies would boost its liquidity.
HMM’s current assets stand at KRW1.19 trillion while current liabilities stand at KRW3.44 trillion, translating into a working capital deficit of KRW2.25 trillion as at 30 September 2015. On the same date in 2014, HMM had a working capital deficit of KRW2.28 trillion.
HMM has divested its LNG businesses, US container terminals, and dedicated bulk shipping services, on top of sales of stakes in Hyundai Logistics and tour operator Hyundai Asan. The company has also sold two of its three VLCCs.
While it is more or less focusing on container shipping, the segment is also depressed because of an economic slowdown.
With Hanjin Shipping in an equally gloomy situation, South Korean media reported that the government had asked the shipping company to consider merging with HMM. However, the Ministry of Oceans and Fisheries issued a statement saying it is important for the two companies to continue their independence for the sake of South Korean economy.
Source: IHS Fairplay
Source: IHS Fairplay