Tuesday, December 20, 2011

Moody downgrades Hapag-Lloyd

Moody's has downgraded the outlook for Hapag-Lloyd. This should come as no
surprise, considering how bad the results have been for all container carriers.

I rather doubt TUI will find anyone to buy the rest of their stake in this

At least, not for what they are asking.

From The Journal of Commerce

Moody’s has changed its outlook for Hapag-Lloyd to “negative” from “stable” after the German carrier had a “weaker than expected performance” during the first three quarters of 2011.

The downgrade of Hapag-Lloyd’s outlook comes as TUI attempts to sell its 49 percent stake in the company. Standard and Poor’s in September downgraded the company’s outlook from “stable to negative,” citing lower than expected first-half year profitability.

Hapag-Lloyd has been one of the few container lines to stay in the black over the last three quarters. A $54.5 million profit total in the last two quarters offset a $31.8 million loss in the first quarter.

Moody’s said the container shipping industry has performed poorly because an oversupply of capacity has forced carriers to pull down rates. The rating’s agency said the highly competitive industry would be further challenged as new capacity is deployed next year.

“These factors have exerted pressure on operators to expand their market shares, making it difficult for the companies in the sector, including HL, to pass on material cost increases, despite good traffic volumes,” Moody’s said.

The ratings agency said Hapag-Llody has a strong business model featuring solid market shares and a flexible cost base. Moody’s said the company’s liquidity profile is adequate, with all of Hagag-Lloyd's new shipbuilding scheduled for delivery over next two years fully financed.

The ratings agency reaffirmed Hapag-Lloyd’s B1 corporate family rating and probability of default rating. Moody’s also reaffirmed the company’s B3 unsecured rating assigned to the $629.7 million and $250 million worth of senior unsecured notes maturing in 2015 and 2017, respectively.

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