Hanjin Shipping Co. (117930)’s Chief Executive Officer Kim Young Min resigned, taking responsibility for two successive years of losses at South Korea’s largest shipper and a delay in getting financial support from creditors.
Kim, 58, will stay until a replacement is found, the Seoul-based company said in an e-mailed statement today. Kim was appointed as CEO in January 2009 after 20 years with Citigroup Inc. Hanjin posted a loss in each of the past 10 quarters.
Shares of the container-to-commodity shipper, which last month received a loan from its group affiliate Korean Air Lines Co. to ease a “temporary” liquidity shortage, fell in Seoul trading. Laden with debt, Hanjin is among liners trying to overcome a global overcapacity and a slump in shipping rates, factors that pushed rival STX Pan Ocean Co. to file for a court receivership in June.
“There’s no good news for Hanjin right now,” said Yun Hee Do, an analyst at Korea Investment & Securities Co. in Seoul. “The company hasn’t been able to make money recently and its interest payment has been increasing. There’s quite a sizable amount of debt coming due next year for Hanjin.”
Korean Air said last month it will provide 150 billion won ($142 million) to Hanjin to help ease the company’s liquidity shortage. The shipping line has 736.4 billion won of debt and loans maturing next year, compared with 58 billion won in 2013, according to data compiled by Bloomberg. Its cash and cash equivalent was 506.6 billion won at the end of June.
Korean Air, the nation’s biggest airline, is the largest shareholder of Hanjin’s parent Hanjin Shipping Holdings Co. They are both part of Hanjin Group.
Hanjin fell as much as 1.4 percent to 7,000 won before trading at 7,060 won as of 11:32 in Seoul. The stock was up by much as 3 percent earlier today. Hanjin has slumped 41 percent this year, compared with a 0.6 percent decline in the benchmark Kospi index.
Hanjin Shipping narrowed losses to 121.8 billion won in the first half, from 346.6 billion won loss a year earlier.
To contact the reporter on this story: Kyunghee Park in Singapore at firstname.lastname@example.org
It's not good news for most shipping companies these days. Will still be a tough few years, and still waiting to see if more consolidation in the industry.