Pan Ocean Q3 operating profit nears 200 billion won, highest in four years on high freight rates

[Financial News] Pan Ocean's third-quarter revenue topped 2 trillion won, while operating profit came in close to 200 billion won. The results were driven by a surge in shipping freight rates due to geopolitical factors.
On the 2nd, Pan Ocean released preliminary third-quarter results showing revenue of 2.0973 trillion won and operating profit of 197.4 billion won. The figures were up 65.2% and 57.7%, respectively, year on year. Operating profit in particular was the highest in four years, since the third quarter of 2022.
The main driver of the strong results was the company's core dry bulk segment. It posted operating profit of 100.6 billion won, up 82.6% year on year. Demand for steel products and coal rose even as weather problems, including typhoons, restricted passage through the Suez and Panama canals.
Container shipping operating profit rose 134.8% year on year to 17.5 billion won, as cargo volumes increased during China's National Day holiday while congestion in Shanghai and Ningbo reduced available vessel capacity. The tanker segment posted operating profit of 34.8 billion won, up 71.4% from a year earlier, partly due to deliveries of very large crude carriers (VLCCs) under long-term contracts with SK Energy Co., Ltd. The liquefied natural gas (LNG) segment operated steadily on the basis of long-term contracts, with operating profit rising 7.6% year on year to 43.6 billion won.
The market consensus is that Pan Ocean's full-year operating profit could reach 800 billion won. With high shipping freight rates persisting, earnings at shipping companies—not just Pan Ocean—are increasingly likely to peak this year.
HMM, the largest player, is expected to see third-quarter operating profit surge 220% year on year to nearly 1 trillion won. Hyundai Glovis, meanwhile, reported third-quarter revenue of more than 9 trillion won, setting a new quarterly record.
The question is what will happen when geopolitical factors such as wars, which are driving freight rates higher, begin to subside. Newbuild deliveries are also mounting, so freight rates could fall and securing cargo could become more difficult. HMM and Pan Ocean are investing in fleet expansion to boost earnings, but those investments could come back to haunt them as losses.

[email protected] Kim Yun-ho Reporter