HMM Q3 net profit jumps fivefold as freight rates more than offset high oil prices

[Financial News] HMM, the country’s largest Korean-flagged shipping company, saw its third-quarter net profit surge fivefold from a year earlier. High oil prices have persisted amid geopolitical factors such as the wars in Ukraine and Iran, but freight rates rose even more, boosting profitability.
On the 12th, HMM reported third-quarter revenue of KRW 4.1271 trillion and operating profit of KRW 1.3947 trillion. Compared with the same period last year, revenue rose 52% and operating profit surged 370%. Net profit, in particular, reached KRW 1.5352 trillion—higher than operating profit—thanks in part to interest income generated by strong cash liquidity. That was up 405% from a year earlier.
The strong third-quarter results further widened the gap from last year in the cumulative results for the first three quarters. Revenue totaled KRW 10.2478 trillion, operating profit KRW 2.0179 trillion and net profit KRW 2.3002 trillion. They rose 25%, 76% and 52%, respectively.
Unusually high freight rates were behind HMM’s sharp improvement in results. Geopolitical factors such as war-related developments pushed up oil prices and costs, but for the same reasons, restrictions on passage drove freight rates higher. Seasonal factors related to climate change added to the pressure. Drought restricted passage through the Panama Canal, while congestion worsened further at U.S. and European ports struggling with strikes. In China, typhoon damage also made it difficult for ships to dock. These factors helped lift operating profit in HMM’s container division by 55.3% to KRW 1.6353 trillion in the third quarter.
An HMM representative said, “Congestion has continued to worsen due to the impact of U.S. tariffs in the first half of this year, geopolitical factors such as the wars that have continued to this day, and climate factors, so freight rates remain high even as we move into the fourth quarter.” The representative added, “There is some variation due to high oil prices, but with fixed costs at similar levels, higher freight rates are driving an upward trend in revenue and operating profit.”
Bulk operating profit rose 418.5% from a year earlier to KRW 378.4 billion. The bulk segment’s share of operating profit increased from 6.4% last year to 18.8% this year. This resulted from a major expansion of the bulk fleet, from 44 vessels in the first quarter of last year to 60 now, as well as a broader base of high-quality long-term contracts and a policy of avoiding short-term charters, which have steadily boosted earnings. Another 22 bulk carriers are scheduled for acquisition, gradually bringing the fleet to a total of 82 vessels.
HMM is also working to prepare for the future. It has invested KRW 6 trillion this year alone in fleet expansion, logistics infrastructure, technology development and other areas, bringing cumulative investment since March last year to KRW 12 trillion. In terms of fleet expansion, its target by 2030 is 166 container ships and 110 bulk carriers. The company plans to invest a total of KRW 29 trillion.
Confident that profitability will continue to improve, HMM is also pursuing substantial shareholder returns. On the same day, it announced that it would return at least 30% of net profit through dividends and share buybacks and cancellations by 2030. It scrapped its previous 5% market dividend yield benchmark and set a single standard: a dividend payout ratio of at least 30%. Last year, HMM recorded a shareholder return ratio of 72.8%, including a KRW 528.6 billion dividend for fiscal 2024 and the cancellation of KRW 2.1432 trillion worth of treasury shares.

[email protected] Kim Yun-ho Reporter