[120112.EN.SEA] Moody's Downgrades Outlook For Hapag-Lloyd To 'Negative' From 'Stable'

MOODY's ratings agency has downgraded the outlook of Hanover's Hapag-Lloyd to "negative" from "stable" because of the carrier's weaker than expected performance in the first three quarters.

The downgrade of Hapag-Lloyd's outlook comes after its largest shareholder TUI announced its intention to sell its 49 per cent shares, noted Newark's Journal of Commerce, adding that another leading ratings agency Standard and Poor's had already downgraded the company's outlook from "stable" to "negative" in September because of unsatisfactory half-year result.

Yet Hapag-Lloyd has been one of the few carriers that has run in the black over the last three quarters.

According to Alphaliner it was the only carrier managed to avoid negative operating figures in the third quarter with two per cent margins and an operating profit of US$48 million. The shipping line posted a $54.5 million profit total in the last two quarters, which was able to offset a $31.8 million loss in the first quarter.

But not all prospects are negative for Hapag-Lloyd. Saying that the carrier had sufficient liquidity, and with fully financed newbuildings to be delivered in the next two years, Moody's praised Hapag-Lloyd for its strong business model with its healthy market share and its flexible cost base.

Additionally, the rating agency reaffirmed Hapag-Lloyd's B1 corporate family rating and probability of default rating. Moody's also reaffirmed the company's B3 unsecured rating in relation to the $629.7 million worth of unsecured notes due in 2015, as well as another batch of $250 million senior unsecured notes due in 2017.

Looking ahead, Moody's said the outlook of the container shipping industry is gloomy due to serious overcapacity problem, which has pulled down rates. Also, since more new capacity will be deployed in 2012, greater challenge for the industry is expected.

"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," said the Moody's note.

Source : HKSG.