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The prime strategic objective of the Hapag-Lloyd Group is to achieve long-term profitable growth measured on the basis of the development of the transport volume and the key performance indicators of EBITDA, EBIT and return on invested capital (ROIC).
The growing global demand for container transportation is the foundation of the organic growth that Hapag-Lloyd hopes to achieve. In general, Hapag-Lloyd intends to increase the transport volume organically in line with market growth.
The key internal performance indicators for the Company’s operating activities are earnings before interest, taxes, depreciation and amortisation (EBITDA) and earnings before interest and taxes (EBIT). EBITDA is an important indicator of the achievement of sustainable company results and gross cash flows. It has a special significance for capital-intensive companies. Hapag-Lloyd uses EBITDA as an important parameter for investment decisions.
The main factors influencing the development of the operating result indicators are transport volume, freight rate, the US dollar exchange rate against the euro and operating costs including bunker price.
Hapag-Lloyd is aiming to be profitable throughout the entire economic cycle, i.e. to achieve a return on invested capital (ROIC) that is at least equal to the Company’s weighted average cost of capital (WACC). In the first 9 months of 2020, Hapag-Lloyd generated a return on invested capital (ROIC) of 8.9 % (prior year period: 6.5%). The weighted average cost of capital (WACC) determined as of December 31, 2019, amounted to 6.8%.
The generation of sustainable cash flows, solid corporate financing, and therefore in particular a sufficient liquidity and equity base, are once again key cornerstones of the Hapag-Lloyd Group’s corporate strategy in the 2020 financial year. As at 30 September 2020, the Hapag-Lloyd Group had a liquidity reserve (consisting of cash, cash equivalents and unused credit lines) totaling EUR 1,319.9 million (31 December 2019: EUR 1,032.8 million). The equity ratio was 42.0 % as at the reporting date (31 December 2019: 40.9 %).
The Executive Board of Hapag-Lloyd AG first reported on the Group’s new strategy (“Strategy 2023”) at a capital market day in November 2018. Strategy 2023 is also described in detail on pages 58 ff. of the Group management report in the 2019 annual report.
The 3 core objectives of Strategy 2023 are:
The focus of Strategy 2023 is on becoming number one for quality and achieving profitable growth. The basis is continuous and consistent cost and revenue management as well as improving internal processes through greater agility and taking advantage of technological opportunities, such as digitalisation and automation. The most important elements of Strategy 2023 are presented in the following illustration. The focus here is on clearly differentiating the Company from its competitors.
Strategy 2023, including the aforementioned targets and goals, will become even more concrete as the strategy is implemented and it will be flexibly adapted to the changing operating environment.
Due to the overall positive business development in the first 9 months, the stable development of freight rates combined with persistently low bunker costs, the cost reduction related to the PSP measures as well as the expected higher demand for transport capacity in the fourth quarter, the Executive Board decided on 15 October 2020 to raise its earnings forecast published in March 2020. For 2020, the Executive Board now expects EBITDA of EUR 2.4 – 2.6 billion (previously: EUR 1.7 – 2.2 billion) and EBIT of EUR 1.1 – 1.3 billion (previously: EUR 0.5 – 1.0 billion). The forecast is based on the assumption of a slight decrease in the transport volume and a moderate decline in the average bunker consumption price compared with the previous year. An average USD / EUR exchange rate of 1.14 is assumed for 2020. In view of the ongoing risk regarding the progression of the COVID-19 pandemic and the associated economic effects, the forecast remains subject to uncertainty.
|Key benchmark figures for the 2020 outlook||Updated outlook|
|Global economic growth (IMF)||-4.4%|
|Increase in global trade (IMF)
|Increase in global container transport volume (Clarksons, Seabury)||-3.0%|
|Transport volume, Hapag-Lloyd Group
|Average bunker consumption, Hapag-Lloyd Group||Moderately decreasing
|Average freight rate, Hapag-Lloyd Group||Slightly increasing|
|EBITDA (earnings before interest, taxes, depreciation and amortisation), Hapag-Lloyd Group||EUR 2.4 - 2.6 billion
|EBIT (earnings before interest and taxes), Hapag-Lloyd Group||EUR 1.1 - 1.3 billion|