Hapag-Lloyd to Omit UASC in 2017 Financials

 

A statement from the company said that the present outlook for the business 2017 will be omitted following the merger of Hapag-Lloyd and UASC which is expected to be completed at the end of May 2017.

 

With the publication of the next financial report,Hapag-Lloyd plans to issue an outlook for the business 2017 of the combined group which will include the business activities of UASC as well as the UASC financial statements for 2016. 

 

The planned merger should generate annual synergies of USD 435 million from 2019 onwards, thanks in particular to the optimisation of joint networks and administrative functions. 

 

Following the closing the timely integration of the UASC business activities and the realisation of the related synergies will have top priority. One-off expenses of approximately USD 150 million are likely to arise from the transaction and implementation of the merger.

 

The merger of Hapag-Lloyd and UASC was not completed at the time of the preparation of the Q1 2017 interim financial report. Although the current earnings forecasts do not include revenue and earnings effects or changes in value following the planned consolidation of UASC, the material factors arising from the planned merger with UASC will be discussed below. 

 

Hapag-Lloyd released indicative pro-forma figures for UASC when the corporate bonds were issued at the start of 2017. 

 

They showed that UASC recorded a transport volume of around 2.3 million TEU in the first nine months of 2016. The average freight rate was USD 610/TEU. The transport volume and freight rate figures were taken from UASC’s unaudited management report, and the following figures from the income statement were adjusted to Hapag-Lloyd’s financial reporting methods. 

 

Revenue came to EUR 1,615.6 million. In the first nine months of 2016, UASC generated EBITDA of EUR 94.6 million, EBIT of EUR –102.8 million and earnings after tax of EUR –209.1 million. The planned merger with UASC would enable the Hapag-Lloyd Group to considerably expand its business activities in 2017. The integration of UASC’s business activities into the Hapag-Lloyd Group would also significantly alter the balance sheet. This affects property, plant and equipment and the level of debt.

 

Significant risks which could negatively affect the business development in 2017 are, besides general macro-economic and sector-specific risks described in the risk report in the Group management report of the 2016 annual report, the economic and accounting effects of the intended merger with UASC.