Hanjin Shipping's net loss balloons to 199.8bn won in second quarter

Hanjin Shipping Co., South Korea's leading shipping line, said Wednesday its second-quarter net loss ballooned to 199.8 billion won (US$195.2 million), largely due to a drop in business and unfavorable exchange rates.
The quarterly net loss grew 148.5 percent from 80.4 billion won in the April-June period of 2013, the company said in a regulatory filing.
Sales were also down 14.1 percent on-year from 2.49 trillion won to 2.14 trillion won, but operating profit bounced back into positive territory of 29 billion won from a loss of 98 billion won a year earlier.
The shipping line said the weak quarterly net numbers were a result of foreign currency translation losses and less revenue from sales of its old ships to foreign buyers.
"The former are 'paper losses' and do not affect the overall cash flow of the company," Hanjin said in a press release.
The company, an affiliate of Korean Air Lines Co., the country's largest full-service airline, said sales earnings took a hit because of a drop in freight orders, but improvements in container shipment operations contributed to significant gains in operating profit for the three-month period.
"If examined separately, the operating profit for the container business stood at 37.5 billion won, and was further helped by the scaling back of non-performing routes and company-wide efforts to cut costs and conserve fuel," it said.
It added that with demand for container traffic likely to pick up in the coming months, along with more bulk cargo business, the company should be able to stay in the black in terms of operating profit.
Bulk cargo could receive a boost through shipments of iron ore by key exporters, as well as the start of the grain transport season in the United States.
The firm said that with cost cutting measures starting to take effect in earnest from the third quarter onwards, the company's profit margins should get a boost.
Hanjin, like many shipping lines, has been struggling with the slowdown in global economic growth in recent years and stiff competition from rivals.
For the six months of this year, Hanjin's bottom line stood at minus 424.3 billion won, a 268.6 percent increase from a loss of 115.1 billion won for the first half of 2013.
Its sales earnings were down 10.9 percent, from 4.83 trillion won to 4.29 trillion won. Operating losses reached 33.2 billion won, an improvement of 83.2 percent from 197.1 billion in the red tallied a year earlier.