S&P changes Hapag-Lloyd view to positive

S&P said it revised the outlook for Hapag-Lloyd to positive from stable and affirmed the company’s B+ rating as well as the B- rating on its senior unsecured debt.

“The positive outlook reflects our view that Hapag-Lloyd could maintain S&P Global Ratings-adjusted funds from operations (FFO) to debt of more than 20%, which is our threshold for a BB- rating, if container shipping industry price discipline enables the company to largely pass through higher International Maritime Organization (IMO) 2020 compliance-related fuel expenses and it keeps allocating discretionary cash flow to debt reduction,” said S&P in a press release.

Hapag-Lloyd will earn higher EBITDA this year despite sluggish global demand and trade volumes. In the first nine months of this year, Hapag-Lloyd reported EBITDA (pre-International Financial Reporting Standards [IFRS] 16) of €1.17 billion, which represents a significant improvement compared with €812 million in the first nine months of 2018, the agency said.

The company has also lowered its operating expenses, which has helped its profitability, S&P said.

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