Foreword
View the video statement by the Chairwoman of the Executive Board in the online Annual Report.
Dear shareholders,
The global economy faced major challenges in 2023. The ongoing war in Ukraine, the military escalation in the Middle East, rising geopolitical tensions, high inflation and interest rate hikes all impacted the economy and continued to impede the recovery from the pandemic. Over the course of the year, the outlook became increasingly gloomy, with economic growth in Germany even turning negative towards the end of 2023.
Undaunted by this challenging environment, HHLA continued to pursue one of the biggest transformation programmes for its Hamburg facilities in decades – in the firm belief that now is the right time to invest in a successful future and the resilience of its business model. For example, Germany’s largest container terminal at Burchardkai is currently being retrofitted during day-to-day operations to automate the storage crane systems and horizontal transport. At the same time, new control software is being installed at all terminals in order to network the entire handling process, while our corporate functions continue to digitalise their workflows and make preparations for the switch to the new SAP generation S/4HANA. In the past year, we also pressed ahead with new growth areas and sustainability initiatives as part of our mission to become climate-neutral. In our view, these are decisive competitive factors and key differentiators for the future.
While the above-mentioned economic weakness resulted in even lower throughput volumes than anticipated at the beginning of the year, there were inflation-induced cost hikes for materials, maintenance and personnel. This is clearly reflected in the company’s earnings during this transition phase of the transformation process. The forecasts issued by leading economic research institutes for 2024 are equally cautious. Added to this are changes in the logistics industry, such as the restructuring of shipping company alliances, which present both new challenges but also new opportunities for HHLA.
Undaunted by the challenging environment, HHLA continued to press ahead with its investments in modernisation, sustainability initiatives and new growth areas in 2023.
Against the backdrop of these developments, we also evaluated the announcement by the Free and Hanseatic City of Hamburg – the majority owner of HHLA – that the company should be controlled jointly in future with Mediterranean Shipping Company (MSC) via Port of Hamburg Beteiligungsgesellschaft SE. To this end, the City of Hamburg declared its intention in September 2023 to maintain a 50.1 percent share while MSC would hold a share of up to 49.9 percent. In accordance with this agreement, MSC made a voluntary public takeover bid to our shareholders in October, which we, the Executive Board of HHLA, closely examined together with the Supervisory Board before issuing our detailed assessment in the form of a “reasoned statement”. After weighing up many important aspects and taking into account an external “fairness opinion”, the Executive Board and Supervisory Board announced their recommendation to accept the offer.
One prerequisite for this recommendation was that the meetings between the City of Hamburg and MSC succeeded in achieving a shared understanding of how HHLA and its business model can be safeguarded over the long term. In a preliminary agreement on this matter, HHLA received various commitments: € 450 million of additional equity to strengthen the transformation process already underway, significant commitments regarding the workforce, and a commitment to uphold the neutrality of the business model, as well as the strategy and investment planning.
Subject to conditions precedent, such as approval by the Hamburg Parliament, the transaction will be completed in mid-2024. At the time of writing this report, not all conditions had yet been met. In general, we regard this offer as proof of the attractiveness of HHLA as a European logistics company with a unique network of seaport terminals, hinterland connections and intermodal hubs.
Despite all the economic obstacles, HHLA continued to drive its corporate development in 2023. We not only put new storage crane systems into operation in Hamburg but also developed a new digital solution for trucks entering our terminals. In Tallinn, we joined forces with FERNRIDE to test an innovative system for self-driving vehicles. Our sustainability efforts also made good progress: we now offer more European connections via our rail subsidiary METRANS in order to shift even more goods from the road to more eco-friendly railway transport. And together with our partners, we began work to provide container ships in the Port of Hamburg with shore-side electricity. These activities underline our efforts to secure the company’s future success while promoting the development of sustainable, innovative solutions for the logistics landscape of the future. As challenging as these uncertain times may be, they also present us with a wealth of opportunities.
Yours,
Angela Titzrath
Chairwoman of the Executive Board