HHLA share

Exceptional year on the stock exchange

Despite continuing major geopolitical uncertainties, the German benchmark indices performed surprisingly well in the past year. China’s unexpected abandonment of its zero-COVID policy and the decline in energy prices following the launch of Germany’s energy price caps helped the country’s stock markets get off to a positive start in the new year. This upbeat market sentiment came to an abrupt end, however, with the closure of three regional US banks in early March. The resulting insolvency of the major Swiss bank Credit Suisse led to heightened uncertainty and greater volatility on the capital markets. At the same time, market sentiment was burdened by the ongoing weakness of the German economy and Chinese industrial output figures which fell short of expectations. Nevertheless, falling inflation rates gave rise to optimism on the markets from April onwards and fuelled hopes of an imminent end to the cycle of US and eurozone interest rate hikes. Contrary to expectations, however, the European Central Bank (ECB) raised its base rate in August and September by 0.25 percentage points each time to reach 4.5 %. The ongoing economic slump continued to hinder any recovery of share prices and repeatedly caused the benchmark index to sink to ever lower levels. It was only when the US Federal Reserve signalled the possibility of lower interest rates that sentiment improved and shares began to rally towards year-end: in early December the DAX broke through the 17,000-point mark for the first time with a new all-time high of 17,003 points. It closed the year with a rise of 20.3 % to 16,752 points. The SDAX stood at 13,960 points at year-end, representing growth of 17.1 % in 2023.

Share price development 2023

Volatile development of HHLA share

The HHLA share began the year at €11.94 and benefited from the positive market environment at the start of the year. After some profit-taking, the share price stabilised at around €12.90. With the publication of the preliminary, unaudited annual results for 2022 in mid-February, the company announced a subdued outlook for the first quarter of 2023 in the light of ongoing geopolitical tensions, sanctions by the European Union and weaker economic growth. As a result, the share price dipped noticeably. After communicating a cautiously optimistic forecast for the development of business in 2023, as part of the reporting for 2022 in late March, the share price recovered. This positive trend was supported in early May by the German government’s decision to approve the minority interest of the Chinese company COSCO SHIPPING Ports Limited (CSP) in Container Terminal Tollerort (CTT) of 24.9 %. Following the Annual General Meeting and payment of the dividend in mid-June, the share was traded at a corresponding discount. In an ad-hoc announcement in late July, HHLA downgraded its outlook for the 2023 financial year in view of further weak economic growth. The share price’s downward trend continued with the publication in mid-August of weak half-year figures due to the macroeconomic situation. On 13 September, the announcement of the submission of a voluntary public takeover bid by the Mediterranean Shipping Company (MSC) with an offer of €16.75 per class A share saw the share price climb from €11.54 to €17.20. The following day, the share price reached a year-high of €17.62 but quickly stabilised around the offer price. After publication of MSC’s takeover bid in mid-October, the HHLA Executive Board and Supervisory Board issued a joint statement on 6 November recommending that shareholders accept the offer. As a result, trading volumes rocketed and the share price declined slightly. By the end of the year, the share price had consolidated around the offer price and closed at €16.76 on 29 December 2023. This represents year-on-year growth of 40.8 %. For more information on the share price performance and the HHLA share, please visit https://hhla.de/en/investors.

Changed shareholder structure after takeover bid

Shareholder structure for listed class A share

as of 31.12.2023

On 13 September 2023, HHLA was informed by its majority shareholder, the Free and Hanseatic City of Hamburg (FHH), that it had come to an understanding with MSC as part of an investment agreement concerning a strategic investment in HHLA. According to this agreement, the City of Hamburg will continue to be the majority shareholder and will run the company together with MSC in future. To this end, the City of Hamburg intends to maintain a share of 50.1 % while MSC will hold a share of up to 49.9 %. The public takeover bid with the respective offer document was published by MSC on 23 October 2023.

As a consequence, the shareholder base changed significantly in 2023. With regard to the listed class A shares, FHH remained the company’s largest shareholder with an unchanged stake of 69.3 %. However, as at 31 December 2023, MSC had already indirectly acquired class A shares amounting to 12.9 % on the market via SAS Shipping Agencies Services Sàrl (SAS). As part of the takeover offer, an additional 10.1 % of the class A shares were tendered to MSC by shareholders by the end of the extended acceptance period on 7 December 2023. Subject to the completion of the transaction, this corresponds to 23.0 % of the share capital of the listed Port Logistics subgroup. The free float portion of A shares fell accordingly to 7.6 %.   

With regard to the HHLA Group's share capital (including the unlisted class S shares), 9.7 % of the free float class A shares were tendered to MSC by the end of the extended acceptance period on 7 December 2023. As of 31 December 2023, the shipping company also held shares acquired on the market amounting to 12.4 % of HHLA's share capital. Subject to the completion of the transaction, a total of 22.2 % of the share capital can thus be allocated to the shipping company as of 31 December 2023. Together, the City of Hamburg and MSC would therefore hold 92.5 % of the HHLA Group's share capital as of 31 December 2023. For more information on the shareholder structure, please visit the HHLA website. https://hhla.de/en/investors/share/shareholder-structure

The completion of the transaction is still dependent on certain regulatory approvals that are presented in the offer document, as well as on the approval of the Parliament of the Free and Hanseatic City of Hamburg (FHH). Provided these conditions are fulfilled, the transaction is expected to be concluded in the second quarter of 2024.

Virtual Annual General Meeting 2023

The Annual General Meeting was once again held as a virtual event on 15 June 2023. The shareholders formally approved the actions of HHLA’s Executive Board and Supervisory Board for the 2022 financial year with a large majority. The proposal of the Supervisory Board and Executive Board to issue a dividend of € 0.75 per listed class A share (previous year: € 0.75) was also approved. As in the previous year, HHLA distributed dividends to its class A shareholders totalling € 54.4 million. The dividend payout ratio of 66 % was therefore at the upper end of the dividend payout range of 50 to 70 % of the annual net profit after minority interests. The dividend was paid out to the shareholders on 19 June 2023. Based on its closing price of € 11.86 on the day of the Annual General Meeting, the HHLA share achieved a dividend yield of 6.3 %.

Dividend proposal for the 2023 financial year

Dividend per listed class A share

in €; payout ratio in %

At the Annual General Meeting on 13 June 2024, the HHLA Executive Board and Supervisory Board will propose a dividend of € 0.08 per dividend-entitled class A share. The amount to be distributed would thus decrease to € 5.8 million (previous year: € 54.4 million).

HHLA therefore continues to pursue its dividend policy of distributing between 50 and 70 % of the Port Logistics subgroup’s relevant net profit for the year to its shareholders, where possible.

Dialogue with capital market maintained

Institutional investors by region

as of 31.12.2023

Against the backdrop of intensive reporting, rapid response times and an open dialogue with financial analysts and investors continued to play a significant role in HHLA’s investor relations activities. In addition to digital formats, the Chief Financial Officer and IR team attended a total of six capital market conferences (previous year: ten) in order to serve the needs of both institutional and private investors and to maintain its dialogue with investors. The Executive Board provided details on business developments during quarterly conference calls. HHLA also provides a variety of digital channels, including its website, the HTML Annual Report and a dedicated investor portal, to inform potential and current investors about the performance of the HHLA share.

With its communication activities, the Investor Relations department maintains a close dialogue with shareholders. In addition to informing interested members of the public, the team also flags up issues of particular relevance to investors within the company. In addition to the progress of the Container segment’s efficiency programme and the automation of Container Terminal Burchardkai (CTB), the impact of inflation and the war in Ukraine, the minority stake of CSPL in CTT and, in particular, the takeover bid by MSC, were of interest to the capital market in 2023.

Number of analysts continues to decrease

HHLA attaches great importance to broad and well-informed coverage of its share by financial analysts, as this gives interested investors the opportunity to familiarise themselves with HHLA’s business model and environment on the basis of independent analyses. The Executive Board and Investor Relations therefore remain in close contact with all financial analysts in order to ensure a broad set of opinions.

Nevertheless, the number of financial analysts actively covering HHLA’s business development and issuing research reports and recommendations fell from six to four in the course of the year. As of the reporting date, two analysts recommended selling the share and two analysts recommended holding.

Sustainability reporting and ratings

In addition to classic financial aspects, non-financial or ESG (Environmental, Social, Governance) figures play an increasingly important role in evaluating companies on the capital market. As a responsible company, HHLA has been reporting extensively on its non-financial performance since 2011. In order to underline the relevance of non-financial topics for HHLA in its reporting, HHLA has published the non-financial statement as part of the Group management report since 2022. HHLA’s reporting goes beyond the legally required information in the non-financial statement and is essentially based on the internationally recognised reporting standards of the Global Reporting Initiative (GRI). Non-financial reporting

HHLA also champions the 17 Sustainable Development Goals (SDGs) adopted by the United Nations. Corporate and sustainability strategy

Based on this information, HHLA’s sustainability credentials are regularly evaluated by ESG ratings agencies, such as MSCI, ISS-oekom, S&P Global Ratings ESG and the Carbon Disclosure Project (CDP). In the CDP ranking for the 2022 financial year, HHLA achieved a “B” rating. www.hhla.de/investoren/equity-story/nachhaltig-investieren