Foreword
Dear shareholders,
As expected, 2023 remains a very challenging year for Hamburger Hafen und Logistik AG (HHLA). The global economic downturn and weak domestic demand in many countries have further slowed the expected post-pandemic recovery. At the same time, the economic development in Germany has been affected more severely than initially expected by the after-effects of the energy crisis and the restrictive monetary policy. As a result, several economic research institutes (and most recently also the International Monetary Fund) have downgraded their forecasts. The ongoing war in Ukraine, geopolitical tensions, inflation and rising interest rates are exacerbating this uncertainty and depressing consumer and industry spending.
As a European logistics company, we are feeling the effects in the same way as many other players in the global supply chains. The significant drop in volumes in the first quarter due to the weak macroeconomic situation continued in the second quarter. Consequently, container throughput at HHLA’s terminals declined significantly in the first half of 2023. By contrast, HHLA’s Intermodal companies experienced only a moderate decline in transport volumes in the first half-year, but were unable to compensate for the overall effects. Due in particular to the resulting burden on earnings in the first six months and the significantly bleaker outlook for the remainder of the year, HHLA has adjusted its guidance for the 2023 financial year.
In view of this challenging environment, HHLA has strengthened its cost discipline once again. Expenditure and projects are thoroughly reviewed to determine their necessity and, if not urgently required, they are postponed. The aim is to achieve savings with an immediate effect. Irrespective of the adverse market conditions, HHLA continues to push ahead with its comprehensive efficiency programme for the Hamburg terminals. These measures will bolster the company’s long-term future viability and competitiveness. They include the continuation of capital expenditure aimed at securing HHLA’s earnings power by enhancing our efficiency and productivity over the long term.
As a European logistics company, the global economic slowdown also directly affects HHLA. With this in mind, we are working all the more resolutely to overcome the current challenges and capitalise on future opportunities.
In line with our firm conviction that sustainability is becoming an ever more important competitive factor that will increasingly be reflected in our company’s future results, we continued to invest in sustainable solutions during the first half of the year. In April, for example, eight new low-emission hybrid straddle carriers were commissioned at the Hamburg Container Terminal Tollerort (CTT). These are significantly more environmentally-friendly than their predecessors. At Container Terminal Burchardkai (CTB), a further four environmentally friendly storage crane systems were put into service in the first half of the year to replace the diesel-powered straddle carriers. In our international activities, we also invested in the expansion of the network of our rail subsidiary Metrans – an important signal for the ongoing shift from road to more eco-friendly rail transport. Moreover, Metrans already transports almost half of its cargo volume carbon-free with the HHLA Pure product. At our HHLA TK Estonia terminal, we have built the largest solar park in the Estonian port of Muuga and are already planning to expand this system. In June, the first phase of the joint project between TK Estonia and FERNRIDE was successfully completed in Tallinn. Both companies are now continuing the project to enable autonomous driving for regular operations. In challenging times like these, it is also important to strengthen cooperation with our customers. The finalisation of the non-controlling interest of 24.99 percent of COSCO SHIPPING Ports Limited in CTT is therefore an important step for us. Together, we can now start to develop CTT into a preferred handling location for our long-standing customer.
We will therefore continue to pursue our goal of tapping potential earnings of 400 million euros in the medium term so that we can invest further in our market positions, in new business and in the decarbonisation of our operations. At the same time, the effects of the war and global economic developments, including central bank interest rates, will require us to review our time horizons.
Our activities highlight HHLA’s firm focus on the development of sustainable, innovative and profitable logistics solutions. In order to maintain this objective with all our strength, we will need to improve our earnings position. We are therefore working all the more resolutely to overcome the current challenges and grasp all future opportunities to emerge from the crisis even stronger.
Yours,
Angela Titzrath
Chairwoman of the Executive Board