Letter to the shareholders

Ladies and gentlemen,

War is being waged in Europe once more. When Russian troops invaded Ukraine in violation of international law in the early morning of 24 February 2022, HHLA employees at the Port of Odessa were in the process of handling two ships. They completed this task as scheduled on behalf of our customers despite their concerns about relatives and the uncertainty about their own future and that of their country. For doing this, they deserve respect. The ships were able to leave Odessa before the Ukrainian authorities closed the port. Our primary concern afterwards was for our 480 employees and their relatives in Odessa. HHLA’s employees in Hamburg stepped in here with an impressive demonstration of practical solidarity. Just one week after the war broke out, employees at our Container Terminal Odessa (CTO) and their relatives were brought to Hamburg. The majority of them were accommodated here with HHLA employees.

The current challenges can only be overcome if all participants in the logistics supply chain work together.

Operations at our terminal continue to be largely suspended. We are, of course, following news about military attacks on Odessa with particular concern. Much of the USD 170 million in capital expenditure between 2001 and today had already been amortised by the end of the 2020 financial year. In addition, HHLA hedged CTO against political risks by obtaining German government guarantees for foreign direct investment. These cover a significant portion of CTO’s assets at present in the event of war or expropriation or if legally binding commitments are breached by government or government-controlled agencies. However, it is not just through the closure of the terminal in Odessa that we are affected by this unjustifiable war. In order to implement the sanctions imposed on Russia by the EU, measures at the Port of Hamburg have also been required. HHLA’s terminals no longer handle containers coming from or destined for Russia. This also applies to cargo being transported by rail or road. As such, HHLA is following the example of terminal operators at other European ports. The existing uncertainty on the global markets created by the coronavirus pandemic has been amplified by the escalation of the Russia-Ukraine conflict. The massive ship delays over several months as a result of supply chain disruptions have led to a backlog of containers at our terminal facilities in Hamburg. Since the outbreak of the coronavirus pandemic, HHLA has maintained the stability of its operations through prudent and disciplined action, as well as various operational measures, and thus fulfilled its supply mandate for businesses and consumers. We have activated additional storage space for containers, and our personnel and equipment are currently operating at full capacity to meet the needs of our customers. However, the current challenges can only be overcome if all participants in the logistics supply chain work together.

Irrespective of the circumstances described above, HHLA got off to a good start in the 2022 financial year. At the HHLA container terminals, the total volume handled was 3.7 percent higher than in the previous year, and in Hamburg even 5.5 percent higher. This is a notable development, as throughput at other European ports such as Rotterdam or Antwerp was down over the same period. The Intermodal segment also achieved volume growth of 3.1 percent and increased its revenue by 11.3 percent. Based on these developments, we expect to achieve the targets we forecast in our outlook for the 2022 financial year. However, this depends on the possible impact on the global economy of a further intensification of the war in Ukraine.

Although we are living in difficult and unsettling times, we will continue to decisively and consistently take advantage of the opportunities provided by the digital transformation and the drive towards climate-neutrality in order to lead HHLA into a sustainable and economically successful future.

Yours,

Angela Titzrath
Chairwoman of the Executive Board