Shipping Shipping Finance

CSAV makes in 9 months enough money to compensate for 10 years of accrued losses

Year-to-date profits reach astronomical US$ 1.99 billion

In the third quarter, Compañía Sud Americana de Vapores (CSAV) reached profits of US$ 1.01 billion, a historical result driven by the positive performance of its container transport business through Hapag-Lloyd, fifth shipping company worldwide. Meanwhile, for the nine first months of the year, profits accumulated to US$ 1.99 billion, up 1,547% from US$ 120.6 million during 9M2020.

Hapag-Lloyd, where CSAV has a 30% stake, reported an accumulated EBITDA of US$ 8.16 billion, an EBIT of US$ 6.94 billion, and a net income of US$ 6.66 billion. Also, transported volume grew 3% compared to the same period in 2020, with almost nine million TEUs transported.

“Global trade continues to go through a period of stress, where the supply chain as a whole is under pressure and where around 12% of the world’s fleet is stuck in some congestion. This has been especially accentuated in the third quarter, with high logistical complexity in the ports, therefore no growth was seen in the industry and that also affected Hapag-Lloyd’s volumes. Despite these difficulties, Hapag-Lloyd has shown great strength to face the operational challenges posed by this scenario”, said CSAV’s general manager, Óscar Hasbún.

The executive also added that it is difficult to estimate when the situation will normalize. “The fact is that, in terms of congestion, the third quarter has been the worst since the beginning of the pandemic, which suggests that the solution will not come quick and that 2022 would be complex with a tight supply chain”, added the executive.

The 13,177-TEU Hamburg Express passing under the Köhlbrand Bridge in Hamburg, Germany. Image credits: Hapag Lloyd

CSAV also highlighted the delivery of an interim dividend to its shareholders in October, which amounted to CLP$ 7 per share, totaling US$ 450 million. CSAV’s stock in the Santiago Stock Exchange (VAPORES) closed on 19 November at CLP$ 54.01, up 72% year-to-date.

The historical 9-month, US$ 1.99 billion profits are the result of a project of more than 10 years, which has involved capital increases of US$ 3.27 billion, a complete restructuring of the company and two mergers. During this period, most container shipping companies lost money, and CSAV accrued losses (net of accounting effects) piled to over US$ 1.7 billion. In the current spectacular container market, the company is recouping that in less than 9 months.

CSAV was founded in 1872 through the merger of Compañía Chilena de Vapores with Compañía Nacional de Vapores. The Luksic family-controlled Quiñenco Group acquired a 20.6% stake in 2011, gradually increasing its holding until the company was merged with Hamburg-based Hapag-Lloyd in 2014.

After the 2015 IPO in Germany and the merger with UASC in 2017, Hapag-Lloyd had two main shareholders buying more and more stock, driving up share prices: CSAV and Klaus-Michael Kühne. To enhance its firepower, CSAV used short-term debt to buy even more stock, finally concluding the process with a US$ 350 million capital increase in 2020. In the same year, it exited the car-carrier business, therefore becoming a pure pass-through vehicle to obtain exposure to Hapag-Lloyd.

The control of the German company is currently settled through a three-party shareholder’s agreement, where CSAV and Mr. Kühne’s interests hold 30% each and the city of Hamburg holds 13.9%. Additionally, the Qatari and Saudi sovereign wealth funds (former owners of UASC) hold 12.3% and 10.2%, respectively. Free float has been reduced to just 3.6%. CSAV’s shares in Santiago are thus more liquid, since the Quiñenco Group holds 66.5% and the rest is mostly publicly traded.

Hapag-Lloyd has a fleet of 237 containerships and a total container capacity of 1.7 million TEU at the end of 2020. It maintains a portfolio of 122 regular services and a highly diversified and balanced logistics network, with a presence in 129 countries and on the main routes globally. It is a core member of THE Alliance, together with Ocean Network Express, HMM and Yang Ming.

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