South Korean liner giant HMM has logged record profits on the back of the enduring container freight rate rally.

Net profit soared to over KRW 6trn ($4.64bn) in the first six months, some 16-times higher than the same period last year.

The result was boosted by an exceptionally strong second quarter which saw profits rise by 1,290% to KRW 2.9trn.

The Seoul-based carrier attributed the stunning performance to higher freight rates and efficient fleet operations.

The company cited a rise in the Shanghai Containerized Freight Index (SCFI) to 4,504 points in the first half of the year, up 49% from the same period last year.

That pushed HMM’s revenues up by 87% to KRW 9.9trn in the first half. Revenues in the second quarter stood at KRW 5trn, up 73% on the same period last year.

The company said its financial structure remained strong, with a debt-to-equity ratio improving to 46% in June, from 73% in 2021.

Uncertain markets

Going forward, the liner operator warned of waning demand for container shipments and strained supply of capacity.

“Demand growth is expected to be under downward pressure due to considerable uncertainties,” it said.

Uncertainties included widespread inflation, recurrent coronavirus outbreaks, and geopolitical tensions.

Other hurdles include the rising oil price which had seen fuel costs for HMM leap 35% to KRW 44bn in the second quarter.

On the supply side, the market is expected to remain strained in the coming months, the company added.

Port congestion was still “pervasive”, and there is growing concern that the logistics situation in northern Europe will impact on the supply chain, HMM said.

The results come a month after HMM unveiled a huge KRW 15trn ($11.4bn) plan to expand its fleet by more than 40 ships.

In July, the company explained it aimed to grow the eco-friendly boxship fleet from 820,000 teu to 1.2m teu by the end of 2026.

The group has a dozen 13,000-teu vessels on order for delivery in 2024, adding 156,000 teu. The company recently placed an order for three container ship newbuildings at Hyundai Mipo Dockyard.