HMM Begins to Diversify its Business by Taking over Large Bulk Carriers
Korea’s largest shipping company HMM has acquired a second-hand large bulk carrier on the M&A market. The shipping company has started to diversify its business with its record operating profits in 2022, analysts say.
Korean shipping company HMM acquired a Newcastlemax dry bulk carrier from Germany’s Oldendorff Carriers for US$46.5 million (about 60 billion won), according to Singaporean shipping media outlet Splash247 on July 31 (local time).
The Newcastlemax bulk carrier has a total deadweight (TDW) of 209,000 which is higher than a typical Newcastlemax bulk carrier (185,000 TDW). The ship was built through a collaboration between China‘s MARIC and Korea’s HD HHI.
The acquisition of the vessel by HMM comes at a time when there has been a significant drop in bulk carrier freight rates. HMM recently announced business diversification. In fact, as of the beginning of July, the Baltic Freight Index (BDI) of 1009 points was down 51.19 percent from a year ago. The BDI’s drop reportedly pulled down the bulk carrier’s price.
HMM posted operating profits of 9.9455 trillion won and 7.3775 trillion won in 2022 and 2021, respectively. As of the first quarter of this year, the container ship business accounted for 84.1 percent of HMM’s total sales.
HMM’s current bulk carriers are Capesize and Ultramax bulk carriers, both of which have a lower gross deadweight compared to a Newcastlemax bulk carrier.
HMM is also in the process of acquiring Hyundai LNG Shipping. HMM recently held a board meeting and decided to participate in a tender for Hyundai LNG Shipping. The target is a 100 percent stake held by private equity firms -- the IMM Private Equity-IMM Invest Consortium (79 percent) and Daeshin Private Equity (21 percent). HMM has reportedly submitted its bidding price in the low 300 billion won range.
Note: Article by Jung Suk-yee (www.businesskorea.co.kr)
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