HMM, a South Korean company primarily engaged in the container shipping business, has decided to place a new order for product carriers (PC vessels) specialized in transporting petrochemical products. Following a more than 300% increase in operating profit in the second quarter compared to the previous year, HMM is seeking to diversify its fleet to enhance revenue stability.
Previously, in June, HMM’s board of directors approved a new capital investment for the construction of product carriers. An official from HMM commented, “We have decided to place an order for new bulk carriers that are specifically designed to transport petrochemical products.”
The industry expects that the PC vessels HMM plans to order will be medium-range (MR) tankers, each with a price slightly over $50 million. Among S. Korean shipbuilders, HD Hyundai Mipo is actively securing orders for these MR tankers.
Meanwhile, the price of new PC vessels has been steadily rising this year, driven by increasing demand as global refiners ramp up exports of products processed from crude oil at their refineries.
For instance, in April, HD Hyundai Mipo secured an order for a product carrier at approximately $51.75 million per vessel. While just a year ago, the price for new PC vessels was around $46 million.
The shipping industry anticipates that HMM will broaden its revenue streams by adding a diverse range of vessels to its fleet. As of the second quarter of this year, HMM operates 73 container ships, 17 tankers (including 14 crude oil tankers and 3 product carriers), 10 bulk carriers, and 8 multipurpose vessels.
Among HMM’s various shipping operations, the bulk carrier division has shown relatively low profitability. In the first half of this year, the division’s revenue increased to 687.8 billion won ($516.5 million), up from $439.6 million in the previous year.
However, operating profit decreased by 9.7% to $65.7 million, down from $72.7 million last year. The share of operating profit from the bulk division dropped from 20.8% in the first half of last year to 8.3% in the first half of this year.
For shipping companies dealing with geopolitical risks, diversifying their fleet to ensure stable revenue sources is beneficial in the long run. The third quarter is usually the peak season for the shipping industry, and with the ongoing Red Sea crisis, sea freight rates are expected to stay higher than normal.
This situation likely encouraged HMM to make new investments. HMM’s revenue for the first half of this year was $3.7 billion, with an operating profit of $789.5 million. The company’s net profit reached $860.3 million, reflecting the strong financial performance that supports its strategic moves.
