HMM sinks into the red and outlook fails to reassure under heavy debt burden

KOREA's Hyundai Merchant Marine (HMM) has posted a third quarter net loss of KRW118 billion (US$104 million) on operating income of KRW29 billion ($25 million).

The poor performance was said to have been the result of high interest/finance costs amounting to KRW216 billion during the quarter under review.

The company's container shipping arm achieved operating profits of KRW72 billion, while its dry bulk and tanker business units suffered operating losses of KRW45 billion and KRW25 billion, respectively.

Average freight rates declined across the carrier's three core trade lanes in October, and further rate weakness was anticipated for the last two months of the year.

A report by Alphaliner said the company's high finance cost burden will continue with consolidated debt standing at $6.4 billion as of end September 2012, which falls far short of shareholders' equity of $1.1 billion.

It is expected that the shipping company's earnings have remained under pressure in the fourth quarter, with weak dry bulk and tanker performance compounded by eroding margins from its container shipping activities.