[SEOUL] South Korea's two biggest container carriers, which are in the midst of a debt recast, reported losses for the first quarter as excess capacity and slowing economic growth weighed on freight rates.
Net loss excluding minority interests at Hanjin Shipping Co, the nation's No 1, was 261.4 billion won (S$304 million) in the three months through March, versus a profit of 9.34 billion won a year earlier, the company said in a statement.
Analysts estimated a loss of 66.3 billion won. Hyundai Merchant Marine Co reported 276.3 billion won in net loss, widening from 42.2 billion won a year ago.
South Korea's shipping companies are revamping their debt after Finance Minister Yoo Il Ho called for an industry overhaul following years of weak demand that eroded cash at companies.
Operators worldwide have also been shrinking their workforce and considering consolidation to stem losses as slowing global trade and overcapacity squeeze transportation rates.
Hanjin Shipping and Hyundai Merchant are in negotiations to cut charter rates on vessels they leased from shipowners in return for a three-month reprieve in their debt repayments.
They also need to get their bondholders to participate in the debt restructuring plan. Korea Development Bank and other creditors are working with the companies on the reorganization.
South Korea said last month it will take more active steps to help the nation's shipping and shipbuilding industries reduce debt and weather a global slump.
Lenders will regularly review progress of restructuring plans that are submitted by shipping lines and builders, including Hyundai Merchant and Daewoo Shipbuilding & Marine Engineering Co.
Mergers among the country's biggest companies in the two industries are inappropriate, the government has said.
Operating loss at Hanjin was 115.75 billion won in the quarter, compared with a 139.8 billion won profit a year ago, the company said. Analysts estimated a loss of 44.4 billion won, according to data compiled by Bloomberg.
Sales fell 25 per cent to 1.59 trillion won. Consolidated operating loss at Hyundai Merchant was 163 billion won, versus a loss of 300 million won a year ago, the company said.
Sales in the quarter fell 18 per cent to 1.22 trillion won.