SIMIC

THE shipping industry is already witnessing negative speculation over the sale of HMM as the three parties chosen for the acquisitions - LX International, Harim Group, and Dongwon Industries - undergo a two-month due diligence process.

The uncertainty surrounding HMM's management stems from the crisis facing the shipping industry. According to financial information provider FnGuide, HMM's operating profit for the third and fourth quarters of this year is expected to decline by 80 to 90 per cent compared to a year earlier.


In the first half of this year alone, HMM's operating profit amounted to KWR160.2 billion (US$120.45 million), marking a whopping 94.5 per cent drop compared to the previous year, reports BusinessKorea.


As the analysis suggests, the future direction of the acquisition race is expected to hinge on the "financial strength" possessed by each of the candidate companies. Currently, there is keen interest in what strategies the three candidates, who are still evaluated as lacking in financial strength, will opt for.


HMM relies on container shipping for over 80 per cent of its revenue, with routes to the Americas and Europe accounting for more than two-thirds of its operations.


In the industry, there is a forecast that this declining trend in maritime freight rates will continue into the next quarter and even throughout the next year. For HMM, expectations of revenue improvement in the near term have become increasingly challenging.


With long-term industry challenges and profit stagnation in mind, there is an analysis suggesting that potential acquirers of HMM should have ample financial capacity. As a result, concerns and apprehensions surrounding the three acquisition candidates have been growing. This is why there is already speculation about the potential failure of HMM's sale.