Issues are growing that Hanjin Shipping Co., South Korea’s largest container provider struggling with financial obligation concerns, would report operating loss in the second quarter, which ought to be a big blow to its efforts to lower ship charter costs and reschedule debts.

According to several sources from the shipping market and financial circle on Wednesday, Hanjin Shipping is most likely to publish operating loss for the April-June period in the second quarter in a row following the very first quarter when it reported 115.7 billion won ($105.5 million) worth of loss. The container carrier is slated to announce its second-quarter earnings later this week.

Sources noted that the consecutive quarterly loss recommended serious degeneration in Hanjin Shipping’s general business conditions, thinking about that the shipping industry normally enters peak season beginning Might.

It would be the very first time for Hanjin Shipping to publish an operating loss in the second quarter in three years. After taping an operating earnings of 79.5 billion won in the April-June duration of 2012, the shipper fell under the red in the exact same period of the following year with 55.7 billion won losses. Hanjin Shipping managed to go back to earnings in the pointed out durations in 2014 and 2015, raising particular 23.9 billion won and 59.2 billion won worth of operating revenue.

An unnamed authorities from the shipping industry said a plunge in freight rates in between March and Might has actually mainly led Hanjin Shipping to log losses in the 2nd quarter. The official also kept in mind that installing financial obligation and growing concerns over its company conditions has actually shooed away Hanjin Shipping’s current and possible clients, making it tough for the container provider to a minimum of preserve the certain cargo volume required to run the businessbusiness.

After Hanjin Shipping made earnings in June, there have actually been expectations that the shipping business would return to earnings in the second quarter. However the losses in April and May were too huge to prevent a quarterly operating loss.

The soon-to-be-announced second quarter operating loss is stated to have already adversely impacted Hanjin Shipping’s ongoing speak with secure liquidity. Worried about whether Hanjin Shipping would have the ability to get back on its feet, some ship financing business in settlements with Hanjin Shipping for rescheduling of 500 billion won worth of debt growing next year have actually apparently chosen to recover vessels rather of waiting for the company’s financial obligation repayments.

A senior lender authorities who asked to be unnamed said Hanjin Shipping’s 2nd quarter revenues would be worse than anticipated, even more weakening the business’s financial health. The company’s efforts to reschedule ship financing hit a big snag, which could reverse the instructions of its debt restructuring talks, he included.

Source: Pulse