Hamburger Hafen und Logistik AG
XETRA:HHFA
Hamburger Hafen und Logistik AG
XETRA:HHFA
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Earnings Call Transcript
Earnings Call Recording
Other Earnings Calls
Ladies and gentlemen, we are glad to see that so many of you have dialed into our conference call today. I hope this means that you're all safe and at most healthy. It is only 6 weeks ago that we last spoke, but since then, the world seems to have turned even faster than before. On the 25th of March, when we published our annual report, the John Hopkins University reported 468,000 corona cases worldwide. Today, we are at 4.2 million. Government around the globe implemented drastic measures to contain the virus, in particular, a far-reaching shutdown of public and economic lives. Therefore, we would like to give you a short update on where we stand as of today before we come to the Q1 numbers. Just like in March, I would like to structure the status alongside the 4 focus areas depicted on this slide. Economy. While economists had only very rough ideas of what the coronavirus pandemic might mean for global prospects, the picture is clear now. And the picture became significantly gloomy. The IMF expects a global contraction of 3%, which would be much worse than during the financial crisis. According to an ECB survey, the contraction in the oil area could become even worse with a GDP decrease of 5.5%. The pandemic itself, in the last 6 weeks, China reported virtually no cases of coronavirus infections even though if since 2 days, 13 new cases now in the Northeast China section was reported. While Europe and North America were hit hard, the European countries implemented strict restrictions, and it seems as if the goal of flattening the curve was particularly successful, especially here in Germany. Meanwhile, the considerations about a sequential lifting of the restrictions are ongoing. Still, the numbers of new infections has to be monitored closely, and the tightening of restrictions we put in place in case the number increases above certain thresholds again. Respecting our core businesses. As expected during our March call, both main pillars of HHLA's business model experienced first slowdowns of their business activity. As the pandemic hit Europe from March on only and proceeds in April and May, the circumstances also for the second quarter remain very challenging. Nevertheless, we continue to fulfill our service mission for the industrial nation as we are one of the operators of critical infrastructure working 7/24 hours, 3 shifts, 360 days a year. Efficiency measures. You can see our Q1 numbers underpin the necessity for improvement in operation efficiency. OpEx at an infrastructure-related company like HHLA is difficult to decrease. Still, we will speed up the organization of our internal organization, accelerate automization and push digitalization itself. Having set the scene or the current situation, I would like to briefly lead you through the current situation at HHLA as of today. And I would like to emphasize the "as of today" because the situation is changing so quickly at the moment. We will start with the container segment. You all remember that we had this overutilization of our yards due to the storm conditions at the North Sea Bay in January and February. These effects have faded out, and we are returning to a normal yard utilization on a high level. At the same time, we see an increasing number of blank sailings leading to less vessels calling the port. This was due to production stops in different regions in the world, reduced imports and exports, as well as lower demand due to the public life put on hold. Our containers report was and will be affected by this. Nevertheless, our terminals are fully operational and work with no interruptions. The remaining demand for throughput services is met at all times. In the Intermodal segment, we saw the result of a global volume drop. Many European countries declared a state of emergency. Restrictions like the closure of retail shops had indirect effects on the overall economy as these closures reduced demand and thereby production further. Led to fluctuating demand for rail-bound transport services as deferring timing of shutdown and reopening of economic and public life induced imbalances in exports and imports. Our measures to protect our employees and maintain our operations on the same hand were successful with no disruption of service. The remaining demand for transport services is covered by 100%. With this, I would like to come to the core of today's call, our Q1 numbers. As described before, the market environment in the first 3 months was challenging, the storm conditions first, then the accelerating coronavirus pandemic. The resulting weakening of trade as well as ship delays and first blank sailings put high pressure on the transport system. On this backdrop, revenue fell moderately and EBIT declined strongly, which was reflected in our EBIT margin. Our liquidity will be sufficient to meet all payment obligations. Roland will come to that a little later. Therefore, we continue to expect a tough year for HHLA with volumes, revenues and EBIT declining strongly. And looking at the macroeconomic environment, the Q1 development of our numbers does not come as a surprise. All economic indicators showed a downside trend in the first quarter. According to the most recent world economic outlook by IMS, the global economy will experience the worst session since 1929. The researchers expect the disruptions to have started in Q1 and peak in Q2. China is somewhat ahead of that time line as they should have been the worst -- seen the worst impact in Q1 already. Russia has been hit in 2 respects: the pandemic and the sharp drop in oil prices. In total, the combination of trade conflicts that endure for 2 years already and the pandemic-induced disruptions, the first quarter was weak, one with more to come. Our sector could not escape this development. According to market research at Drewry, Q1 will have seen clear drops in all regions considered. The world throughput should have shown the most pronounced decrease while Europe and especially Scandinavia and the Baltics experienced only slight declines. Unfortunately, this was only Q1, and there is some more to expect. We will come to that in our outlook session. As indicated before, our numbers for the first quarter reflect the developments I just described to you. As Roland will guide you through the numbers in detail, I would like to pick out only 1 or 2 numbers. As you can see, EBIT fell more significantly than revenue. In an asset-heavy business like ours, downscaling of OpEx is a major task and one of the focus points for us as management. The strong EBIT decline hit our return on capital employed as our average capital employed remains virtually unchanged. With that, I would like to hand over to you, Roland.
Thank you, Angela. Ladies and gentlemen, Angela mentioned the main reasons for declines in throughput and transport volumes before, namely, the poor weather conditions in January and February and the coronavirus pandemic that was starting in Europe and North America. If we take a closer look at the container throughput, we see that especially the strong conditions left their marks in the Hamburg volumes, while the international terminals remained on previous year's level. Our feeder volumes in Hamburg continued to decrease, resulting in a feeder ratio of 20.9%. This helped average revenue per TEU. I will just play this effect on the next slide. In total, Container throughput decreased moderately. In our Intermodal segment, the container transport decreased significantly. The decline of rail transportation was more pronounced than in road transportation. As perceived in the previous quarters, road transportation continued to descend this quarter even by 11.4%. And in rail transportation, the maritime traffic from the North German and the Adriatic Seaports declined significantly. The strong growth in continental traffic could not offset this. On the next slide, we come to the monetary side of the business, starting with the Container segment. This 3.7% drop in throughput volumes resulted in a revenue decline. Two effects explain the underproportionate decline. It was an advantageous model -- modal split with a high proportion of hinterland volume. Furthermore, storage fees increased temporarily because of ship delays and longer container dwell times. Angela mentioned before that downscaling our OpEx needs stricter control. In Q1, OpEx increased as personnel costs increased in line with the higher hinterland volumes and the change in our company pension scheme. In addition, the very high yard utilization led to lower productivity as optimization was partially not possible anymore. The revenue decline in combination with rising OpEx resulted in a significantly lower EBIT and EBIT margin. In the Intermodal segment, revenue decreased slightly stronger than transport volumes. Although the rail share increased, which is normally good for revenue, the transport distances decreased to -- OpEx increased due to imbalances in hauling export containers as well as the underutilization of the train systems, challenging the operational gearing. EUR 7 million lower revenues and EUR 1 million higher OpEx results in an EBIT that was EUR 8 million below previous year at EUR 17.2 million. EBIT margin was affected accordingly but is still sound. Let's come briefly to our smallest segment, the Logistics segment. We have bundled our digital projects and participations in this segment now. Revenue-wise, the segment held up pretty well. Vehicle logistics dropped significantly, but the consulting activities and additive manufacturing made up for that. Ramp of losses for some of the digital projects prevented a positive EBIT this quarter. And equity earnings fell significantly short of the previous year. Lower fruit and bulk materials handling were the reasons. Coming back to the Port logistics subgroup as a whole. In our earnings bridge, the effects from the challenging environment described before continue to drop the P&L. Net financial expenses increased due to the interest expense related to lease liabilities. The lower results decreased the tax payments accordingly. Minorities decreased slightly in line with the earnings split in Hamburg. In total, net profit showed a strong decline of 72%, leading to an EPS of EUR 0.11 per A share. On the next 2 slides, my last slides, I would like to shed more light on our financial position and cash flows. Following the presentation of business development and the resulting earnings, it doesn't come as a surprise that the cash flow from operating activities decreased accordingly. When we have listened to our last call, the higher investing cash flow might not fit into the picture. The CapEx program, which we initiated in 2018, is ongoing, although at a lower pace. The due payments in the first quarter concern PPE that were honored before the situation worsened so dramatically. On the financing side, we did not make any major changes. In total, our financial funds stood at EUR 236.5 million as of March 31. Ladies and gentlemen, with the coronavirus pandemic further progressing and the worst effects on the economies still to come, liquidity is the first focus for us as a management. Securing cash flows and providing for sufficient cash to meet all due payment obligations is our main interest. Our financial position supports us there. A breakdown of our indebtedness helps to clarify the picture. While there is a total of EUR 1.3 billion in liabilities on our balance sheet, lease obligations and pension provisions make up for the gross part. Net financial debt only accounts for EUR 119 million of debt. As of March 31, as already mentioned before, financial funds stood at EUR 236.5 million. To further strengthen the financial position as we have decided to propose a dividend of only $0.70 per A class share, which equivalents to a decrease of 12.5% and the payout ratio of 52%. Furthermore, we have negotiated with the workers' council that we can implement short-time work if this should become necessary. And we will decrease the number of GHB workers and deploy our own staff to respond to demand. It is obvious that we make use of the possibility to defer taxes. And we have applied for a credit line. This gives us the confidence that our liquidity is sufficient today and will be sufficient throughout the year. In the weeks to come, EBITDA will be the KPI of relevance before we hopefully can turn to normal. Back to you, Angela.
Thank you, Roland. Ladies and gentlemen, the macroeconomic perspective, as of today, remain rather dark. The world economy is expected to shrink by 3% with very differing developments in the regions. As China currently seems to be ahead of the infection curve and can assume business activity, the IMF expects a small growth for the full year. All other regions will experience a sharp drop. Under the assumption that, from H2, 1, business can be taken up again outside China, too, recovery in Q3 or Q4 is expected. World trade will be heavily affected, and the IMF forecasts a plunge of 11% this year's forecast. Sector researcher Drewry is a little more optimistic. In their baseline scenario, the researchers assumed that China was able to contain the virus while it spreads more rapidly in other countries. Currently, unfortunately, this is what we see. In this scenario, the slowdown in GDP growth or even a compression is possible. Still, the expectations for throughput decreases are moderate, but only if you do not compare it to the growth expected before. Today, we reiterate our forecasts. The degree of uncertainty continues to be high as the extent and duration of pandemic cannot be predicted. We assume that container handling and container transport will decline sharply in the first half of the year. But this decline will not be compensated for by an economic catch-up movement in the second half of the year when upturn is expected. This will result in a strong decline in turnover and operating profit for the year as a whole. We have put our investment plans under review to adapt it to the changing market environment and to slow it down where necessary. And as Roland explained, we have sufficient liquidity to navigate through these stormy waters. Roland and myself will now be happy to answer your questions.
[Operator Instructions] The first question is from Robert Joynson from Exane BNP Paribas.
I'm pleased to hear that you're both well. A few questions from me, if I may. Just starting off with the container throughput, we know that the volumes in Hamburg declined like 4% during Q1 overall. But given the high exposure to Asia-Europe and the fact that it takes 40 days or so to sale from Asia together with the start of the problems in China, I guess, towards the end of January, I'm assuming that the main negative impact was only seen during March or maybe the second week of March onwards. Could you maybe just provide us with some indication of the volume run rates exiting Q1 and going into Q2. So that's the first question. The second question, just in terms of transshipment volume, specifically. There were some reports back in January which suggested that Hapag-Lloyd has agreed a slot purchase agreement with the 2M alliance on the Asia-Europe services that call directly in Scandinavia and Poland. Would it be fair to assume that, that could have a negative impact on transshipment volumes in the Port Hamburg going forward? And then a third question, just on the dividend. As you mentioned in the presentation just now, the dividend of EUR 0.70 is still to be proposed to the AGM in June as things stand, but are there any circumstances in which that proposal could be canceled or potentially the proposed amount of the dividend reduced?
Well, I will start with your last question with regard to the dividend. The 70% is within the range, so we're sticking to our commitments to the capital market. And obviously, this was proposed, already discussed with our Supervisory Board and then proposed to the annual meeting. And only if the annual meeting is approving it, then it will be coming to a payout. As Roland mentioned before, we have a strong focus on liquidity, and we are making this exclamation that we are strong to the year-end, as of today, already factoring in the proposal of the dividend. So we cannot foresee in this moment, speaking from today, any circumstances not acting along as we have proposed. With regard to the sales or to the -- with regard to the volumes in Q1, you should consider that we had, in the first quarter, around about 23% blank sailings coming from Asia and only very few coming from the other markets, from the Northern Sea and Eastern Seas, therefore, there was the major impact, obviously, already then in March from the blank sailings coming from China. As we described it before, you have different waves. The pandemic impact was first hitting China, and the effect, which started end of January, mid- of February, 6 to 7 weeks later then was hitting the ports here in Europe and, in particular then as well, Hamburg. So we see that the major impact basically was in the first quarter in the month of March. With regard to the acquisition within Hapag-Lloyd, we don't see an impact of transshipment volumes turning from Hamburg.
Can I maybe just ask 1 or 2 follow-up questions, if I may. First of all, just on the -- in the Intermodal business. Could you just provide some color on why the road volumes were down by so much more than the rail volumes? And then just finally, on staff costs. [indiscernible] mentioned short-time working measures a few minutes ago. Could you just confirm if any short-time working measures have been implemented as yet or that's potentially yet to come?
Starting with your second measure. Please factor in a certain lead time that you need in order to get measures to curb with underutilization of P&L effective. But as we outlined before, we prepared for to use it in case it is needed, and this means you have to negotiate and agree on the terms with the labor representatives. And this, we did by end of March and early in April. And now is a question of the volume development going forward, to which extent we might use short-term labor schemes in case needed. So we have the flexibility to use it, but it depends on the around the development going forward. And once again, if you look at the present cost development in the first quarter, please bear in mind that a certain lead time is always needed. And on the other hand, with regard to the extreme bad weather conditions, this harms efficiency this way or the other. And this means you have to deploy more headcount. The specific year, unit costs are negatively affected depending on the weather. Your first question was with regard to Intermodal. Could you repeat what in specific you meant with regard to volume decline on one hand, as I understood, in operational gearing effects with regard to performance on the other side was -- is your point?
No. It was more of a simple question. It was just -- I'm just looking to some color on why the road volumes were down by 11%, whereas, the rail volumes were down by just 3%? So just some color on the difference between the 2.
Okay. Right. I think there is nothing to be outlined here in specific. It would be pure speculation to be frank with short-term effects. That harmed the road-bound volumes already in March, whereas, the rail system remained in place, and the volume has been affected to a lower extent. And maybe that was nonperformance of competitors in the market as well. So I think nothing specific to outline here.
Next question is from the line of Adrian Pehl from Commerzbank.
Everybody. Good to hear your safe and healthy condition. Well, first of all, just a matter of clarification on your guidance. When you say strong decline, definition-wise, strong means more than 10%? Or is that more than 15% or whatever should we factor in here? And secondly, on the personnel expenses in Q1. In the presentation, you mentioned there is an effect from the pension scheme. I was wondering how much that actually was. And probably a little bit harder to quantify, you mentioned the weather has been also causing some, let's call it, productivity issues or more headcount. Maybe you could put a ballpark figure to this one as well. And more importantly, going forward, as you were referring to GHB as a part of your personnel cost items to breathe over the year with demand, some of it might be sticky, but taking into account that this probably stands for 15% of your personnel expenses, is there the actual potential to save some 50 million in 2020 by ramping down the resources that usually would imply? And lastly, a question on Capex. Actually, you spent more than last year in Q1, but I assume that there's some kind of different phasing throughout of the year. So could you help us a little bit with what we should think of CapEx going forward in Q3 to Q4 this year?
Couple of questions. I will start with the technical question of what does strong mean. I think in line with the national standard DRS 20, as you outlined, 10% or more. And there is no further differentiation in the standard. So this is what we expect, a strong decline, whether it's revenue or EBIT line. And if we have matured our transparency on that, and I would say, let's see how the second quarter proceeds then. We are in a position to more precisely guide you, we will do it. But I think it's simply too early to give you more orientation for the time being. The second question was with regard to personnel costs and the impact of the pension scheme. If you look at the figures year-on-year and see the increase, assume as a rough guess, 1/3 of the increase is related to the schemes. And this again is, to a certain extent, affected by the interest rates on. The third question was with regard to the -- for the guys that are not aware of what GHB means. This is temporary workforce we use here that is quite flexible in the port. And of course, this is besides short-term labor schemes. This is another measure we can use to drop the percentage of temporary workforce we deploy to curb with the volatile volume development going forward. Whether we will end at, and you mentioned EUR 50 million, I think this is more or less the total amount that we typically account for temporary workforce annually. So if you expect that to drop it down to 0, I would say, this exceeds the flexibility. But somewhere in between, we will definitely use it to adjust the personnel cost as close as possible to be declining and more volatile volumes in the next quarters to come.
Can I follow up before we come to CapEx on this one actually? How should we think of it? I mean, obviously, you got 2 instruments in your hand. One is actually to lower that GHB workforce that you're using and the other one is short-time work. I mean, from a natural standpoint, I would say, your own work is first, which should mean finally that bringing down GHB headcount should be prioritized over entering short-time work. Is that how we should think about it? Or what is the logic behind it?
As I outlined before, we will make use of the short-term labor measures in case needed. That with regard to cost control is evident that we try to drop down the percentage of temporary labor force first. And with regard to your CapEx, and this was a point I forgot to comment on, I think it depends very much on the delivery and supply of equipment if we have. Oil, and you know that we are in a phase of upgrading another berth to comply with the 400-meter dimensions of vessels. So far, we have received another pair of cranes. This is needed. The pity is that, similarly, the volumes are dropping down. And I think it's infrastructure-related to long-term business. So sometimes you're lucky, and sometimes the fleet is not that precisely forecastable compared to the economic situation. But going forward, I think this was the question, it is clear that short term, we are locked in deliveries that we ordered a year before or so. But if I look more at 2021 and going forward, I think we do our utmost to make the CapEx as scalable as possible in line with the financial development going forward because, if utilization remains low, there is no need to further upgrade capacity. Where we stay the course is all components that are efficiency-related that helps us to increase efficiency and productivity on our terminal so that this is compared to pure hardware that we need to handle more boxes, a smaller portion in our CapEx program going forward.
Let me add to the personnel cost question one more I can. As we have negotiated with the unions a special deal where we can make use of more flexibilization of time, that means that the bank account for extra time, the so-called in Germany will be used heavily these days. As well, there is a higher flexibility from the employer to steer vacation days and to make use of vacation days, which in addition are, to the GHB, and in addition to the short-term works agreement, are all leaders to cope with this delicate situation in terms of cost and flexibilization of personnel cost itself.
Right. Perfect. And just a quick follow-up actually on CapEx. So from a pure equipment standpoint, as you were referring rightfully to the gentry cranes that you just received, so equipment CapEx should be skewed towards H1, probably. Is that fair to assume? And a quick follow-up on the volume development. Would you confirm actually that volumes in January have been up year-over-year?
Sorry, you missed the answer to your first question. I think we will fade it out quarter-by-quarter, so it will decline over time. But I wouldn't guide you in a way that it necessarily will be H1 versus H2 will be declining in H2 already. More, as I mentioned before, looking at 2021. It is clear that we do our utmost to make the CapEx components as scalable as possible in line with the volume development we foresee.
Next question is from the line of Nikolas Mauder from Kepler Cheuvreux.
Given that we have discussed the personnel costs already, I would like to change topic to the other surprising element in the Q1 results, which was the influence of the transport distances in the Intermodal segment. Can you provide a bit more color here, sort of what the underlying reasons for the shorter transport distances were and when you expect this to recover? The second question would be, I remember an e-mail being sent out that you have seen or witnessed the first full ships sailing from China, and then that very much depends -- or a lot depends on the state of Europe when they arrive. Can you update us on this story? Third question. I feel confident that you can steer through this situation with positive free cash flow or at least a breakeven free cash flow in 2020. And finally, on the surrounding infrastructure in the Port of Hamburg, is the fairway adjustment still going according to plan? And I saw a press release that there was a new motorway being built, improving accessibility of the port. When do you expect improvements from this?
I'm starting with your third question. What are we aiming at in terms of cash flow control? It is clear that we're aiming at keeping the asset-free cash positive. Whether we will be successful by end of the year, given the limited transparency on the second half, I wouldn't confirm, but given the strong cash position on one hand and the in-principle scalable cash CapEx going forward, we are confident that we are aiming at a free cash operation as soon as possible in the next quarters to come.
With regards to the EBIT rating itself, you know that we're very happy about the start of the dredging. And as the Hamburg Port Authority is informing, they are all on time. And actually, the passing box was already finished now in Q1 in 2020. So this will ease the entry into and exit from the Port of Hamburg. The dredging itself of the fairway has started and should be finalized in Q2 2021. And we have no further information of any delay. Everything is according to plan following what the Hamburg Port Authority is communicating. And the dredging work is carried out, and our customers can call the port with more loans than currently. And when and how they will do so, this is a question that we have to see, depending on, obviously, as well the development of the pandemic space. With regards to the Intermodal distance, I would like to sum up that, overall in the first quarter, we have seen a lot of imbalances and in consequences of the imbalances as well a shortening of distance. If you can say so that the restrictions, which have been very different from one European country to the other, they declared a state of emergency. They closed their borders. And this basically has led as well to certain, let's say, volatile and shortening of distances. Obviously, with the new normal or the normalization overall, we expect as well that the average distances will come back to the level that we have seen in the past years. I don't know if we answered all your questions. Did we miss one?
Yes. Just one. This story with the ships coming full already from China and what kind of Europe they're seeing, can you sort of continue telling us that story?
Okay. I'm hoping that I'm not telling fairytales. So basically, this is what I wanted to explain that the pandemic is impact, has different waves, if you like, so the pandemic influence in Asia has led to, in the first quarter, to around 23% blank sailings coming ships from Asia. Now we see that they are picking up. And with the picking up of frequencies call in Europe, obviously, they're bringing as well more volume. On the same hand, we see that, for example, the transatlantic ones, which have been 15% around in the first quarter, less frequency, calling the harbor, probably will impact higher in the following weeks. So the big question now is what is happening in Europe in terms of the Chinese volumes or the Asia volumes hitting the ground. Can they absorb the volumes? And it's not only the question of the frequency of cause and the volumes, which the ships are bringing with them, but as well the ability of the European markets to consume. And this is a little bit the question. On same token, the North American part is obviously heavily influenced with the pandemic impact starting now. So China is picking up. China production is at full speed. And therefore, you can expect a higher volume hitting from Asia to Europe in token with the lower volume of European production for the export as production in Europe is still not up yet.
[Operator Instructions] The next question comes from the line of Peter Hyde from Atlas Infrastructure.
It's -- I've got a couple questions. One, could you just explain the CTA agreement with Hapag-Lloyd and if there's going to be any changes to that given the COVID-19 pandemic? And is there a minimum payment that you have to make, so that's one question. I think the second question would be, could you just talk to us a bit about your flexibility in the Intermodal costs. How much can you really flex costs with volume? Or could you give us an idea of how much a fixed costs within the Intermodal business?
With regard to the CTA, there is no minimum payment, and there is no change. It's a contract, which is not impacted by the COVID-19 virus. With regard to the flexibility of our cost, Roland will add on.
Yes. In principle, we are flexible with regard to the capacity as such as we have a certain percentage of short-term equipment leased to deal with that. The problem lies not only in the system, as such. It has to do with the structure of the cargo and the imbalances. That limit the operational gearing for the time being. So on one hand, you need the equipment to maintain the system. And on the other hand, you have to deal with imbalances. And this is very much related to the ongoing crisis.
Okay. And can I just ask a follow-up, which is, as far as I understand it, the German government has talked about short-time working being extended from 12 months to 2 years. I think that's right. Is that the case for you? And have you got a bit more flexibility there than you thought you would have?
This is in principle, correct. We are not in short-term work right now. But in principle, we could apply for it as well. Yes, and it gives to a certain degree as well flexibility. Nobody wants to seek 24 months of short-term work. I mean, this is -- then you have to introduce different measures. Then basically, if you want to continue 2 years paying salaries for people you don't need, you have to implement different solutions.
Yes. But the -- as you outlined, the legal framework was adjusting calling. So it's a theoretical option that you can use the scheme for up to 24 months.
Could I ask one final question? Sorry. Can I just ask one final question. When you talk about free cash flow positive, are you talking about the fact that your net financial debt at the 31st of March 2020 was EUR 119 million and you're hoping to get the 31st of December 2020 with about EUR 119 million of net debt. Is that your aim?
No. Going forward, I would agree. But as I outlined before, we are in a process of achieving free cash neutrality at minimum. But short term, as mentioned before, we expect further equipment, and this will affect the liquidity on hand accordingly and impact the net financial liabilities that you mentioned before depending on the CapEx components that we expect in the next quarters to come. So it will slightly go up. But what I'm referring to here is that, more looking at 2020/'21, is that the operational cash flow overtake the EBITDA as a metric on one hand, and the remaining CapEx at a minimum should fix. And this is our understanding of free cash neutral. But in the meantime, until we have achieved these states at minimum, liquidity will be affected to a certain extent.
We have a follow-up question from the line of Adrian Pehl from Commerzbank.
Actually, couple of housekeeping questions on, first of all, your other operating expense line, that was up 14% year-on-year. I was wondering what that kind of extra cost was related to? Secondly, there was also some inflation on, I would call it, consolidation or holding cost expenses. By roughly, what was it, EUR 2 million basically. Maybe you have some words on this one as well. And lastly, on the financial expenses line, I mean what you booked in Q1 was pretty much equivalent to what you had in Q4. However, there's always some kind of influence, I think, from the minority side. And I was wondering whether the EUR 11.4 million financial expenses was largely attributable to IFRS 16? Or is there -- or any other effects baked into here?
Hopefully, I got all the points. With regard to holding costs, they are affected, as mentioned before, by the pension schemes in place. And as outlined before, I assume 1/3 and most of this -- of the year-on-year personnel cost is allocated in the first instance in the [indiscernible]. So the other point was just...
Yes, there was other operating expenses, actually, you had EUR 32.8 million in Q1. That was up 13.7% when the math is correct versus Q1 last year? Or in absolute terms, it was like 3.5 million or something for us.
Please contact Mrs. Steiner. She will [indiscernible] more details on that.
Yes, no worries. We will come back on this one.
[indiscernible] IT project that was figured in there, but we can give you later those details.
Yes. Yes. That's highly appreciated. And on the financial side, any thoughts around this one?
To a certain extent, the financial income is affected by currency effects, and Ukraine has declined. To [indiscernible] it's cash effective. And the other thing is that we hedged the net present value of the hedging of the local currency in check. Went in the wrong direction in the first quarter. We, in principle, charge the Intermodal business related on a euro equivalent, where we had, to a certain extent, had local steady personnel costs in Czech. And the appreciation of the Czech crowns was expected impacted terms is when the -- due to the pandemic in the other direction, and this impacts the hedging negatively, and this is partly reflected in the financial income as well.
So we should probably then assume -- I mean, last year, you had draw the run rate except for Q4 of something between EUR 9 million and EUR 10 million on financial expenses. That should be the rough figure I guess going forward for Q2, Q3, I said, probably some additional liquidity you might have taken onboard. Is that correct?
If you assume the development normalizing and would take the currency depreciation more as a onetime effect. And accordingly, it should normalize, as you outlined before.
Next question is from the line of Christian Cohrs from Warburg Research.
Yes. Just 2 left from me. First of all, I'm a bit puzzled, to be honest, with regards to the [ trends ] shipment. The feeder ratio is down. And the feeder channel volumes were actually just down, I think, 3.5% or 3.6% in the first quarter. So have you lost market share, and is there a big proportion of fear gone to different ports and now also gone through the [ feeder ] channel. Maybe you can shed some light on that. And secondly, it's a short question. Can you confirm that you have actually lost a major Far East service as of May -- as of mid- of May, to your local competitor. So that actually, besides the volume drop or the deterioration in the market environment, you will also face some headwind from local competition that some volumes actually you have gained a lot in the previous few years that you are now also going to lose some volumes to your rival.
Mr. Cohrs, thank you very much. Yes, I can confirm that the other competitor in Hamburg has lost one Far East trade, and this trade did go to [ unwrap ] them from Hamburg. And in consequences, one trade was leaving Carline going now to our competitor. And I can confirm that these CMA trades still is in more than 4 other trades within HHLA, and this is confirmed in likely and the Far East shipments, which will continue to call and which is confirmed for another couple of years. With regards to the transhipment and the keel, my expert is Mr. Lappin.
Could you give me more details on the question that I give you a proper answer. Okay. As I -- as far as I understood your question, I do not see any correlation to volume on one hand and the nautical limitations in the current status of the canal given the principle declining volumes in the current environment.
So well, first off, according to press releases, the volume decline for the [indiscernible] was, I think, 3.6% in the first quarter. Now taking your numbers, the sharp drop in the feeder ratio and combined that with the 4% drop for [ hundred billions ] overall, it seems to me that your volume decline in terms of transshipment is much more pronounced than 3.6% for the Kiel Canal. So I was wondering where this actually comes from because I thought that Containers are going through the Kiel Canal to the Baltic sea to the very most extent actually coming from Hamburg. And yes, due to this gap, I was wondering whether this feels -- is still true or whether you have lost some sort of market share in the field of transshipment, and where this actually comes from. So that is the background of [indiscernible].
It seems to be a very, very academic question, but let me try to answer it in practical terms. You are for quite a while in the industry. So you should know that our liners are coping with increasing excess capacity. And dealing with the excess capacity on one hand on the vessel side, being locked and fixed-cost heavy, dedicated terminal facilities on the other side. This might impact the decision of where to handle transit cargo. And this is not necessarily related to the volumes that you see in the Kiel Canal in the current environment. So this is why I can't follow-up with your calculation on what I'm seeing that some volume has shifted, and this might correlate with the volumes handled in the Kiel Canal but not necessarily due to the aspect mentioned before.
Okay. Then simply, the data reached a new high. Because in the past, well, we have seen some. Yes, of course, you can lose transshipment cargo going not through the Kiel Canal, but the data reaching your height. But that's fine then.
There are no further questions at this time. And I would like to hand back to Angela Titzrath for closing comments. Please, go ahead.
Thank you very much. And ladies and gentlemen, Roland and myself and the whole management team at HHLA are convinced that we will navigate through these stormy waters. The pandemic gives digitalization of push and is causing everyone to leave the beaten track and try something new. Thank you very much for your interest and your ongoing support for HHLA. Please stay healthy, and take care. Goodbye.