Maersk's Shipping Profit Doubles on Europe-Asia Demand

Posted by Joseph Keefe
Wednesday, May 21, 2014

A.P. Moller-Maersk Q1 net profit $1.207 bln vs $1.072 forecast; Raises full-year outlook.

Profit at A.P. Moller-Maersk's container shipping business, a bellwether for global trade, more than doubled in the first quarter as demand on the world's busiest route between Asia and Europe picked up and it cut costs.

That helped the Danish shipping and oil group beat forecasts for net profit on Wednesday and prompted the company to raise its outlook for the full year.

The jump in profit at Maersk Line, the world's largest container shipping company, is an early sign the company is starting to recover from several tough years in the industry.

Container shipping firms have been struggling with overcapacity and too few goods to transport as a result of a weak global economy.

A.P. Moller-Maersk Chief Executive Nils Smedegaard Andersen said he was surprised by the strength of demand.

"It is a little bit surprising that volume to and from Europe is growing very nicely, particularly export out of Europe is developing very well," he said.

Maersk Line raised its 2014 profit outlook to beat last year's $1.5 billion rather than matching it, partly driven by increasing demand in China for European food, fashion and car parts.

Historically, goods on this shipping route have mainly been transported from Asia to Europe. But this could be about to change as a growing middle class in China buys more goods from Europe, said Lars Jensen from maritime analysis company SeaIntel.

Maersk, which has about 15 percent of the global market, expects demand for containers to increase by 4-5 percent this year.

Maersk shares were up 3.5 percent at 1143 GMT compared with a 0.6 percent rise in the Danish benchmark index.

"The report is a positive signal when it comes from a conservative company after the first quarter," analyst Jesper Christensen from Alm. Brand Markets said.

Sydbank analyst Jacob Pedersen said Maersk Line was far ahead of most competitors. German shipping company Hapag-Lloyd earlier in May reported a loss for the first quarter and Singapore based Neptune Orient Lines also reported a loss.

"Maersk Line has been much better than other shipping companies to reduce costs," Jensen said.

ALLIANCE DELAYED


Maersk Line also said the start date for its alliance with two other global shippers, Switzerland-based MSC Mediterranean Shipping Company and France's CMA CGM, would be pushed back from the middle of this year while they wait for regulatory clearance.

The alliance, set up to tackle overcapacity, was given the go-ahead by U.S. regulators in March but is still waiting for other countries including China.

Group net profit rose to $1.207 billion in the first quarter, beating an average forecast of $1.072 billion in a Reuters poll of analysts.

Maersk Line, which contributes around half of the group's total revenue, reported a 123 percent rise in net profit.

The result was supported by a 10 percent drop in fuel costs to $1.2 billion due to 2.9 percent lower fuel consumption and a 7.2 percent decrease in the average fuel price.

A.P. Moller-Maersk reiterated its overall group outlook for the full year to be significantly above the 2013 net profit of $3.8 billion. But the company raised its forecast for profit excluding disposals to around $4.0 billion from an earlier $3.6 billion.

Maersk Line's costs per unit fell by 9 percent and volumes increased to 2.2 million forty-foot containers (FFE) from 2.1 million a year earlier.


By Ole Mikkelsen

Maritime Reporter October 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Gazprom Transgaz Ufa Organizes Arts Festival

Over 200 healthy children and children with disabilities from Bashkortostan as well as the Volga Region participated in the Breaking the Barriers second interregional children’s arts festival,

President Pryor Retires from ExxonMobil Chemicals

Stephen D. Pryor, president, ExxonMobil Chemical Company and vice president of Exxon Mobil Corporation, has elected to retire on January 1, 2015, after more than 44 years of service.

Steven Palazzo Visits HII, Newport

Huntington Ingalls Industries today hosted Rep. Steven Palazzo, R-Miss., for a tour of the company's Newport News Shipbuilding division. Palazzo represents the fourth district of Mississippi,

Ports

October Imports up 9% at Port of Oakland

Containerized imports shipped through the Port of Oakland were up 9.17% in October from a year ago, the port said, citing the surge as the biggest jump in import cargo volume in six months.

BG Group's Queensland Curtis LNG to Ship First Cargo

BG Group is set to ship the first cargo of liquefied natural gas from its flagship gas project Queensland Curtis LNG on Dec. 20, a source familiar with the matter told Reuters.

Belgian Strike to Impact Antwerp Port

A strike in parts of Belgium on Monday is expected to disrupt rail services and one of Europe's largest ports as trade unions and workers voice their anger over

Finance

Time-out for Kwanza Drilling

Statoil has decided to cancel the Stena Carron rig contract after fulfilling the work commitments in the Statoil-operated blocks 38 and 39 in the Kwanza basin offshore Angola.

Oil Deal Between Iraqi Kurdistan & Baghdad Welcomed

The United States welcomes an agreement between Iraq's central government in Baghdad and its northern Kurdistan region over the management of oil exports, U.

Nigeria to Cut Petrol Subsidy by Half

Nigeria plans to cut subsidies on petroleum products by half next year after sharp falls in global crude prices, spurred the government to revise its 2015 budget downwards,

Container Ships

Sea Star Line: Equipment Replacement Plan on Track

Company Receives New Refrigerated Containers and Places Order for New Genset Equipment   Sea Star Line, LLC began receiving the first of its new 100 40’ and 45’

October Imports up 9% at Port of Oakland

Containerized imports shipped through the Port of Oakland were up 9.17% in October from a year ago, the port said, citing the surge as the biggest jump in import cargo volume in six months.

Video: Reefer RoRo Ship Design Rebooted

Expanding on the Reefer RoRo Ship design release in September last year, naval architects group Knud E. Hansen A/S has continued the development of the new Reefer RoRo Ship design with version II.

News

7 Rescued from Sinking Freighter Near Haiti

Seven crewmembers were rescued after their 100-foot coastal freighter began taking on water and sank approximately 45 miles north off of Cap Haitien, Haiti, Friday.

Gazprom Transgaz Ufa Organizes Arts Festival

Over 200 healthy children and children with disabilities from Bashkortostan as well as the Volga Region participated in the Breaking the Barriers second interregional children’s arts festival,

Time-out for Kwanza Drilling

Statoil has decided to cancel the Stena Carron rig contract after fulfilling the work commitments in the Statoil-operated blocks 38 and 39 in the Kwanza basin offshore Angola.

Logistics

October Imports up 9% at Port of Oakland

Containerized imports shipped through the Port of Oakland were up 9.17% in October from a year ago, the port said, citing the surge as the biggest jump in import cargo volume in six months.

Cost to Fuel Ships Falls

For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as $1 million a year if current price level stay put. Assuming

Asia Tanker, VLCC Rates Could Climb

Charterers to release 30 Middle East VLCC cargoes next week. VLCC market buoyed by upbeat Suezmax, Aframax sectors. Rates for very large crude carriers (VLCCs)

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Navigation Port Authority Ship Electronics Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1910 sec (5 req/sec)