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

Australian Defence Minister Says Would Not Trust Submarine Firm to Build Canoe

Australia's defence minister has said he would not trust state-owned Australian Submarine Corp (ASC) "to build a canoe", fuelling expectations that most work in

Matson Raises Guam, Micronesia Rates

Matson, Inc., a U.S. carrier in the Pacific, announced today that Matson Navigation Company, Inc. will raise its rates for the company's Guam/Commonwealth of the

Norwegian Buys Ship from Princess Cruises

Norwegian Cruise Line Holdings Ltd. announces fleet expansion for Oceania Cruises in 2016; Sirena to join sister ships Insignia, Regatta and Nautica   Norwegian Cruise Line Holdings Ltd.

Ports

Vacant Pier to Help Ease Long Beach Congestion

Pier S temporary depot to relocate empty containers for next five months    The Port of Long Beach expects a “Temporary Empty Container Depot” planned for a vacant

Vietnam Warship Visits Underscore Regional Tension

Vietnam on Tuesday showed off its two most powerful warships in the first-ever port call to the Philippines but an official said it was not trying to challenge

Vacant Pier at Long Beach Port to Ease Congestion

The Port of Long Beach expects a “Temporary Empty Container Depot” planned for a vacant pier on Terminal Island to be open and operating in December, which will

Finance

Matson Raises Guam, Micronesia Rates

Matson, Inc., a U.S. carrier in the Pacific, announced today that Matson Navigation Company, Inc. will raise its rates for the company's Guam/Commonwealth of the

Shipbuilding Regulations: Cents and Sensibility

Addressing the Jones Act is just one aspect of an increasingly complicated boatbuilding environment. Stovepiped, poorly conceived regulations is another. The sting of the recession is fading,

Ship Broker Clarkson Looks to Acquire Platou

Top ship broker Clarkson is seeking to acquire Norwegian brokerage and investment bank RS Platou for 281.2 million pounds ($441 million) in a deal that would create

News

US House to Hold Hearing on Oil Export Ban

A House of Representatives panel will hold a hearing on Dec. 11 to explore whether a decades-old law that prohibits the export of crude oil makes sense in an era of domestic energy abundance.

Bollinger Delivers 11th FRC to the US Coast Guard

Bollinger Shipyards, Inc. has delivered the William Trump, the 11th Fast Response Cutter (FRC) to the United States Coast Guard.   The announcement was made by Bollinger Chief Operating Officer,

Australian Defence Minister Says Would Not Trust Submarine Firm to Build Canoe

Australia's defence minister has said he would not trust state-owned Australian Submarine Corp (ASC) "to build a canoe", fuelling expectations that most work in

Logistics

Matson Raises Guam, Micronesia Rates

Matson, Inc., a U.S. carrier in the Pacific, announced today that Matson Navigation Company, Inc. will raise its rates for the company's Guam/Commonwealth of the

Vacant Pier to Help Ease Long Beach Congestion

Pier S temporary depot to relocate empty containers for next five months    The Port of Long Beach expects a “Temporary Empty Container Depot” planned for a vacant

Russian Liftings for Western Options at 12-Year Low

By Gleb Gorodyankin MOSCOW, Nov 25 (Reuters) - Exports of Russian crude oil to Western markets are set to fall by almost a third in December and reach a 12-year

 
 
Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Pod Propulsion Port Authority Ship Electronics Ship Simulators Sonar
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: 0.2617 sec (4 req/sec)