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

People & Company News

Panama Canal Updates Maersk on Expansion

Within the framework of the centennial celebration, the Panama Canal Administrator Jorge L. Quijano received a Maersk Line delegation led by Søren Skou, CEO of Maersk Liner Business,

Refiners Seek Jones Act Workarounds as Crude Export Debate Heats Up

As the first U.S. oil condensate exports head to Asia from the Gulf Coast, crude producers and refiners are exploring ways to get around a century-old law that

Maritime Security West Conference Underway in Tacoma

On water and in the air, maritime security involves local, state and federal stakeholders The 2014 Maritime Security West conference is underway in Tacoma, Washington.

Ports

Panama Canal Updates Maersk on Expansion

Within the framework of the centennial celebration, the Panama Canal Administrator Jorge L. Quijano received a Maersk Line delegation led by Søren Skou, CEO of Maersk Liner Business,

First Two Mooring Boats Launched for Port of Ras Laffan

Nakilat has celebrated the delivery of two 16-meter mooring boats built by shipbuilder Nakilat Damen Shipyards Qatar for towage operator Nakilat Svitzer Wijsmuller.

Maritime Security West Conference Underway in Tacoma

On water and in the air, maritime security involves local, state and federal stakeholders The 2014 Maritime Security West conference is underway in Tacoma, Washington.

Finance

Refiners Seek Jones Act Workarounds as Crude Export Debate Heats Up

As the first U.S. oil condensate exports head to Asia from the Gulf Coast, crude producers and refiners are exploring ways to get around a century-old law that

Lukoil Shipped Canadian Crude from Houston

Russian oil major Lukoil has emerged as one of the first companies to buy Canadian crude re-exported from a U.S. port, shipping one cargo last month to its refinery in Augusta,

Vestas Profit Beats Forecast

Danish wind turbine maker Vestas Wind Systems posted much higher than expected second-quarter earnings and slightly increased its guidance for the full year, signaling

Container Ships

Doosan Delivers a ‘World’s First’ to NASSCO

Doosan Engine has confirmed delivery of the world’s first dual-fuel, low-speed ME-GI engine to the American National Steel and Shipbuilding Company (NASSCO) shipyard in San Diego, USA.

Asia–U.S. Container Lines to Introduce Freight Increase

The Transpacific Stabilization Agreement (TSA) informs that member container shipping lines are proposing an across-the board general rate increase (GRI) of at

Evergreen Line's Ital Lunare to Make Maiden Call in Boston

As part of the new service linking North Asia and the U. S. East Coast (NUE2), Evergreen Line's containership Ital Lunare will make the first ever direct call into

News

Panama Canal Updates Maersk on Expansion

Within the framework of the centennial celebration, the Panama Canal Administrator Jorge L. Quijano received a Maersk Line delegation led by Søren Skou, CEO of Maersk Liner Business,

First Two Mooring Boats Launched for Port of Ras Laffan

Nakilat has celebrated the delivery of two 16-meter mooring boats built by shipbuilder Nakilat Damen Shipyards Qatar for towage operator Nakilat Svitzer Wijsmuller.

Refiners Seek Jones Act Workarounds as Crude Export Debate Heats Up

As the first U.S. oil condensate exports head to Asia from the Gulf Coast, crude producers and refiners are exploring ways to get around a century-old law that

Logistics

Panama Canal Updates Maersk on Expansion

Within the framework of the centennial celebration, the Panama Canal Administrator Jorge L. Quijano received a Maersk Line delegation led by Søren Skou, CEO of Maersk Liner Business,

Refiners Seek Jones Act Workarounds as Crude Export Debate Heats Up

As the first U.S. oil condensate exports head to Asia from the Gulf Coast, crude producers and refiners are exploring ways to get around a century-old law that

Pipeline Corrosion Shutters Statoil's Troll C Platform

Norway's Statoil shut oil and gas production at its Troll C platform in the North Sea after inspections found corrosion damage on a pipeline, the company said in

 
 
Maritime Security Naval Architecture Navigation Pipelines Pod Propulsion Port Authority Ship Repair Ship Simulators Shipbuilding / Vessel Construction 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: 0.2356 sec (4 req/sec)