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

People & Company News

TOTE Finalizes Charter for LNG Containerships

World’s first LNG powered containerships to serve Puerto Rico TOTE, Inc. announced an agreement today between its operating companies TOTE Shipholdings Inc.

Hamburg Süd Opens Office in India

Hamburg Süd announced the opening of an office in Gandhidham, India, on October 1, 2014. It is the second branch office in the state of Gujarat. Hamburg Süd already has three offices in Mumbai,

GAC Marine Logistics Shifts Central Office to Singapore

In a move that brings it closer to key Asian markets, ship spares logistics specialist GAC Marine Logistics (GML) has relocated its head office to Singapore. The

Ports

First Damen ASD 2810 Leaves for Trinidad

First delivery of Damen ASD Tug 2810, ARC Towage signed four contracts total in Barcelona, Spain On July 31, 2013, ARC Towage signed four contracts at the Netherlands

Bridge Milestone Celebrated at Port of Long Beach

Port, City and Caltrans officials, along with an international team of builders and designers, celebrated a key milestone today in the Gerald Desmond Bridge

DP World Acquires Dubai-based World Security FZE

DP World today announces that it has acquired World Security FZE for total consideration of $25.5 million. World Security FZE provides security services

Finance

Yara Completes Acquisition of OFD Holding

Yara International ASA has obtained relevant regulatory approvals and closed the acquisition of OFD Holding Inc. (OFD) allowing the integration process to start.

Vallianz Acquires OER Holdings for $28m

Vallianz Holdings Limited, a provider of offshore support vessels and integrated marine solutions to the oil and gas industry, has today announced that it is acquiring OER Holdings Pte.

DryShips: Public Offering of Its Senior Secured Notes

DryShips Inc. announced today that it intends to offer senior secured notes due 2017 (the “Notes”) pursuant to its effective shelf registration statement. The Company

Container Ships

TOTE Finalizes Charter for LNG Containerships

World’s first LNG powered containerships to serve Puerto Rico TOTE, Inc. announced an agreement today between its operating companies TOTE Shipholdings Inc.

Hamburg Süd Opens Office in India

Hamburg Süd announced the opening of an office in Gandhidham, India, on October 1, 2014. It is the second branch office in the state of Gujarat. Hamburg Süd already has three offices in Mumbai,

Chinese Manufacturing Expansion Affects Shipping Demand

The expansion of the Chinese Manufacturing Industry continued in September at unchanged pace as compared to the month before, BIMCO reports. The manufacturing industry

News

Wave Energy Conversion Competition Offers Cash Prize

Ricardo has been selected by the U.S. Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy to administer a ocean Wave Energy Converter (WEC) prize challenge,

New Inspection Requirement for Ships in Paris MOU

Lloyd’s Register advises that the St. Vincent and the Grenadines Maritime Administration has issued Circular No. PSC 033 which requires additional inspections (termed

First Damen ASD 2810 Leaves for Trinidad

First delivery of Damen ASD Tug 2810, ARC Towage signed four contracts total in Barcelona, Spain On July 31, 2013, ARC Towage signed four contracts at the Netherlands

Logistics

TOTE Finalizes Charter for LNG Containerships

World’s first LNG powered containerships to serve Puerto Rico TOTE, Inc. announced an agreement today between its operating companies TOTE Shipholdings Inc.

Hamburg Süd Opens Office in India

Hamburg Süd announced the opening of an office in Gandhidham, India, on October 1, 2014. It is the second branch office in the state of Gujarat. Hamburg Süd already has three offices in Mumbai,

GAC Marine Logistics Shifts Central Office to Singapore

In a move that brings it closer to key Asian markets, ship spares logistics specialist GAC Marine Logistics (GML) has relocated its head office to Singapore. The

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Offshore Oil Pipelines Salvage Ship Repair 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: 0.1757 sec (6 req/sec)