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

People & Company News

Liberian Registry Appoints Catsiba Manager in Dubai

Fay Catsiba has joined the Liberian International Ship & Corporate Registry (LISCR) as Business Development Manager based in Dubai, U.A.E. Greece-born Fay, who

Cook Joins Horizon Shipbuilding as Operations VP

Horizon Shipbuilding, Inc. announced that Mickey Cook has joined the corporation as the Vice President of Operations for the Bayou La Batre shipyard. Cook, one of the founders of C & G Boatworks,

Mercury Marine Launches Repower Financing

Mercury Marine launched a new repower finance program that aims to make it easier for consumers to get the engine performance they want with flexible financing for a broad range of buyers.

Finance

Mercury Marine Launches Repower Financing

Mercury Marine launched a new repower finance program that aims to make it easier for consumers to get the engine performance they want with flexible financing for a broad range of buyers.

Maritime Academy Awarded DHS Grant for Arctic Training

Maine Maritime Academy receives $450,000 grant From U.S. Department of Homeland Security for ice navigation and maritime first responder courses for the Arctic Maine

Knightsbridge Closes Vessel Acquisition Transaction

Bermuda-based Knightsbridge Tankers Limited announced that it has closed the first stage of its vessel acquisition transaction. Knightsbridge has issued 31 million

News

Gladding-Hearn Delivers Third NYPD Boat

With more than a dozen patrol boats and a fireboat built by Gladding-Hearn Shipbuilding, Duclos Corporation, operating in New York Harbor, the Somerset, Mass.,

Cook Joins Horizon Shipbuilding as Operations VP

Horizon Shipbuilding, Inc. announced that Mickey Cook has joined the corporation as the Vice President of Operations for the Bayou La Batre shipyard. Cook, one of the founders of C & G Boatworks,

Update: SS Central America Salvage

Odyssey Marine Exploration completes current phase of SS Central America recovery; 15,500+ gold and silver coins, 45 gold bars recovered to date; 161,000-square meter,

Logistics

China, Sri Lanka to Launch FTA Talks

Chinese President Xi Jinping began a visit to Sri Lanka on Tuesday agreeing to open bilateral negotiations for a free trade pact as Beijing tightened its embrace

Cargo Container Security Alliance Formed

SC-integrity, Inc. (LoJack SCI) and Contguard Ltd. announced a strategic alliance designed to provide their customers with security and real-time visibility of

Mideast Crude Tanker Rates Near 3-month Low

Crude oil tanker earnings on the major Middle East route fell to their lowest in nearly three months as a slowdown in business in recent days battered rate sentiment.

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Ship Electronics 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: 0.2841 sec (4 req/sec)