Maersk Line 1H 2015 Profit Up 22%

 

Maersk Line reported a first half-year 2015 (H1) result that is USD 220 million higher than H1 2014. This was achieved due to lower costs.

Revenue in H1 was USD 12,517 million, which is 6.8% lower than H1 2014 (USD 13,365 million). Volumes were 1.1% higher. The market share that Maersk Line lost in Q1 was regained in Q2, where volumes increased by 3.7% ahead of estimated global market growth of 1-2%.

In H1, the Return On Invested Capital (ROIC) was 12.2% and in Q2 the ROIC was 10.1%. In six (6) consecutive quarters, we have delivered a ROIC above 8.5%, which is Maersk Line’s medium-term target for return on invested capital.

The average freight rate has continued to fall throughout the first half of 2015 due to weak demand, overcapacity and an intense competition on price. Maersk Line’s average rate decreased by 8.1% compared to H1 2014, and in Q2 alone, the rate decreased by 14.1% to USD 2,261. In the Asia – Europe trade rates reached an all-time low as the trade contracted with 3%. The China Containerized Freight Index (CCFI) fell to its lowest level since 2009.

“I am satisfied with our first half year result. Our strong financial performance is the result of our cost leadership strategy. It has proven to be the right strategy," says CEO Søren Skou.

  * USD 1.2 billion profit – a 22% improvement compared to H1 2014 (USD 1bn),
  * 12.2% Return On Invested Capital (ROIC),
  * Volumes increased by 1.1%, average rate decreased by 8.1% and unit cost decreased by 9.9%,
  * Global container demand was very weak in H1 2015 and likely to grow by only 2-4% in 2015, which is slower than expected,
  * Maersk Line adjusts its growth ambition from growing in line with the market to growing at least with the market to defend its market leading position,
  * The 2015 underlying result is expected to be above the 2014 underlying result (USD 2.2bn).

“We have built a business which remains profitable despite fierce competition, falling rates and wavering demand. Driven by our low cost position, we continue to lead the industry on profit and margins. I am convinced we can do more and in the coming years grow our business at least in line with the market. We have the people and we have the assets. Most importantly, we continue to improve and deliver the services our customers want,” says Søren Skou, CEO of Maersk Line.

On 2 June, Maersk Line signed a contract for eleven (11) second generation Triple-E vessels with a capacity of 19,630 TEU each to be delivered in 2017-18. The value of the contract is USD 1.7 billion and includes an option for six vessels. The new vessels are intended for the Asia-Europe trade, where they will replace smaller, less efficient vessels.

In addition, on 8 July Maersk Line signed a contract for nine (9) vessels with a capacity of 14,000 TEU each to be delivered in 2017. The value of the contract is USD 1.1 billion and includes an option for up to 8 (eight) additional vessels. The vessels will be designed to operate in and perform efficiently across multiple trades.

We expect the market to remain weak. We expect – with continued over-capacity – the rates to remain under pressure. We expect global container demand in 2015 to grow by 2-4% against a previous expectation of 3-5%. We will continue to actively adjust our network, hereunder reduce capacity, to match the market demand.

“I am satisfied with our first half year result and return on invested capital. Our strong financial performance is the result of our cost leadership strategy. It has proven to be the right strategy, especially at a time with very tough competition, falling rates and stagnating demand,” concludes Søren Skou.