Moeller Says '99 Shipping Profits To Be Up From Last Year

Year A.P. Moeller - parent of the world's leading container shipping company Maersk Line -announced last week that full-year 1999 operating profit on shipping activities would exceed last year's. In January-June, this line of the profit and loss account showed a profit of $196 million, up from $154 million in the same period a year ago. Shipping accounted for 89 percent of the group's turnover and 53 percent of operating profit. "For container services the result was at the level of that of the first half of 1998. Overall freight volumes increased," an A.P. Moeller representative said. "In general, freight rates declined to the Far East and between Europe and the U.S., but increased in the latter part of the first half year from the Far East to Europe and the U.S." The shipping business's full-year 1999 net profit, including the group's customary transfer of part of its oil surplus to the accounts of the shipping companies, is expected to be "slightly below" last year's $378 million crowns. In 1998, the oil profit transfer was $84 million and net profit was also bolstered by a $83 million one-off gain from the liquidation of a wartime maritime insurance fund. A.P. Moeller officials said the company expects an increased oil profit transfer to the shipping activities this year, but did not elaborate. Maersk Line cemented its position as the global leader in container shipping through A.P. Moeller's acquisitions this year of South African Safmarine and U.S. Sea-Land. "Final takeover (of Sea-Land) is subject to authorities` approval, which is expected to be obtained in the last quarter of 1999," representatives said. "Considerable non-recurring expenses in connection with the implementation (of the Sea-Land deal) will affect the results for 1999 and 2000 negatively, but the takeover will result in significant future synergies." The integration of Safmarine was proceeding as planned, A.P. Moeller said. In a separate statement, chief executive Jess Soederberg said the integration of the newly acquired U.S. Sea-Land would entail significant one-off costs that will be reflected in 1999 and 2000 accounts. "We hope that there will be synergy benefits already in 2000," he said, adding the cost of integrating Sea-Land would be offset "very quickly" by synergies. The July purchase of Sea-Land's international container business for $800 million from U.S. CSX Corp. was likely to be finalized in the last quarter of 1999. Among shipping activities other than the container service, the group said the H1 result for large crude carriers was lower than in the year-ago period. Product carriers as well as bulk and special carriers performed in line with January-June last year while gas carriers and supply vessels did slightly better.