MAERSK LINE in the black after four quarterly losses

Rebounding container rates helped Maersk Line post a third quarter operating profit of $547 million compared with a loss of $255 million and made parent A P Moller-Maersk raise the group's full-year outlook.

Group chief executive Nils Smedegaard Andersen cautioned rates could reverse for Maersk Line, which returned to profit after four successive periods of losses, reported Reuters.

"I think one should be careful expecting that this is now very stable," Andersen told reporters. "It does not mean there is no chance of a relapse for prices on some routes."

The container unit, a barometer of world trade as its fleet carries more than 15 percent of all seaborne containers, has struggled with profitability due to the global economic slowdown and an oversupply of vessels. Maersk Line successfully managed to implement rate hikes in the third quarter along with rivals, but spot rates on the crucial Asia to Europe route were easing again this week, worrying some analysts.

"The profits are not sustainable for Maersk Line," said Alm Brand analyst Jesper Christensen. "I believe the unit will hold up in the fourth quarter but that rates will fall to unprofitable levels at the beginning of next year," Christensen said.

The Maersk group said it still expected a modest positive result in 2012 for Maersk Line, based on higher average rates in the second half, but downgraded growth estimates for seaborne container demand to three percent from four percent.

It did not offer outlook for next year, but raised its 2012 group net profit forecast to US$3.7 billion from "slightly above" last year's $3.4 billion result. Group net profit jumped to $933 million in the third quarter from $371 million in the same period last year, lagging an average forecast of $1.20 billion by analysts in a Reuters poll.

Maersk Oil reported a 33 percent fall in operating profit to $1.16 billion, lagging forecasts.

Shipowners are struggling with an oversupply of vessels that could intensify next year. Raising rates and cutting costs are amongst ways the companies can cushion falling volumes as trade slows worldwide.

The group said last month it would step up investment in its oil, ports and drilling businesses to cut its exposure to the volatile container shipping industry.

The shipping downturn has forced banks to pull back from shipping finance amid a four year-long downturn that is likely to extend well into 2013. Maersk could decide to increase its planned bond issue program, Smedegaard said.

"Our bond programme is still of a limited size and what will decide how large it will be is how the banks' behaviour will change in the future," he said. "If the banks view credit for large companies increasingly in terms of bonds, we will definitely increase our bond programme," Smedegaard said. The group's four core businesses are Maersk Oil, APM Terminals, Maersk Drilling and Maersk Line.

MAERSK LINE to restructure, terminate 400 jobs

Danish oil and shipping group A P Moller-Maersk said it would slash about 400 jobs as part of a restructuring of its struggling container shipping division Maersk Line.

The group said in a statement that a key objective of the reorganization was faster decision-making and that about 250 of the job cuts would be at its Copenhagen headquarters, reported Reuters.

The shipping industry has been hit hard during the global economic downturn as weak demand and excess capacity knocked freight rates to loss-making levels.

Maersk said last month it expected 2012 results "slightly lower" than in 2011, a modest improvement on previous guidance, but below analysts' hopes.

Maersk Line reported a loss of US$599 million in the first quarter. In a stark illustration of the damage caused by excess tonnage in a poor rate environment, Maersk Line’s volume increased by 18 percent while the average freight rate declined by nine percent compared to the first quarter last year.

source: cargonewsasia[dot]com / picture: google[dot]com

Maersk posts a quarterly loss of US$599 million despite 18pc volume rise

DENMARK's AP Moller-Maersk Group has posted its first quarter results, which its container shipping unit Maersk Line suffered US$599 million year-on-year loss despite a 18 per cent growth in volumes.

The carrier said the average freight rate fell nine per cent compared to the same period last year.

Overall, the group delivered a profit of $1.2 billion, drawn on revenues of $14.32 billion, down one per cent year on year. Compared to the same quarter of 2011, it experienced almost zero growth in the first quarter. Excluding divestment gains and one-off tax income from the settlement of an Algerian tax dispute, the group recorded zero profit in the first three months, against a profit of $1.1 billion in the same period of 2011.

Group CEO Nils Andersen said the company is "not satisfied" with its first quarter performance, adding "earnings in shipping were weak due to the continued loss-making rates in the container and tanker markets. However, our efforts to increase container rates are paying off and we will continue our initiatives to improve rates throughout the year.

"We will also maintain a high level of costs for oil exploration and development of discoveries for production. We are confident that these investments will enable us to stop the decline in our oil production and then return to growth towards our target of 400,000 barrels per day."

Looking ahead, Maersk expects the group's year-end 2012 earnings will be slightly lower than the $3.4 billion recorded in 2011. Cash flow used for capital expenditure is expected to remain the same as in 2011.

For container shipping, Maersk Line said it "expects a negative up to neutral result in 2012, based on the assumption that the rate restoration that has taken place since March 2012 will continue."

The Maersk Line projects the global demand for seaborne containers will increase by four to six per cent in 2012, with lower increases on the Asia-Europe trades, but higher increases on the north-south trades.

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