Maersk raises profit outlook as volumes grow

Maersk Line experiences a 6.6 percent volume increase, leading AP Moeller Maersk to raise its projected profit by nearly three billion kroner.

Maersk raises profit outlook as volumes grow
The Maersk container terminal in the Port of Los Angeles. Photo: Kevork Djansezian/Scanpix
Danish shipping and oil conglomerate AP Moeller Maersk raised its full-year profit guidance on Tuesday after quarterly results were boosted by a strong performance by its container shipping business.
It also said it would return about 5.6 billion kroner ($1.0 billion) to shareholders over the next year through a share-buyback programme.
The group, which has about 15 percent of the global container market through Maersk Line, said profit was expected to be 25.14 billion kroner ($4.5 billion) this year rather than the previously stated 22.37 billion kroner ($4.0 billion) after stripping out discontinued operations, impairment losses and divestment gains.
Maersk Line, which accounts for about 40 percent of group revenue, reported a 6.6 percent volume increase and bolstered profits through cost cutting initiatives that included operating ships at a slower speed.
Operating profit from the container business rose by a quarter to $547 million as higher volumes and lower costs offset a fall in the average revenue per unit.
Freight rates have remained depressed since global shipping companies expanded their capacity just as international trade was hit by the financial crisis.
To reduce costs, Maersk announced last month an alliance with shipping company MSC on some of the world's busiest cargo routes after China scuppered a planned tie-up between the two companies and CMA.
The alliance will create a system similar to code-sharing agreements among airlines, allowing the companies to put cargo on each others vessels.
The group's net profit in the second quarter nearly tripled to $2.304 billion from $856 million, reflecting a $2.8 billion gain from selling its stake in Danish retailer Dansk Supermarked, but also a $1.7 billion writedown on its Brazilian oil assets.
Analysts polled by Dow Jones Newswires had expected net profit to reach $2.1 billion.
The raised outlook was "greater than expected," Sydbank analyst Jacob Pedersen told Danish news agency Ritzau.
"The share buyback will make investors say that now Maersk has really trained its focus on the shareholders," he added.
Shares in Maersk were 4.7 percent higher in midday trading on the Copenhagen stock market, where the main index was up by one percent.

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Maersk profits up as global supply chain disrupted

Danish shipping giant, AP Møller-Maersk, said Tuesday that profits were up sixfold in the third quarter as the coronavirus pandemic and global supply chain problems caused container prices to soar. 

Maersk headquarters in Copenhagen. The Danish shipping company posted hefty profits in the third quarter of 2021.
Maersk headquarters in Copenhagen. The Danish shipping company posted hefty profits in the third quarter of 2021. Photo: Niels Christian Vilmann/Ritzau Scanpix

“Maersk delivered record earnings” in the third quarter, chief executive Soren Skou said.

“In the ongoing exceptional market situation, with high demand in the US and global disruptions to the supply chains, we continued to increase capacity and expand our offerings to keep cargo moving for our customers.” 

Maersk said that its bottom-line net profit amounted to $5.438 billion in the period from July to September, compared with $947 million a year earlier.

Underlying, or operating, profit increased nearly fivefold to $5.859 billion and revenues jumped by 67 percent to $16.612 billion.

“Results in Q3 were driven by high freight rates in an exceptional market situation,” the group said.

Looking ahead, Maersk said it is sticking to its full year forecast for operating profit of 18-19 billion dollars. 

However, the ocean shipping division “is now expected to grow below” projected global container demand of between seven and nine percent this year, “subject to high uncertainties related to the current congestion and network disruption,” Maersk said.

“The current trading conditions are still subject to a higher-than-normal uncertainty due to the temporary nature of current demand patterns, disruptions in the supply chains,” it cautioned.

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