Maersk profits down due to freight and oil slumps

Danish shipping and oil conglomerate A.P. Moller-Maersk on Friday reported a near halving of profits as it was hit by weaker container freight rates and lower oil prices.

Maersk profits down due to freight and oil slumps
A photo taken on December 3, 2014 shows workers taking a break outside an under-construction Maersk triple-E class container ship at the Daewoo DSME shipyard in Okpo, 60km south of Busan. Photo: Ed J
The decline “was primarily due to container freight rates deteriorating to a historically low level, especially in the later part of the third quarter, and profits in Maersk Oil being impacted by the lower oil price,” chief executive Nils Andersen said in a statement.
The average container freight rates were down by 19 percent compared to the same period a year ago, while oil prices had plunged 51 percent, the group said.
Shipping unit Maersk Line, seen as an international trade bellwether as it controls around 15 percent of global sea freight, said on Wednesday it would cut 4,000 jobs by the end of 2017 and defer vessel investments.
It followed an announcement by Maersk's oil business last week that it would cut between 10 to 12 percent of its workforce due to slumping oil prices.
“It is a world of slow growth, no question about that, but the real concern we need to have is that we operate in (the) industry of shipping where there is a lot of capacity and the market is not growing as strongly as participants in the market expected,” Andersen said.
In response to sluggish demand “we are reducing costs and we are also stopping our investments a little bit,” he said.
But strengthening the group's balance sheet in previous years meant it still had “money to invest in distressed assets or interesting assets, within our core businesses,” he added.
“It is clear that Maersk Line has found itself in the epicentre of the tremors in the container market,” Sydbank analyst Jacob Pedersen told Danish news agency Ritzau.
The group's net profit fell to $755 million in the third quarter from $1.465 billion a year ago as revenue dipped 17 percent to $10.11 billion.
Shares in Maersk edged up 0.5 percent in mid-morning trading on the Copenhagen stock exchange, where the main index was 0.2 percent higher.

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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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