Maersk profit sinks in tough market

Danish oil and shipping conglomerate A.P. Moller-Maersk on Friday reported a plunge in profits in the second quarter in the face of tough market conditions, but beat expectations as it continued to cut costs.

Maersk profit sinks in tough market
The Danish company posted its disappointing results on Friday. Photo: Claus Fisker/Scanpix
Net profit in the period plummeted to $101 million (€90.5 million) from $1.07 billion as revenue fell 16 percent to $8.86 billion.
“In response to challenging supply-demand imbalances, the group continues to execute on factors that are within our control by reducing cost and delivering high operational performance,” the company said in a statement.
“Maersk Oil has reduced operational costs by 25 percent, upholding a break-even at $40 to $45 per barrel. The costs in Maersk Line have been reduced to an all-time low level,” it added.
While chief executive Soren Skou said the results were “unsatisfactory”, earnings before interest and tax reached $656 million, higher than a Bloomberg analyst consensus of $551 million.
Shares in Maersk were 3.1 percent higher in late morning trading on the Copenhagen bourse, where the main index was 0.4 percent lower.
Shipping unit Maersk Line continued to suffer from overcapacity in the industry, posting an underlying loss of $139 million, down from $499 million a year ago as average freight rates were 24 percent lower.
Maersk Oil, which made an underlying profit of $130 million, said it had reduced its headcount by 25 percent since the third quarter of 2014.
The result “reflects that Maersk operates in historically difficult markets, where there is pressure on all parts of the business,” Sydbank analyst Morten Imsgard told news agency Ritzau.
Maersk said in June it was considering splitting the group into several separate companies, as it named Skou — who also heads Maersk Line — as its new chief executive.
The board will give an update on the progress of a strategic review into the matter by the end of the third quarter.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


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.

READ ALSO: Danish shipping giant calls for global carbon tax for shipping