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Shipping prices sink Maersk profit

Danish conglomerate A.P. Moller-Maersk said on Wednesday that its third quarter profit tumbled 44 percent to $429 million (387 million euros) as low fees pushed its world-leading shipping service into loss.

Shipping prices sink Maersk profit
Photo: Asger Ladefoged/Scanpix
However the company, which is in the midst of splitting off its oil and oil-related businesses, said profit rebounded in these units.
 
Overall, the group's sales contracted nine percent to $9.2 billion.
 
“The result is unsatisfactory, but driven by low prices,” chief executive Søren Skou said in a statement.
 
He pointed to freight rates down by 16 percent from last year, which pushed Maersk Line into is second straight quarterly loss.
 
The net loss of $116 million compared to a profit of $264 million in the July through September period last year.
 
The loss came despite the container industry witnessing its first major bankruptcy in 30 years, when the world's seventh largest carrier, South Korea's Hanjin, filed for receivership in August.
 
Maersk Line experienced short-term increased demand for its services in the transpacific trade as a consequence, and freight rates increased by five percent from the second quarter.
 
In the past, the group's oil operations have helped offset downturns in the shipping sector when oil prices rose.
 
But facing headwinds in both sectors, Maersk said in September that it would split the the group into separate businesses for transport and energy.
 
Wednesday's results sent the company's shares eight percent lower in morning trading on the Copenhagen bourse, where the main index was down by 1.4 percent.

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BUSINESS

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

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