Maersk Executives Call a Bottom in the Shipping Container Market
Danish shipping-and-oil giant A.P. Moller-Maersk A/S said Thursday the container market is starting to emerge from one of the worst industry downturns with demand outgrowing capacity for the second consecutive quarter.
Maersk Line, the company's biggest unit and the world's largest container operator by capacity, said average freight rates increased 4.4% in the first quarter. Revenue and volumes both increased 10% from a year earlier.
But an 80% rise in the cost of fuel meant the unit sank to a loss of $80 million in the three months ended March 31, compared with a $32 million profit a year earlier.
"There is quite strong demand and it's not fully reflected in our results with market conditions improving toward the end of the quarter and in April," Chief Financial Officer Jakob Stausholm said in an interview. "We are optimistic because there has been no real ordering of new ships in the past two quarters and quite substantial scrapping in the short term."
Mr. Stausholm expects demand for containers to increase around 4% for the full year, with capacity growth at 3.5%, with Maersk Line improving its underlying profit by more than $1 billion compared with 2016.
The company is trying to reshape itself into a global supply chain player like United Parcel Service Inc. and FedEx Corp. by integrating its transport and logistics units and spinning off its oil business by the end of next year.
Maersk plans to move more ships in and out of APM Terminals, its own global ports operator, and move more cargo inland through DAMCO, its supply-management division handling airfreight, trucks and warehouses around the world.
Late last year, Maersk announced the acquisition of German shipping line Hamburg Süd, boosting its presence on North-South shipping routes, increasing market share and cutting the average age of its fleet.
The Maersk Oil unit contributed $328 million to first-quarter earnings, benefiting from an average oil price in the quarter of $54 a barrel compared with $34 last year. Chief Executive Soren Skou said that at today's oil price the unit is "very profitable."
The group's net profit for the quarter was $245 million, compared with $211 million a year earlier. Revenue rose 5% to $8.96 billion.
Maersk shares closed up 3.8% to 12,180 Danish kroner in Copenhagen.
Write to Costas Paris at email@example.com and Dominic Chopping at firstname.lastname@example.org
(END) Dow Jones Newswires
May 11, 2017 12:05 ET (16:05 GMT)