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Maersk Line Announces Return To Profitability

by Ulrika Lomas, Tax-News.com, Brussels

21 August 2012


Danish shipping and oil giant Maersk has said that it expects profitability to be restored to its container operations following market developments that impacted positively on in its second quarter results released on August 14, 2012.

The company's shipping division, Maersk Line posted profit of USD227m during the second quarter, against a loss of USD95m in the same period last year, and losses of USD599m incurred in the first quarter. Maersk Line reported that its bottom line was positively affected by an increase in total volumes and higher freight rates, but negatively affected by higher fuel prices.

To combat the oversupply of vessels, which had led to depressed rates, Maersk was one of the first operators to reduce the size of its operational fleet and increase rates. Maersk Line said that despite this decision volume had increased by 11%, and substantial growth was seen in Asia-Europe trade, where volumes increased by 16%. The average freight rate increased by 4.2% during the quarter to 3,014 USD/Forty-foot Equivalent Unit (FFE); and earnings per transported FFE were positive at USD118 (compared to negative USD59 a year earlier).

Maersk Line said that despite its decision to boost rates, the company maintained its market share from Q4 2011 in Q2 2012, but conceded that its decision to act first to trigger an industry rate hike had had a slightly negative impact on the company's market share towards the end of Q2.

Maersk Line said it anticipates modest positive results in 2012, based on higher average rates in the second half of the year. Demand for container transport grew by 4% compared with Q2 2011, however the decline in inbound volumes to Europe seen in Q1 accelerated during Q2.

The Group said, looking ahead, there will be limited need for further contracting of new tonnage in the years to come. The global fleet reached 16.1m Twenty-foot Equivalent Unit (TEU) capacity at the end of Q2, an increase of 7% compared with Q2 2011 and 2% compared to end Q1 2012.

Maersk said higher bunker prices, which rose by 10%, to USD696 per tonne had impacted profits. However, the total unit costs per transported FFE decreased by 1%, mainly caused by better fuel efficiency.

TAGS: marine

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