Maersk Q3 Profit Falls
Danish shipping and offshore energy conglomerate, Maersk Group, kept a reduced forecast made two weeks ago for a 2015 underlying profit of $3.4bn, down from the $4.0bn previously expected.
The Danish shipping giant said on Friday that lower oil prices and lower average container freight rates had hurt its earnings.
The Maersk Group – and especially Maersk Line – was severely impacted by continued low economic growth and significant market imbalances. Global container demand is expected to have grown by 0-1%, whereas the global container fleet grew by almost 9%.
Container freight rates declined significantly across all trades except North America, and especially Maersk Line’s key Europe trades were impacted severely.
The Group delivered a profit of USD 778m (USD 1.5bn) negatively impacted by the lower oil price and lower average container freight rates, down 51% and 19% respectively compared to the same period last year. The return on invested capital (ROIC) was 7.6% (12.7%).
The underlying profit was USD 662m (USD 1.3bn) with lower profits in Maersk Line, Maersk Oil and APM Terminals and improved result for Maersk Drilling while APM Shipping Services was on par with Q3 last year.
Maersk Line delivered a profit of USD 264m (USD 685m) and a ROIC of 5.2% (13.5%). The underlying profit was USD 243m (USD 659m).The quarter was characterised by poor market conditions with oversupply and decreased imports into Europe, where freight rates declined to new historical lows.
Revenue of USD 6.0bn was 14.9% lower than Q3 2014 due to an average freight rate decline of 19.3% to 2,163 USD/FFE, where especially the key Europe trades were severely impacted. In a difficult quarter, Maersk Line defended its market position and grew volumes by 1.1% to 2,427k FFE.
The Group expects an underlying result of around USD 3.4bn which is unchanged from the result adjustment published on 23 October. Gross cash flow used for capital expenditure is now expected to be around USD 7bn (USD 8.7bn) from previously around USD 8bn, while cash flow from operating activities is still expected to develop in line with the result.
