DENMARK's Maersk Group, which runs the world's biggest container shipping liner, has downgraded its full-year outlook for underlying profit by US$600 million to about $3.4 billion billion due to the deterioration in the container shipping market.
In a company statement, the Copenhagen-based container shipping company said: "The container shipping market deteriorated beyond the Group's expectations and does not expect market recovery in 2015."
It also explained that the previous expectation, as announced in the Q2 report, was based on an underlying result contribution from Maersk Line above $2.2 billion.
"The Group now expects an underlying result from Maersk Line of around $1.6 billion especially in the latter part of the third quarter and October."
The group's chief executive, Nils Andersen, said Mærsk Line had taken steps in recent years to ensure a "cost-effective and resilient operation" but the weak container shipping market was taking its toll.
Maersk Line's average freight rates were 19 percent lower in the third quarter versus the same period a year earlier, the company said. The shipping line also carried fewer containers than it had expected as shipments only rose 1.1 percent.
The company statement pointed out that in Q3 Maersk Line achieved an average freight rate of $2,163 per FEU ($2,679 per FEU in Q3 2014) and carried 2.427 million FEU (2.401 million FEU in Q3 2014) which were lower than expected.
Analysts said the profit downgrade had been larger than expected, according to media reports.
Sydbank analyst Jacob Pedersen was cited in Reuters saying that: "Mærsk Line has been hit harder than expected by low capacity utilisation due to the low volume growth in the global container transportation market."
Source : HKSG.