[290212.EN,SEA] Maersk 2011 Profits Total US$3.4 Billion, But Containers Lose $600 Million

DANISH shipping giant AP Moller-Maersk, which owns the world's biggest container carrier Maersk Line, posted 2011 profits of US$3.4 billion, down 32 per cent year on year due to "low container freight rates especially on Asia-Europe trades".

Maersk's container business made a loss of $600 million in 2011, a steep decline from a $2.6 billion profit in 2010.

Group revenue increased seven per cent to $60.2 billion in 2011 from $56.1 billion the previous year, "positively affected by higher oil prices and container volumes, but offset by lower freight rates," said the company.

Commenting on the under-performance of its container business, the company said: "The negative result was primarily due to the low rates on the Asia-Europe trades. The freight rates started the year at a reasonable level, but decreased throughout the year as large amounts of new tonnage was delivered.

"Overall freight rates were eight per cent lower than in 2010 and this, combined with 35 per cent higher bunker prices, reduced margins considerably. The number of containers carried increased by 11 per cent to 8.1 million FEU, and the group more than regained the market share lost during 2010."

Besides the liner business, APM Terminals posted a profit of $649 million in 2011, down 18 per cent from $793 million in 2010. However, said the company, the "profit excluding sales gains and impairment losses was 24 per cent higher than in 2010".

Its terminals' container throughput increased eight per cent on a like-for-like basis and the ROIC was down about three percentage points to 13.1 per cent from 16 per cent in 2010.

"The high investment level from previous years continued, and during 2011 APM Terminals secured further new investments and development projects primarily in emerging markets," said the company statement.

Additionally, Maersk Drilling made a profit of $495 million, up 24 per cent from $399 million in 2010, due to higher day rates and better contract coverage.

The company said it has signed several new long-term contracts and has committed $3.9 billion for investments in six new rigs.

And Maersk Supply Service made a profit of $210 million last year, up four per cent from $201 million in 2010 because of higher activity level and improved spot rates.

Damco, the group's freight forwarding and supply chain management business, posted a profit of $65 million in 2011, up $21 million from $44 million in 2010, attributing the gain to air freight with its acquisition of NTS International Transport Services in China.

Its ocean towage business Svitzer also experienced a profit of $133 million from $130 million in the previous year.

Looking ahead, the AP Moller-Maersk group expects "a positive result lower than the 2011 result. Cash flow used for capital expenditure is expected to be around the same level as in 2011 while cash flow from operating activities is expected to develop in line with the result."

For liner business, the company expects a "negative result in 2012 as a consequence of excess capacity. Global demand for seaborne containers is expected to increase by four to six per cent in 2012, lower on Asia-Europe trades but supported by higher growth in the north-south trades".

It expects the APM Terminals to perform better than in 2011, growing "more than the market supported by volumes from new terminals."

The total result from all other activities is expected to be at the same level as in 2011 excluding divestment gains and impairments, said the company.

But the company also said that its "outlook for 2012 is subject to considerable uncertainty, not least due to developments in the global economy".

Source : HKSG, 28.02.12.