[171118.EN.BIZ] Maersk Back Into Profit Thanks to Hamburg-Sud and Higher Freight Rates

DANISH shipping giant AP Moeller-Maersk bounced back into profit in the third quarter aided by its acquisition of Hamburg-Sud last year and growing cargo volumes, as well as increased revenue from its non-ocean businesses.

"We continue to see improved results in the third quarter after a very weak start to 2018," said Soren Skou, the chief executive officer of Maersk.

The world's largest container operator said revenue in the third quarter 2018 was US$10.1 billion, 31 per cent more than in the same period last year, up 12 per cent before figuring in the contribution from Hamburg-Sud.

The parent company of Maersk Line and APM Terminals said it had a profit of $360 million in the third quarter compared with a loss of $1.5 billion in the same period last year of which $1.4 billion was due to discontinued operations.

Comparison with the financial results in the third quarter of 2017 is complicated by the fact that Maersk was hit with a costly cyberattack on June 27, 2017, which the company said "significantly affected the container-related businesses, Maersk Line, APM Terminals and Damco, and resulted in a negative development on volumes, utilisation and unit cost performance throughout Q3 2017. Further, the cyberattack caused for additional IT costs and had a negative effect on working capital."

EBITDA was $1.13 billion for the third quarter of 2018 compared with $977 million in the third quarter of 2017.

"We have good earnings momentum," said Mr Skou. Maersk said it now expects to have EBITDA in the range of $3.6 billion to $4 billion for the year and a positive underlying profit.

Maersk benefited from Hamburg-Sud's involvement in intra-regional trades.

Maersk said it handled more than 6.6 million TEU in the third quarter, 26.7 per cent more than in the same period the prior year. Volumes were up 14.2 per cent in the major east-west trades, up 23.9 per cent on north-south trades and up 65.4 per cent on intra-regional trades.

Volume growth for the full year is expected to be 3 per cent to 4 per cent.

In the third quarter of 2018, the average loaded freight rate was $1,929 per FEU, 5.5 per cent higher than a year earlier. While rates rose just 5 per cent on east-west and north-south trade lanes, the average was lifted by a 19.3 per cent rise in intra-regional trades.

Maersk said while its global volumes increased compared to last year, demand was weaker than expected, which led to volumes being lower than anticipated.

"The Asia-Europe trade disappointed the most due to lower imports from Asia to UK, Turkey and Mediterranean, but lower than expected volumes were realised on most trades," Maersk said.

The Danish shipper said it had realised synergies of around $290 million through the merger of Maersk and Hamburg-Sud through "procurement, network optimisation and increased volumes in gateway terminals operated by APM Terminals."

Source : HKSG.