Danish oil and shipping conglomerate A.P. Moller-Maersk said it delivered a group profit of US$778 million in the third quarter of the year, down from $1.5 billion in the same period last year, “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.”
In an emailed statement, the group said the return on invested capital for the period under review was 7.6% from 12.7% year-over-year.
The underlying profit was $662 million from the year-ago level of $1.3 billion, 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.
“The Maersk Group delivered an underlying profit of USD 662m in the third quarter. The decline of nearly 50 percent compared to last year was primarily due to container freight rates deteriorating to a historically low level, especially in the later part of Q3, and profits in Maersk Oil being impacted by the lower oil price,” said group CEO Nils S. Andersen.
“The expected underlying result of around USD 3.4bn for 2015 reflects good performance in very challenging oil and container shipping markets, where the continuous actions taken in all our business units to reduce the cost base will enable us to maintain our ability to pursue the opportunities arising in our industries,” he added.
The report said all business units delivered positive results in the third quarter, “reflecting the continuous efforts taken to adjust to the changing market conditions.”
It also cited the intention of its box shipping arm Maersk Line to accelerate cost-cutting efforts and postpone previously announced plans for adding capacity due to lower growth in 2015.
The group’s revenue in the third quarter decreased by $2.1 billion or 17% compared to Q3 2014, predominantly due to lower oil price and lower average container freight rates. The operating expenses decreased by $1.1 billion mainly due to lower bunker prices and cost-saving initiatives.
The Maersk Group—and especially Maersk Line—was severely impacted by continued low economic growth and significant market imbalances, said the report. Global container demand is expected to have grown by 0% to 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.
Maersk Line delivered a profit of $264 million in Q3 2015 from $685 million year-over-year. The underlying profit was $243 million against $659 million in the same quarter of the preceding year.
“The quarter was characterised by poor market conditions with oversupply and decreased imports into Europe, where freight rates declined to new historical lows,” said the report.
Revenue of $6 billion was 14.9% lower than for the third quarter of 2014 due to an average freight rate decline of 19.3% to $2,163 per forty-foot equivalent unit (FFE), where especially the key Europe trades were severely impacted. Recognized freight revenue was $5.4 billion (from $6.5 billion year-over-year) and other revenue was $604 million (US$599 million).
On the outlook for the year, the report said: “The Group’s guidance for 2015 is subject to considerable uncertainty, not least due to developments in the global economy, the container freight rates and the oil price.”
