A.P. Moller-Maersk reported a single-digit increase in total revenue for the first half of the year, as profits from its container shipping division thin out from the pressure of overcapacity and reduced freight rates.
The Danish shipping and oil group announced a 9 percent increase in revenue for the first half of the year to US$29.9 billion from $27.4 billion for the same period last year. The hike was primarily due to higher oil prices and the good performance of its terminals, the company said in a press release.
Profit for the period was 8 percent higher at $2.7 billion from $2.5 billion. The group said, however, that it still expects a revenue lower than the 2010 result.
“As we anticipated at the start of the year, the shipping market has been difficult, due to growing capacity, and we expect the slow economic growth and market volatility to continue for the coming quarters,” says Nils Andersen, A.P. Moller- Maersk’s group CEO.
The world’s largest container shipping company saw a profit of $400 million from its container business, down from $1.2 billion for the same period last year. “Supply of new capacity reduced rates and this, combined with high bunker prices, set margins under pressure throughout the period,” A.P. Moller-Maersk said.
The number of containers carried increased by 6 percent to 3.8 million 40-foot equivalent units, while average freight rates, including bunker surcharges, were 3 percent lower than in the same period last year.
Oil and gas activities continue to benefit from the high oil prices and made a profit of $1.2 billion from $900 million.
The terminal activities made a profit of $304 million compared to $504 million last year, excluding divestment gains and other items. Container throughput increased by 8 percent and earned a return on invested capital of 12.2 percent. During the period, APM Terminals secured a number of new investment and development opportunities primarily in emerging markets.
Tankers, offshore and other shipping activities made a profit of $250 million from $171 million last year, and saw a return on investment capital of 3.4 percent from 2.4 percent.
For the whole of 2011, the group is still bracing for revenue that is below that of 2010. It now expects a “modest positive result” from its container activities, and sees global demand for seaborne containers growing by 6 percent to 8 percent in 2011.
“The global supply of new tonnage is expected to grow more than the freight volumes especially on the Asia to Europe trade,” the company said. “The group expects freight rates to remain under pressure, and high bunker and time charter costs are expected to continue to impact margins negatively.”
Oil and gas activities are now seen to record a profit at the same level as 2010, based on an oil price of $105 per barrel, higher level of exploration activities, and a share of oil and gas production of around 120 million barrels, which is 13 percent below 2010.
The result for terminal activities, tankers, offshore and other shipping activities, retail activities, and other businesses is expected to be above 2010.
“The outlook for 2011 is subject to considerable uncertainty, not least due to developments in the global economy, oil price, and global trade conditions,” the company concluded.
