Danish shipping and energy group A.P. Moller-Maersk announced a profit of US$253 million for the first quarter of 2017, up 12.9% from $224 million in the same period last year.
This as its energy unit’s performance improved while that of all its other businesses, including Maersk Line, declined.
Revenue increased by 5%, or $424 million, to $9 billion as a result of revenue growth in Maersk Line and Maersk Oil, said the company in an emailed release on May 11.
“We delivered year-on-year revenue growth for the first time since Q3 2014 in line with our ambitions to become a growth company again,” said Soren Skou, CEO of A.P. Moller-Maersk.
“Whilst we cannot be satisfied with the overall profitability in the first quarter, the result is as expected and we reiterate our guidance for the year for the Group,” Skou added.
The group delivered an underlying profit of $201 million in line with same quarter last year. The company said the underlying profit reflected an increase of $321 million in Maersk Oil due to higher oil price and lower operating expenses.
“Our Energy division is progressing on defining sustainable structural solutions for the individual businesses and was profitable in first quarter with Maersk Oil delivering strong earnings,” said Skou.
However, this was offset by decreases in almost all other businesses. In particular, the overcapacity in the drilling industry led to a decrease of $175 million in Maersk Drilling.
And despite increasing freight rates, Maersk Line experienced a first-quarter loss of $66 million as against a profit of $37 million in the year-ago period, primarily due to higher bunker costs.
Despite this, Skou said “Maersk Line is on track to deliver a result improvement of above USD 1bn for 2017 compared to 2016, despite an underlying loss of USD 80m in Q1, driven by a USD 381m higher fuel bill.”
He noted that the shipping industry is showing signs of improvement. “Both spot freight rates and contract rates have increased during the quarter, lately also on the North-South trades.”
He added that Maersk Line is focused on restoring profitability and maintaining market share in the next quarters, as industry fundamentals improve.
Moreover, the Hamburg Sud acquisition is expected to deliver substantial revenue, volume, and market share growth as well as operational synergies of $350 million to $400 million per year from 2019, said the company.
The acquisition is “progressing as planned towards a closing in fourth quarter, subject to regulatory approvals,” said Skou.
Another positive development is the continuing business integration between its transport and logistics divisions.
“We are starting to see synergies in Transport & Logistics, for example with Maersk Line increasing volumes to APM Terminals, improved collaboration between Maersk Line and Maersk Container Industry leading to significantly higher volumes and improved results, as well as cost synergies on Sales, General & Administration,” said Skou.
Photo: Maersk Line – At sea
