Maersk Profits Up In Q4, 2012?

A Q4 showing increased profits seems to be the consensus of opinion of analysts ahead of AP Møller-Maersk’s full-year results tomorrow for its flagship liner business.

A better than expected US$498 million net profit in third-quarter 2012 for the group’s liner services — including Maersk Line, Safmarine, MCC Transport and Seago — represented more than 50% of the Danish transport and energy company’s total net profit of $933 million.

A Q4 showing increased profits seems to be the consensus of opinion of analysts ahead of AP Møller-Maersk’s full-year results tomorrow for its flagship liner business.

The turnaround followed a first-half loss of $372 million for the container arm, which posted a disastrous $600 million loss in the first three months of 2012.

William Foggon of Berenberg Bank said: “The key issue is what happened to contract rates during the fourth quarter. Typically, around 70% of Maersk’s volumes are on contract, not spot, and we know that these have been negotiated upwards substantially.”

Given that Maersk continues to bring down its unit costs and is off-hiring surplus charter ships, Foggon expected its profitability to have increased again in fourth-quarter 2012.

Meanwhile, looking forward, Rob Byde of Cantor Fitzgerald said: “Now the key issue is the direction of container freight rates and how they will impact earnings this year.”

Given that Maersk continues to bring down its unit costs and is off-hiring surplus charter ships Foggon believes “there is a good chance that profitability in Maersk Line increased again in Q4”.

Byde expects the “usual cautious outlook” from Maersk on Friday and predicts that they will hit forecast.

However, he added: “All eyes are on the spring rate negotiations.”

Herman Hildan at Platou Markets said: “Given record newbuilding containership deliveries in 2013 and negative trade growth for certain lanes, we expect liners to struggle to keep rates up above breakeven.”