The Maersk Group today reported a “satisfactory” second-quarter profit of US$1.1 billion, negatively impacted by the lower oil price and lower average container freight rates, with decreases in profits from Maersk Line, Maersk Oil and APM Terminals and increases for Maersk Drilling and APM Shipping Services.
The Maersk Group today reported a “satisfactory” second-quarter profit of US$1.1 billion, negatively impacted by the lower oil price and lower average container freight rates, with decreases in profits from Maersk Line, Maersk Oil and APM Terminals and increases for Maersk Drilling and APM Shipping Services.
Maersk Line reported a profit of US$507 million for the second quarter, down from $547m a year earlier. Despite a “sharp decline in the average freight rate” of 14.1%, Maersk Line delivered a 10.1% return on invested capital (ROIC) “based on its cost leadership strategy”, the company said.
For the six months, the results were up on 2014, with net operating profit for the half year of $1.2bn, against $1bn in the same period previously. But the second-quarter figures were dragged down by a 14.1% drop in average freight rates to $2,261 per feu, from $2,634 in the same three months of 2014.
Its estimated EBIT-margin gap to peers was at 6.8%-points in Q1 2015. This remains consistent with Maersk Line’s ambition to sustain a gap over its peers above 5 percentage points, the company said. Cash flow from operating activities was USD 873m (USD 870m) and cash flow used for capital expenditure was USD 861m (USD 488m) leaving a free cash flow of USD 12m (USD 382m).
In terms of guidance for 2015, Maersk Line reiterated the expectation of a higher underlying result than for 2014 (USD 2.2bn). But it said global demand for seaborne container transportation is revised to an expected increase by 2-4% versus previously by 3-5%.
In a streategy update, it said Maersk Line continues to improve its competitiveness through cost leadership. “Maersk Line maintains its medium term ambition of an EBIT margin gap to peers of more than 5 percentage points, which Maersk Line has delivered every quarter since Q4 2012,” the company said.
“Maersk Line maintains its ambition to be self-funded, which has been achieved since 2013. Maersk Line adjusts its growth target from growing in line with the market to growing at least with the market to defend its market leading position. Maersk Line is executing on its USD 15bn investment programme announced in September 2014 to support the growth targets. Additionally, Maersk Line adjusts its annual return target from 8.5% ROIC to ROIC between 8.5% and 12.0%.”
Speaking about the overall Maersk Group results, Group CEO Nils Smedegaard Andersen said: “In a quarter impacted by lower average container rates and a lower oil price, the Maersk Group achieved a satisfactory result with an underlying profit of US$1.1bn (compared with US$1.2bn in 2014) and maintain the expectation of an underlying result of around US$4bn for the year.
“We reiterate our strategic direction of targeting profitable growth with top-quartile performance and a ROIC above 10% over the cycle in all business units. The turbulence in the oil price has had a negative influence in the oil and offshore markets and countries dependent on oil. This has changed the outlook for Maersk Oil, Maersk Drilling, APM Terminals and APM Shipping Services, where previously announced profit and growth targets will be replaced by plans adapting to the volatile environment.”
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