Thursday Nov 14, 2024
Thursday Nov 14, 2024
Monday, 20 May 2013 00:00 - - {{hitsCtrl.values.hits}}
COPENHAGEN (Reuters): Owner of the world’s biggest container shipping company, A.P. Moller-Maersk, is ‘100% certain’ it can more than double freight rates in July despite market weakness that has seen prices fall by a third since March.
Shipping has taken a hammering in the past five years, hit both by the broad weakness of the global economy and a boom in orders for huge new freighters put in by major players just as the 2008 financial crisis hit.
The Danish group, whose Maersk Line vessels make up around 15% of world container shipping capacity, however, said its container shipping unit swung back to a US$ 204 million profit in the quarter from a US$ 599 million loss a year earlier, beating forecasts.
While those results benefited from briefly improved prices, Maersk and other major players are now desperate to raise the industry’s traditionally volatile rates, after a fall in the past two months that left most trading at a loss.
Chief Executive Nils Smedegaard Andersen said he had ‘no doubt’ Maersk Line would be successful in its plans to hike rates to US$ 1481 per twenty foot container from 1 July from US$ 731 currently.
Those spot rates, however, are traditionally only a basis for negotiation with clients and he also admitted that the outlook for the industry was bleak. The company cut its forecast for a rise in demand in 2013 to 2-4% from 4-5% earlier. “To be honest, we just have to get used to the fact that these are harder times, and that there will be harder times ahead,” Andersen said at a teleconference.
Market capacity is also expected to increase significantly later this year, not least when the first of Maersk’s 20 new mega vessels is delivered by Korea’s Daewoo Shipbuilding and Marine Engineering. The slump of around 400 dollars in spot rates – a 36% fall – since March had fuelled speculation that Maersk, which traditionally offers a conservative financial outlook, could be cutting 2013 expectations. “The fact that they keep their outlook unchanged at a time when Asia to Europe freight rates are at an absolute low, is an important signal (for the full year results),” said Sydbank analyst Jacob Pedersen.
The group’s first quarter net profit fell to US$ 790 million, down about 30% from the same period a year earlier which included US$ 899 million in settlement for an Algerian tax dispute.
The result was above an average forecast of US$ 726 million in a Reuters poll of analysts. The company reiterated its overall group outlook for the this year’s net profit to be below last year’s US$ 4.0 billion, and the result for its container shipping unit, Maersk Line, to exceed last year’s US$ 461 million. The improvement at Maersk Line countered a 73% drop in net profit at Maersk Oil to US$ 346 million, hit by a falling oil price and lower production but ahead of forecasts.
