Maersk sees FY shipping loss after Q3 profits drop

Monday, 14 November 2011 00:00 - - {{hitsCtrl.values.hits}}

COPENHAGEN (Reuters): Danish shipping and oil group A.P. Moller-Maersk reported a bigger-than-forecast drop in profits for the third quarter due to weak freight rates and said its container shipping business would lose money this year.

The conglomerate forecast a full-year 2011 net profit in a range of $3.1 billion to $3.5 billion including divestment gains, which is below the $5.02 billion for 2010.

The group, whose Maersk Line is the world’s biggest container shipping company and a barometer of global trade, said net profit fell to 1.92 billion Danish crowns ($356 million) in July-September from 9.62 billion in the same period last year.

The result lagged an average expectation of a fall to 2.41 billion crowns in a Reuters poll of analysts whose estimates ranged widely from a loss of 661 million to a profit of 5.36 billion crowns.

“The Group’s container (shipping) activities now expect a negative result for the full year as a consequence of lower rates on especially the Asia-Europe trade,” A.P. Moller-Maersk said in a statement.

“We are on the way towards a fairly satisfactory result for 2011 especially when one takes the very low container shipping rates into account,” Chief Executive Nils Smedegaard Andersen said in a statement.

The other parts of the group are delivering good results, Andersen said.

The group had earlier guided for a 2011 net result lower than 2010 and for its container shipping operations to reach a “modest positive result” this year.

Container shipping fell to an operating loss of 1.18 billion crowns in the third quarter from an operating profit of 6.65 billion a year earlier, below analysts’ average expectation of a loss of 962 million.

The global container shipping industry, which rebounded in 2010 from a deep plunge in 2009, is facing new challenges from weak freight rates, demand uncertainty and rising fuel costs.

Maersk’s report followed third-quarter losses and gloomy outlooks from Chinese rival COSCO Holdings and Singapore’s Neptune Orient Lines (NOL).

Maersk said average third-quarter container freight rates, including bunker surcharges, were 12 percent lower than in the third quarter last year and 6 percent lower for the first nine months of the year compared to the same period last year.

The group’s oil and gas operations, which contributed most of the profit, were helped by higher prices.