Maersk Line Posts Profit as Capacity Control Lifts Pricing

A.P. Moeller-Maersk A/S (MAERSKB) said its container-shipping line, the world’s largest, posted a first-quarter profit as freight rates picked up.

Maersk Line’s net income totaled $204 million, compared with a loss of $599 million a year earlier, the Copenhagen-based group said today in a statement. That beat the average estimate of $160 million in a Bloomberg survey of six analysts.

The shipping operator has slimmed down its fleet and slowed vessel speeds to curb capacity as falling consumer demand hurts cargo volumes and carriage prices. Group earnings fell 35 percent as profit from an oil division tumbled, Maersk reported.

“Maersk Line is much more competitive and has gained strength to deal with the challenging shipping markets,” Chief Executive Officer Nils Smedegaard Andersen said in the statement which cautioning that container demand will remain “subdued” in 2013, making managing supply “even more important.”

A.P. Moeller-Maersk shares rose as much as 2.6 percent before trading 0.8 percent higher at 41,560 kroner as 10:10 a.m. in Copenhagen trading. The stock has lost 2.5 percent this year, valuing the company at 178 billion kroner ($31 billion).

Rate Gain

Maersk Line cut unit costs 7.1 percent in the quarter as volumes fell 4 percent, while its freight rates rose 4.7 percent. The unit continues to forecast that full-year net income will exceed 2012’s figure.

First-quarter profit was aided by lower fuel usage and the hiring-in of vessels with lower depreciation, Roger Elliot, an analyst at Citigroup Inc. said in a note to clients. The outlook for profitability at the division remains unclear since shipping -rate comparatives are tougher in the second quarter, he added.

Maersk revised its forecast for growth in global container demand to a range of 2 percent to 4 percent from 4-5 percent.

Container rates will stay under pressure as fleets expand 7.5 percent, exceeding growth of 4.5 percent, according to Drewry Maritime Equity Research, which says the industry must idle more ships to support pricing.

“Freight-rate volatility will be a defining feature of the decade,” Martin Dixon, a London-based researcher at Drewry, said in a presentation yesterday.

The $710 million quarterly profit for A.P. Moeller-Maersk as a whole -- down from $1.08 billion -- was hurt by a 73 percent drop in earnings to $346 million at Maersk Oil.

The performance of the company’s most profitable division was hurt by lower crude prices, decreased production and an absence of tax and divestment gains.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editors responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net

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