A.P. Moeller-Maersk A/S’s container-shipping line, the world’s largest, reported an 11 percent increase in third-quarter profit after cost cuts countered a decline in freight rates.
Maersk Line’s third-quarter net income rose to $554 million from $498 million a year earlier, the Copenhagen-based company said today in a statement. Its parent, A.P. Moeller-Maersk, raised its full-year forecast and said net income rose 23 percent to 6.36 billion kroner ($1.14 billion), beating the 6.14 billion-krone average estimate in a Bloomberg survey of nine analysts.
Maersk Line, which transports about 15 percent of the world’s containers, is battling industry overcapacity after a boom in ship orders collided with the global financial crisis, triggering the worst slump in freight rates since containerization became global in the 1970s. The company said today it cut unit costs by 13 percent in the quarter, helped by lower fuel prices and better utilization of its fleet.
Maersk Line’s “result was driven by strong volume growth of 7 percent and unit costs 4 percent below consensus,” Finn Bjarke Petersen, an analyst at Nordea Bank AB in Copenhagen, said in a report today. “Maersk Oil reduced oil production estimates owing to a further delay in the ramp-up of production, which is negative for the investment case. However, we believe that the market will focus on the positive development in unit costs in Maersk Line and the small upgrade of guidance.”
Shares of A.P. Moeller-Maersk opened 1.3 percent higher and gained 1.6 percent to 54,300 kroner as of 9:11 a.m. local time. The company’s stock has risen 27 percent this year.
A.P. Moeller-Maersk raised its guidance for 2013 and now sees full-year net income before minority interests of about $3.5 billion, compared with $3.3 billion previously. Maersk Oil reported a profit of $189 million, compared with $243 million a year earlier.
Maersk Line said freight volumes increased 10.6 percent in the third quarter while rates declined by 12.2 percent. The average deployed fleet capacity dropped by 0.8 percent.
Freight rates “deteriorated significantly during the quarter and hence the seasonally low fourth quarter 2013 has started with low freight rates, which will result in a significantly lower fourth quarter result” than in the third quarter, Maersk Line said. Still, the result for 2013 will be “significantly above” the $461 million profit in 2012, it said.
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