Maersk Group posts highest ever profit of $5.2bn

Maersk Group has posted its highest profit ever of $5.2bn buoyed by liner shipping, APM Terminals and the sale of its majority stake in Dansk Supermarket Group.

The $5.2bn profit in 2014 was delivered in almost steady revenues of $47.57bn.

Maersk Group CEO, Nils Andersen said they were “very, very pleased to present the highest result in the company’s history”.

The underlying result was $4.53bn up from $3.04bn in 2013. “The underlying result was very good and in line with our expectations,” Andersen said.

The group booked a gain of $2.8bn from the sale of its majority stake in Dansk Supermarket. It also announced it would be selling its 20% stake in Danske Bank which is valued at $5.45bn.

He said the Maersk was “Continuing our efforts to focus the conglomerate on shipping and oil related business.”

Star performers in the group were Maersk Line with a $2.3bn profit and APM Terminals with a $900m profit.

However, APM Shipping Services racked up a $230m loss hit by a $357m impairment related to the acquisition of Adsteam in Australia.

“Svitzer’s Australian operations are negatively impacted by industry overcapacity, a high industry cost structure and a general slowdown of bulk activities,” the group said.

Despite the pressure of the falling oil price, Maersk Drilling reported a profit of $478m but Maersk Oil delivered a loss of $861m.

Andersen said they were scaling back on exploration in the Gulf of Mexico and would not be undertaking exploration in Brazil.

Meanwhile, the world’s biggest container line has said it would order new ships for the first time in four years as the industry shakes off its worst crisis in four decades.

Chief Executive Officer of A.P. Moeller-Maersk A/S, Nils Andersen, said the Danish company may focus on purchasing smaller vessels than it has bought in the past.

“The lower the oil price gets, the less benefit the larger ships offer,” he said in an interview from Copenhagen. “We’re not making long-term plans based on what the oil price is exactly today, but nevertheless we’re currently looking into what effect the low oil price should have on our vessel size.”

The decision marks a shift from the container shipping industry’s strategy so far. Vessels built by Maersk Line and its competitors had grown ever larger to save fuel since containerization went global in the 1970s. Maersk Line set itself apart as a pioneer, claiming at least four world records for the biggest ships over the past two decades. Its most recent mega-ship project was in 2011, when it ordered 20 Triple-E class vessels that each carry more than 18,000 containers.

The industry is still suffering from overcapacity. Excess supply in 2009 triggered a slump in freight rates as volumes contracted in the wake of the global financial crisis. Though there’s still too much capacity in some parts of the industry, “the situation looks better now than it has for a while,” Andersen said.

“We need to get new ships by 2017 if we want to keep up with the growth in the market, and we will place orders this year, probably already in the first half,” he said.

Maersk shares rose as much as 3.8 percent in Copenhagen trading and were up 3.4 percent to 15,780 kroner at 12:04 p.m. The stock jumped 9.5 percent on Wednesday and now trades at a record high after exceeding a 2007 peak.

Maersk Line needs its new ships to have a combined capacity of 425,000 standard-size containers in the period 2017 to 2019 to keep its market share, according to its earnings report published Wednesday. That’s equivalent to about 23 of the Triple-E ships on the market.

“We may order Triple-E ships, but don’t expect an order of 20 or 30 ships this year because we need to time it carefully so we grow with the market,” Andersen said. Though the lower oil price makes larger ships less attractive, Maersk is still “looking at both smaller and larger ships and we will probably place orders in both segments,” he said.

Maersk Line said Wednesday its fourth-quarter net operating profit after tax more than doubled to $655 million as higher shipping volumes and lower fuel costs more than countered a decline in freight rates.

Maersk Line’s shipping volumes grew 6.8 percent last year, as the global market expanded 6 percent, according to an estimate provided by BIMCO, the world’s largest international shipping association. The company now has a global market share of 15.7 percent, compared with 15 percent six months ago, according to data from Alphaliner SA.

“We’re not intentionally trying to gain market share,” Andersen said. “When some of our competitors scale back, that leaves more for us. We’re not having a price war as customers have come to us.”

Maersk Line expects to invest about $3 billion a year through 2019 on new vessels and on retro-fitting current ships. The money will also go toward more containers, according to a September presentation.

Maersk Line will in the next four months get the last five Triple-E vessels it ordered in 2011 from Daewoo Shipbuilding & Marine Engineering Co. The Danish company paid $3.8 billion for the 20 ships, which are 400 meters (1,312 foot) long and 59 meters wide.

“If we should buy Triple-E ships, we would deploy them on the Asia to Europe trade and then move some of the smaller tonnage to other lanes,” Andersen said.

The U.S. and India will be the biggest drivers of global economic growth this year, Andersen said.

“Other countries, like the so-called BRIC nations Brazil and Russia, will drag down global growth,” he said.



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