A.P. Moller Maersk reports $1.5 billion profit

Maersk Line saw quarterly gains, helped by lower costs and higher rates; it plans to start up 2M iwith MSC in January.    A.P. Moller-Maersk — the Danish conglomerate that includes Maersk Line, APM Terminals and divisions in the oil industry and other sectors — had a profit of about $1.495 billion in the third quarter, up from $1.195 billion in the same period last year. (In the third quarter of 2013, the company gained $83 million through the sale of a Danish supermarket chain it previously owned.)
   Revenue was $12.169 billion in the third quarter, compared to $12.081 billion in the third quarter of 2013.
   The company said its container carrier, Maersk Line, made a net operating profit of $685 million in the third quarter, compared to $554 million a year earlier. The improvement was achieved through lower costs and supported by an increase in the average freight rate to $2,679 per FEU, compared with $2,654 per FEU a year earlier. Maersk carried 2.401 million containers in the third quarter, compared with 2.315 million a year earlier. The company also saw average bunker prices fall to $575 per ton during the quarter, compared to $580 per ton a year earlier.
   In remarks to securities analysts, Nils Andersen, the chief executive officer of A.P. Moller-Maersk, said oil prices have continued to fall, resulting in a $20-per-ton drop in bunker prices. He said the lower costs will be positive in the fourth quarter. He added, “Fundamentally, we believe, given the competitive nature of the container business, when you look a little further out than two or three months, the tendency is the carriers compete this away, and it ends up as price reductions.”
   Andersen said that he was pleased to see the level of capacity utilization of the Maersk ships, though he added that “fleet growth has been slightly ahead of the volume growth. Of course, it is impossible to manage this down to less than a couple of percentage points up or down every quarter. Our ambition is to grow with the market, but there will be quarters were we are less and where we will grow even more depending on the speed of delivery, and how fast we can reduce our time charter portfolio.”
   He reaffirmed earlier statements that Maersk planned to spend about $3 billion annually on new ships between 2015-2019; this will be financed out of the company’s own cash flow.
   Andersen said that Maersk does not expect anything to go wrong with its plan to start up the 2M Alliance with MSC in January.
   He said the U.S., Chinese and European regulators will “reserve their rights to observe what we are doing, and if they believe that we act against laws or what they like to see, there can be some measures taken, but there are no plans to do anything other than capacity sharing. It is approved in the U.S., and it is reported or explained in both China and the European Union, so we will start taking orders in December, and the network will go live in January.”
   He continued, “Like in all alliances, we have to watch out and make sure we behave in line with regulations, which we intend to do. Then we do not foresee any problems.”
   APM Terminals had a net operating profit after tax of $345 million in the third quarter, compared with $203 million a year earlier. The company gained $219 million through divestments, including the sale of its terminals in the Port of Virginia and Le Havre, France, offset in part by impairments of $74 million.
   Volumes of containers handled at the APM Terminals amounted to 9.7 million TEUs in the third quarter, compared with 9.3 million TEUs in the third quarter of 2013.
   The company said its DAMCO forwarding unit had a loss of $68 million in the third quarter, compared with a profit of $1 million in the same period last year. This occurred even as its revenue grew to $848 million from $836 million.