Maersk sees $2.9 billion profit as container shipping earnings soar

Maersk sees $2.9 billion profit as container shipping earnings soar    A.P. Moller-Maersk A/S group's net income soared 43 percent last year to DKK17.3 billion ($2.9 billion) from DKK12.1 billion in 2002, as its container shipping and related activities increased their profits eight-fold in 2003 to DKK3.9 billion ($648 million).
   The spectacular recovery of the container shipping and related activities, which include Maersk Sealand, Safmarine, APM Terminals and Maersk Logistics, more than reversed the 67-percent drop in net profit of this unit in 2002, when Maersk Sealand was believed to have made a loss.
   A.P. Moller-Maersk did not disclose the earnings of Maersk Sealand in 2003, but said it had a “positive” development, being “considerably above the 2002 level, despite the weakened U.S. dollar.”
   A.P. Moller-Maersk’s group revenues for 2003 rose 4 percent to DKK157.1 billion ($26.3 billion) from DKK151.6 billion in 2002.
   Revenue from container shipping and related activities increased 9 percent over the same period to DKK90.2 billion ($15.1 billion) from DKK82.6 billion in 2002, as their net income climbed to DKK3.9 billion ($648 million) from DKK419 million ($59 million) in 2002. In 2001, this unit earned DKK1.3 billion.
   A.P. Moller-Maersk said group results for last year was affected in particular by “better markets and rates in U.S. dollars for container services and for the large crude carriers,” weaker markets and rates for supply vessels, drilling rigs and aviation, higher oil prices in dollars, a weaker dollar/Danish Krone exchange rate, and value adjustment of financial assets.
   “2003 was a year of general improvement in the container market due to a combination of an improved U.S. economy, increasing import volumes from Asia to the USA and Europe, as well as increased utilization of the global fleet of container vessels,” the Danish group said.
   In most trades freight rates increased compared with the “low level” in 2002, especially from second quarter of 2003, it added.
   However, the increase in freight rates was “dampened by continued higher rates for chartered tonnage, high fuel prices and increased imbalance in global trade,” A.P. Moller-Maersk noted.
   “Maersk Sealand continued its endeavors to reduce operational unit costs and vessel operating expenses, and to increase productivity, including the amalgamation of a number of administrative functions,” the group added.
   A.P. Moller-Maersk did not provide more detailed financial figures on its container shipping and related activities, but gave general comments on trends in their results.
   Safmarine Container Lines, a sister company of Maersk Sealand within the Danish group, saw a positive development in rates and volumes and its result was “well above” that for 2002, its parent company reported.
   Meanwhile, the result for APM Terminals was “considerably better” than in 2002, partly due to value adjustment of some investments.
   The Maersk Sealand agencies’ trucking and depot activities, also included in the container shipping and related activities unit, had “a satisfactory result above that for 2002,” and Maersk Logistics’ result was “at the level of that in 2002,” with volumes increasing 18 percent last year.
   APM Terminals handled 22.3 million TEUs last year, when measured in crane lifts, an increase of 25 percent over 2002.
   A.P. Moller-Maersk predicted its group result for 2004 before special items, but after tax would be about the same level as for 2003, which was DKK13 billion ($2.2 billion).
   For the container business, the first months of 2004 have shown stable rates and volumes, and the overall result for the container shipping activities is estimated to be above that for 2003, A.P. Moller-Maersk said.
   The Danish group expects its overall revenue to be a little higher this year than in 2003, but warned that developments in the world economy, freight rates, oil prices and exchange rates may still affect its activities and result for 2004.
   Shortly after the profit announcement to the Danish stock exchange today, “A” shares in A.P. Moller-Maersk fell 11 percent, to DKK42,300.