A.P. Moller – Maersk profit up 15%, box business turns “modest” profit

A.P. Moller – Maersk profit up 15%, box business turns “modest” profit

A.P. Moller – Maersk profit up 15%, box business turns “modest” profit

A.P. Moller – Maersk today reported a “modest” annual profit in its container shipping division as the Danish group achieved a 15.3 percent increase in net profit for 2007 of 18.66 billion Danish Krone
($3.4 billion).
      Group revenue for the year improved 7.2 percent to DKr278.9 billion ($51.2 billion).
      The Copenhagen-based giant said its profits from container activities “showed significant progress, but remain unsatisfactory.”   
The liner business’ profit after tax was DKr 1.18 billion ($217 million), from last year’s loss of DKr 3.38 billion. Profit before financial items and tax (EBIT) in the segment gained six-fold at DKr
5.35 billion ($982 million) despite a revenue drop of 3.4 percent to DKr 145.2 billion ($26.7 billion).
      Other highlights from the container segment include:
      ' Profit at Maersk Line’s sister company Safmarine jumped 66 percent to $83 million and APM Terminals’ earnings increasing 12.1 percent to $111 million on a revenue gain of 22 percent at $2.5 billion. APM handled an extra 13 percent containers in 2007 at 31.4 million TEUs.
      ' Maersk Logistics, which was last year divided into two business units — forwarding under the name of Damco, and global supply chain management under the existing brand — saw its revenue go up 9 percent to $3 billion, although profit was down for the year at $6 billion.
      The combined volume transported by Maersk Line and Safmarine was behind the global container growth — given as 9 percent — with shipments only up 2 percent at 6.8 million FEUs. Maersk said it trimmed its non-profitable transpacific capacity by 17 percent while at the same time raising its volumes in the Asia/Europe trade by 12 percent and Africa trades by 15 percent.
      During the 12 months, average liner freight rates, including bunker adjustments, were 5 percent higher. Average unit costs, including depreciation and amortization, were down 1 percent despite an approximate 10 percent hike in bunker costs.
      In January, Eivind Kolding, Maersk Line’s chief executive officer, announced a “streamLINE” initiative to focus on cutting costs, increasing vessel utilization and simplifying procedures. The move will see job cuts of 2,000 to 3,000 people, mostly from middle management. Non-recurring costs for the implementation of streamLINE are expected to total about $250 million in 2008.
      A.P. Moller – Maersk said the outlook for 2008 is subject to “significant uncertainty” due to a potential slowing of the global economy, record fuel prices and the ongoing reorganization of Maersk Line.
      “Global growth in the container shipping market is expected to decrease compared to 2007 influenced by an expected modest growth in trades to the United States,” the group said in its annual report.
      It expects the global container fleet to swell by 14 percent gross, although it said the net increase is likely to be lower due to longer average transport distances, larger imbalances and industry measures to reduce service speed due to high fuel costs.
      The group added that it is mulling the sale of shares in “non- strategic” assets that if completed this year could bring a net result of $800 million. ' Simon Heaney