Posted on August 15, 2016
By Kari Reinikainen, Fairplay
Danish shipping giant AP Moller-Maersk has reported a sharp fall in the second-quarter and first-half 2016 net profits on weak container freight rates and the soft oil price with only Damco, its logistics business, improving its performance on a year ago.
Group net profit declined to USD118 million in the second quarter from USD1.09 billion a year ago, while revenues fell to USD8.86 billion from USD10.52 billion.
In the first six months of the year, the profit fell to USD342 million from USD2.66 billion a year earlier and revenues fell to USD17.40 billion from USD21.07 billion.
Søren Skou, who became group CEO in early July, described the second quarter results as unsatisfactory. “Cost reductions and operational optimisations, however, made a significant contribution to mitigating the impact of the negative market conditions,” he said in a statement.
“Maersk Oil has reduced operational costs by 25% upholding a breakeven at USD40–45 per barrel. The costs in Maersk Line have been reduced to an all-time low level and are under USD2,000/FFE for the first time. Our financial position remains strong with a liquidity reserve of USD11.5 billion,” Skou continued.
“The group’s expectation for 2016 of an underlying result significantly below 2015 is unchanged. To ensure future strength, profitability, and development of new growth opportunities of the company, the board of directors have initiated a strategic review of the company and will report on progress of the review before the end of 3Q16 [third quarter of 2016],” he said, not unveiling further details about it.
In the second quarter, Maersk Line reported a loss of USD151 million compared with a profit of USD507 million a year ago, Maersk Oil’s profit declined by USD6 million to USD131 million, while APM Terminals profit declined to USD112 million from USD161 million. Maersk Drilling made a profit of USD164 million, down from USD218 million and APM Shipping Services plunged to a loss of USD44 million from a profit of USD138 million, with Maersk Supply Service’s USD106 million loss mainly to blame for the overall loss.
In the APM Shipping Services business area, Maersk Tankers, and Svitzer reported a weaker result, but remained in profit. Maersk Supply Service reported a loss of USD106 million compared with a profit of USD64 million. Damco’s profit rose to USD10 million from USD7 million.
Source: Fairplay
