Maersk profit tumbles amid shipping, oil market slump

epa05152301 (FILE) A file photo dated 30 September 2013 showing sailboats flanked by a large Danish A.P. Moeller Maersk shipping company container vessel in Elsinore, Germany. Danish shipping and oil group AP Moller-Maersk said 10 February 2016 its full-year 2015 net profit plunged 82 per cent due to lower freight rates and oil prices and writedowns of oil assets. The net profit of 925 million dollars compared with 5.2 billion dollars in 2014. The 2014 results were affected by gains from sales of stakes in a supermarket group and other assets. Turnover in 2015 declined 7.4 billion dollars year-on-year to 40.3 billion dollars. The group that operates Maersk Line, the world's biggest container shipper, said average freight rates dropped during the year. Weaker demand affected transportation to emerging markets as well as imports to Europe and Latin America, it said. EPA/KELD NAVNTOFT DENMARK OUT

COPENHAGEN: Danish oil and shipping conglomerate A.P. Moller-Maersk on Wednesday reported a plunge in first quarter profit, weighed down by low freight rates and oil prices, but cheering investors with significant cost cuts.

“While market conditions remain challenging, we continue to adjust our cost base to the new conditions and maintain a good operational performance across our businesses,” Niels Andersen, the chief executive of Maersk which runs the world’s biggest container shipping line, said in a statement.

Net profit fell 86% to US$214mil (RM859.4mil) as revenue declined 19% to US$8.54bil (RM34.30bil) from the same period a year ago.

The fall in revenue was “predominantly due to a 37% lower oil price and 26% lower average container freight rates,” according to the group.

However, shares in the company rose as profit came in above expectations. Analysts polled by Bloomberg had predicted a net profit of just US$38mil (RM152.59mil) in the period.

“Management has had to slash costs over a long period and they have succeeded with that for another quarter,” Alm. Brand analyst Michael Friis Jorgensen told Danish news agency Ritzau.

Everything “that is not controlled by global container and oil prices they deliver on”, he added.

Cost cuts helped Maersk Oil lower its break-even oil price to US$40 to US$45 per barrel from a previous level of US$45 to US$55.

Stripping out exploration costs, its operating expenses fell 21%.

Shipping unit Maersk Line, seen as an international trade bellwether, saw a 95% drop in net operating profit after tax to US$37mil (RM148.65mil).

“Container freight rates declined across all trades, especially Maersk Line’s key trades to and from Europe as well as Latin America and North America,” the company said.

Shares in Maersk were 5.1% higher in late morning trading on the Copenhagen bourse, where the main index was flat. - AFP