A.P. Møller - Mærsk Group reported a profit of $1.2 billion
in the third quarter, a 28-percent increase over the $934 million it made in the same 2012 period. (The Danish company reports its results in both krones and US dollars.)
Quarterly revenue of $14.6 billion for the group was down less than 1 percent, and the company said increased profit was achieved at all its businesses except Maersk Oil and Damco, its forwarding and logistics businesses. It said improvements were seen in particular at Maersk Line, its biggest unit, APM Terminals and Maersk Drilling.
Maersk Line made a net operating profit after tax of $554 million compared to $498 million a year earlier, which it said was achieved through “lower unit costs through the continuous focus on operational cost savings mainly from vessel network efficiencies and improved vessel utilization, and also supported by lower bunker price.”
Maersk Line revenues were lower for the quarter — $6.78 billion compared with $6.96 in the same 2012 quarter. Maersk Line increased volumes by 10.6 percent to 2.3 million 40-foot equivalent units (FEU).
With increased volumes and an average deployed fleet capacity decrease of 0.8 percent, Maersk said its vessel utilization improved. Falling bunker prices and lower bunker utilization were major factors that resulted in unit costs falling by 13 percent to $2,622 per FEU. Average freight rates fell to $2,654 per FEU in the third quarter, 12.2 percent below where they were a year earlier, but up by 1.4 percent compared to the second quarter of 2013.
Nils Andersen, the chief executive officer of Maersk, said he was confident that Maersk, along with MSC and CMA CGM, will get regulatory approval to form the P3 network by the second quarter of next year.
“We don't see any real arguments against the P3,” he said. “This is good for the customers, this is good for CO2 emissions, and it is good for general costs.”
Asked about the magnitude of the savings P3 might bring to Maersk, Andersen said they would be significant, but said they would not be as great as the cost reduction the company achieved over the past year.
“We continue to be of the opinion that this does not affect the markets in any negative way, as it is a capacity-sharing agreement, which allows us to reduce cost and give our customers a better network as well as reducing the global CO2 footprint. So we think this is a win-win situation for us and the shipping markets," said Andersen.
Maersk said while the third quarter “had satisfactory results, freight rates deteriorated significantly during the quarter, and hence, the seasonally low Q4 2013 has started with low freight rates, which will result in a significantly lower fourth-quarter result than third quarter.”
Andersen said, “We continue to focus on profitable growth. This is also reflected in Maersk Line sticking to the principle of keeping our market share, and if we should at a point in time start to grow, it would be because the customers are willing to pay good prices for good service.”
He said the next two to three years will be a relatively unfavorable period in container shipping due to the supply-demand balance. However, he said Maersk was a market leader with a better cost structure and a higher EBIT margin, and is aiming for a return of between 8 percent and 9 percent on invested capital that will allow it to “make a decent profit and at the same time make sure we don't have any incentive for over investment in the industry, and hopefully cut down on volatility somewhat.”
Andersen continued, “Having said that, part of our strategy is that we have a very strong balance sheet and very high equity, and we are not worried about intra-year or even cross-year volatility in the business if it gives an acceptable average return. But we don't want to have a situation where we pressure our Maersk Line people to go for short term, over-normal profits because we are afraid that will lead to too much volatility.”
APM Terminals had net operating profit after tax of $203 million in the third quarter compared to $156 million in the same 2012. Revenue in the third quarter was $1.12 billion compared to $1.05 billion in the same period a year earlier.
APMT handled 9.3 million TEU in the third quarter compared to 9 million TEU in the same quarter a year earlier. The company noted that its terminal in Santos began operations, but said those operations remain limited in scope while dredging work is under completion by port authorities.
Sale of a 24-percent stake of its terminal in Zeebrugge is awaiting regulatory approval, and Global Ports, a Russian company in which APMT holds a 37.5 percent stake, signed an agreement to acquire National Container Co., another Russian firm
APMT said it continues to focus on improving productivity in existing terminals. In September, productivity, measured in crane lifts per hour, reached its highest level for 2013 and was 6-percent ahead of the 2012 average.
Damco, Maersk's forwarding and logistics arm, had a net operating profit after taxes of $1 million in the third quarter compared to $15 million a year earlier. Third-quarter revenue was $836 million in the third quarter — down slightly from $838 million a year earlier.
“Increased overhead cost, and significant project and restructuring costs led to a result below Q3 2012,” the company said. “The additional cost mainly relates to programs to adjust the business model for the future. This includes roll-out of the new operating system (Air & Ocean) and simplification and consolidation of operational structures in many countries. The system will be cascaded to all regions over the coming quarters, and will add significant cost to Q4 2013 the and first half of 2014, after which Damco is expected to become more profitable.”