Maersk returns to growth
Container shipping and terminals giant Møller - Mærsk has revealed in its Q1 2017 interim report revenue increased 5% in Q1 for the first time since 2014.
Revenue growth was spurred by revenue increases of 10% in Maersk Line (or $US519 million) and 33% in Maersk Oil (or US$343 million).
Transported volumes increased by 10% because of improved demand, but the liner’s market share also increased.
Maersk Line also reported a loss of US$66 million, however market fundamentals improved in Q1 and demand outgrew nominal supply for the second consecutive quarter. Freight rates increased by 4.4%, mainly on East-West trades and especially from Asia to Europe while North-South trade freight rates were below last year's.
A major boost to cash flow from operating activities, of 251%, was mostly due to a one-off dispute settlement payment made to Maersk Oil in 2016.
The Transport & Logistics division also saw a revenue bounce of 10% compared to the same quarter last year, spread across all businesses with the exception of its towage business Svitzer.
Maersk in Q1 integrated its Transport & Logistics division by reforming its container line, Maersk Line, so that more volumes pass through its port and terminal business, APM Terminals.
Further utilizing terminals’ capacity as well as optimising vessel networks, Maersk’s acquisition of German Hamburg Süd container shipping line may generate US$350-400 million annually starting in 2019.
Its acquisition is still subject to EU approvals, but Maersk Line expects to close the transaction by the end of 2017.
The container shipping giant plans to grow the Transport & Logistics division by developing and introducing new digital products and services, for example digital freight forward platform Twill.
Its container liner is collaborating with IBM to develop blockchain solutions that securely digitize supply chain documentation.
Capital expenditure in Q1 fell 33% over the same period last year, at US$1.3 million and divestments included the sale-and-leaseback of vessels in Maersk Line. The Transport & Logistics division also generated a free cash flow of US$104 million including effects from sale-and-lease back transactions in Maersk Line.
Soren Skou, CEO of Møller - Mærsk. said: “A.P. Møller – Mærsk A/S delivered an underlying profit of USD 201m in line with same quarter last year. Whilst we cannot be satisfied with the overall profitability in the first quarter, the result is as expected and we reiterate our guidance for the year for the Group.
“Maersk Line is on track to deliver a result improvement of above USD 1bn for 2017 compared to 2016, despite an underlying loss of USD 80m in Q1, driven by a USD 381m higher fuel bill. Both spot freight rates and contract rates have increased during the quarter, lately also on the North-South trades. Maersk Line is focused on restoration of profitability and maintaining market share in the next quarters, as industry fundamentals improve.”
“We are starting to see synergies in Transport & Logistics, for example with Maersk Line increasing volumes to APM Terminals, improved collaboration between Maersk Line and Maersk Container Industry leading to significantly higher volumes and improved results, as well as cost synergies on Sales, General & Administration.”