Maersk Defying Market Headwinds as Profit Beats Estimates

 

By Christian Wienberg

(Bloomberg) — Shares in A.P. Moeller-Maersk A/S soared the most since February after the owner of the world’s largest container line said profit exceeded estimates despite a slump in freight rates.

Maersk shares rose 7.4 percent to 12,790 kroner as of 9:39 a.m. in Copenhagen. They soared as much as 8.7 percent right after the market opened, their biggest gain since Feb. 25. Before Thursday, the stock had lost 3.7 percent in 2015, compared with a 12 percent gain in the Stoxx Europe 600 Index.

Maersk Line said net operating profit after tax dropped 7.3 percent last quarter to $507 million, beating the $482 million estimate in a survey conducted by SME. Group net income fell to $1.07 billion, better than the median estimate of $729 million in a Bloomberg survey.

It “is a relief” to see the numbers, Frode Moerkedal, an analyst at Clarksons Platou Securities, said in a note. “The figures beat both our, and consensus, expectations hands down” thanks to the company “recapturing volumes and good cost control.”

Maersk Line, which transports about 15 percent of the world’s manufactured goods, said costs fell about 13 percent per transported container last quarter. The division kept its full- year forecast amid a 14 percent plunge in freight rates.

“In a quarter impacted by lower average container rates and a lower oil price, the Maersk Group achieved a satisfactory result,” Chief Executive Officer Nils Smedegaard Andersen said in the statement.

Buying Shares

The balance sheet “remains strong,” which will enable the company to buy back own shares for about $1 billion, he said.

The share buy-back “shows clear commitment of distributing returns to shareholders,” Moerkedal said. “Our current recommendation is neutral, but is under revision.”

The container industry has since 2009 suffered from over- capacity and freight rate volatility after a slowdown in global trade coincided with a boom in vessel building.

Maersk Line sees 2015 underlying net profit growing from the $2.2 billion reached last year. The group, which also owns oil and drilling operations, kept its full-year forecast for an underlying net profit of about $4 billion.

–With assistance from Peter Levring in Copenhagen.

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