Britain To Build A ‘National Flagship’ To Promote Maritime Trade
by Alistair Smout (Reuters) – Britain is to build a new flagship to promote its business and trade interests around the world, the government said on Saturday, in a move it...
COPENHAGEN (Dow Jones)–Danish oil and shipping conglomerate A.P. Moller-Maersk A/S is increasingly optimistic that its container-shipping arm Maersk Line can return to profit in 2012, after freight rates have seen a positive upward trend since March, Maersk Chief Executive Nils Smedegaard Andersen said Wednesday.
For the container shipping industry, 2011 was an annus horribilus, when surging bunker fuel prices, lower freight rates, tough competition and increasing over-capacity combined to send the entire industry deep in red. In the new year, however, rates have seen a marked improvement, as shippers have taken out capacity and abandoned the fierce price competition to plug the outflow of cash.
“We have implemented a number of price increases, which makes us more optimistic that we can achieve a small profit in the full year,” Smedegaard Andersen told Dow Jones Newswires in an interview.
“We have seen good rate increases, and so far, it looks like the rate increases are being absorbed well by the market,” he said, adding that he sees the trend continuing in coming quarters.
Earlier Wednesday, Maersk reported a 1.3% increase in first-quarter net profit to DKK6.15 billion, overshooting analysts’ expectations, but mainly due to a one-off tax gain from the settlement of a lawsuit in Algeria.
Maersk Line reported a loss of DKK3.4 billion in the first quarter, compared with a year-earlier profit of DKK 2.32 billion, as weak shipping rates and overcapacity weighed on results.
“Maersk Line expects a negative to neutral result in 2012, based on the expectation that the improvement in freight rates since March will continue,” Maersk said in its guidance for the full year and the overall net result is expected to slightly below that of 2011.
Smedegaard Andersen said Maersk Line maintained its market share in the first quarter and will focus on profitability rather than market-share gains for the remainder of the year.
“We are satisfied with Maersk Line‘s current market share. We are not aiming for further gains,” Smedegaard Andersen said, and Maersk Line has no intention of offering rates at the low end of the industry.
Maersk will maintain its overall group strategy, despite the recent death of 98-year-old company patriarch Maersk-McKinney Moller, Smedegaard Andersen said.
Analysts and observers have speculated that Moller’s death could pave the way for the sale of assets, including the company’s 20% stake in Denmark’s largest lender Danske Bank A/S (DANSKE.KO), a move Moller firmly rejected. But Smedegaard Andersen maintained that the stake will not be sold.
“Mr. Moller’s death has no effect on the strategy. We will definitely keep the stake,” he said.
At 0947 GMT, A.P. Moller-Maersk shares were down 6.3% at DKK37,780.
-By Flemming Emil Hansen, Dow Jones Newswires
Join the 70,545 members that receive our newsletter.
Have a news tip? Let us know.