Maersk Advances as Goldman Praises Cost Cuts

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September 4, 2013

maerskSept. 4 (Bloomberg) — A.P. Moeller-Maersk A/S, owner of the world’s largest container line, rose the most in more than two weeks in Copenhagen trading after Goldman Sachs Group Inc. said investors should buy the stock as cost cuts boost profits.

Maersk jumped as much as 2.3 percent, the most since Aug. 19. The stock gained 1.3 percent to 49,560 kroner at 10:36 a.m. local time, with trading volume at 42 percent of the three-month daily average. The advance made the share today’s biggest winner in the Nasdaq OMX Copenhagen 20 index.

Maersk Line reported last month rising profits and said 2013 net income will be “significantly above” that of 2012, compared with a previous forecast of earnings “above” last year’s level. Goldman has added the share to its conviction list and repeated a buy recommendation saying the Copenhagen-based company will continue to benefit from “a very competitive cost base,” according to a note distributed today.

“We believe Maersk can achieve significant earnings growth and a step-up in return on capital,” Goldman analysts, including Nick Edelman, said in the note. “We believe Maersk’s second-quarter 2013 results confirmed its ability to achieve a structural improvement in profitability.”

Maersk Line has trimmed its fleet and slowed sailing speeds to curb capacity as falling consumer demand hurts cargo volumes and carriage prices. The shipping line cut unit costs by 12.7 percent in the second quarter as bunker costs slumped 31 percent because of lower consumption and fuel-price declines, the company reported Aug. 16.

Goldman raised its 12-month share price estimate to 62,000 kroner from 53,000 kroner. That’s the second-highest price target among 26 analysts tracking the stock, according to data compiled by Bloomberg. Danske Markets in Copenhagen has the highest price estimate of 65,000 kroner, according to the data.

– Christian Wienberg, Copyright 2013 Bloomberg.

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