Danish conglomerate does not expect container line business to turn a profit in 2012, either
AP Møller Maersk announced today that its container line, the world’s biggest, made a loss of US$537 million last year and is unlikely to turn a profit in 2012 either.
The news follows recent announcements that the line will cut capacity and increase freight rates on the Asia-Europe trade. According to today’s results, a hike of $100 per feu could raise an additional profit of $900 million.
On Friday, the line announced it would increase its Asia to Europe prices by $400 per teu from 1 April.
The Danish conglomerate remained in the black overall, mainly thanks to its buoyant oil business, but its profit line of $3.38 billion was more than 40% down year-on-year.
Maersk executives said the negative container line result was primarily due to low rates on the Asia-Europe trades, pointing out that although they started the year at a “reasonable” level, they decreased throughout 2011 as large amounts of new tonnage was delivered.
“We deliver an acceptable result for 2011, considering how the shipping rates developed during the year,” said group Chief Financial Officer Trond Westlie.
“Markets are volatile, but our businesses are fundamentally strong and competitive. Our products and services are in high demand and most of our core businesses deliver good results.
“2012 will be another challenging year and we will continue to focus on profitability and allocate our growth investments to terminals and oil-related business.”
He added that overall freight rates were 8% lower than in 2010 and this, combined with 35% higher bunker prices, reduced margins considerably, despite an 11% increase in volume.
In contrast to Maersk’s box line business, the container handling division, APM Terminals, made a profit of $649 million. The profit, excluding sales gains and impairment losses, was 24% higher than in 2010.
Maersk Liner Business, however, expects the negative numbers to persist through 2012 as a consequence of excess capacity.
Global demand for seaborne containers is expected to increase by 4-6% in 2012, lower on the Asia-Europe trades but supported by higher growth in the north-south trades.
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