Maersk raises profit outlook
19 August 2014, 16:36
Copenhagen -Danish shipping and oil conglomerate AP Moeller Maersk raised its full-year profit guidance on Tuesday after quarterly results were boosted by a strong performance by its container shipping business.
It also said it would return about $1.0bn to shareholders over the next year through a share-buyback programme.
The group, which has about 15% of the global container market through Maersk Line, said profit was expected to be $4.5bn this year rather than the previously stated $4.0bn after stripping out discontinued operations, impairment losses and divestment gains.
Maersk Line, which accounts for about 40 percent of group revenue, reported a 6.6% volume increase and bolstered profits through cost cutting initiatives that included operating ships at a slower speed.
Operating profit from the container business rose by a quarter to $547m as higher volumes and lower costs offset a fall in the average revenue per unit.
Freight rates have remained depressed since global shipping companies expanded their capacity just as international trade was hit by the financial crisis.
To reduce costs, Maersk announced last month an alliance with shipping company MSC on some of the world's busiest cargo routes after China scuppered a planned tie-up between the two companies and CMA.
The alliance will create a system similar to code-sharing agreements among airlines, allowing the companies to put cargo on each others vessels.
The group's net profit in the second quarter nearly tripled to $2.304bn from $856m, reflecting a $2.8bn gain from selling its stake in Danish retailer Dansk Supermarked, but also a $1.7bn writedown on its Brazilian oil assets.
Analysts polled by Dow Jones Newswires had expected net profit to reach $2.1bn.
The raised outlook was "greater than expected," Sydbank analyst Jacob Pedersen told Danish news agency Ritzau.
"The share buyback will make investors say that now Maersk has really trained its focus on the shareholders," he added.
Shares in Maersk were 4.7% higher in midday trading on the Copenhagen stock market, where the main index was up by 1%.