Maersk Line back in profit

Maersk Line returned to profit in the first quarter with a result of $204m compared to loss of $599m through the same period of last year.

The blue box container shipping giant benefited from cost cutting initiatives and improving freight rates.

“We have improved our performance in the past year and we are satisfied with our result for the first quarter. Maersk Line is much more competitive and has gained strength to deal with the challenging shipping markets,” declared group chief executive, Nils Andersen.

The result was ahead of market expectations although the company warned that activity through the rest of this year would be subdued, reducing its forecast of container shipping demand growth to 2% to 4% from a previous range of 4% or 5%.

Maersk Line made a return on invested capital of 4% compared to a loss of 12.7% in the first quarter of 2012.

Revenue of the company was unchanged at $6.3bn, but costs per forty foot box were down by 7.1% as a result of what Maersk described as “improved network efficiencies.”

Capacity was up by 4.2% but the big change was a move in the freight rate to volume differential.

Volume was 4% down, but this was more than compensated for by a 4.7% increase in freight rates.

APM Terminals made a profit of $166m down from $226m through the same quarter of last year.

The number of containers handled was unchanged with expansion in high growth markets compensating for a decline in North America and Western Europe.

The overall first quarter profitability of the Copenhagen based AP Moller – Maersk group was down a third to $790m compared to $1.175bn.

But this reflected that the first quarter of 2012 benefited with the settlement of a $899m Maersk Oil tax dispute with Algeria and divestment gains of $325m.

So the underlying trend was positive.

Andersen said Maersk Oil had replaced its reserves and continued with a high level of exploration activity, APM Terminals continued to progress in a growth market while Maersk Drilling was back on track.