The world’s largest container carrier Maersk Line said Friday it netted $547 million in operating profits in the third quarter, a more than $800 million change in fortunes from the same period in 2011.
The quarter also saw the Danish line move into the black for the year, with operating profits through three quarters at $241 million, 66.2 percent higher year-on-year.
Maersk’s liner revenue rose 5.7 percent in the third quarter to nearly $7 billion, while it’s up 9.9 percent for the year to $20.6 billion. Container volume in the third quarter was 4.2 million TEUs, unchanged from the third quarter of 2011, but the average freight rate during the quarter rose 5.7 percent to $3,022 per FEU.
For the year, container volume is up 10.2 percent to 13 million TEUs. Average freight rates year-to-date are up 0.2 percent.
Average bunker costs in the third quarter fell nominally, from $656 per ton in 2011 to $648 in 2012. For the year, Maersk’s average bunker cost has risen from $606 to $678.
On a group level, Maersk had operating profits in the third quarter of $2.1 billion, virtually unchanged from a year ago. Year-to-date operating profit was $6.2 billion, compared to $8.6 billion a year ago.
Group revenue is down in the third quarter and through the first three quarters, mostly due to a planned reduction in production in Qatar from Maersk’s oil business.
Maersk Group Chief Executive Officer Nils Andersen said volumes for Maersk Line are up in all trades this year outside of its core Asia-Europe trade, where Europe’s crippling debt crisis has had an effect on demand.
“The big question is how does the European consumer market behave,” he said during a conference call Friday. “We need to see a reverse in that to see return in growth rates that are high. We expect the U.S. market to be developing relatively well – back to growth. Europe is harder to predict because we have a lot of structural issues. We expect uncertainty around certain countries to be resolved in 2013, but that doesn’t change that we have high level of debt among governments and so we expect a slow level of growth.”
The declining volumes for Maersk this year on Asia-Europe point to the line avoiding defending market share at unviable rates.
“We’ve pulled quite a bit of market capacity out,” Andersen said. “We definitely feel we’ve done our share. Now we expect to see our competitors do their part. The market has learned something from the price wars in 2009 and 2011 and at the moment the signs are good. We’re not naïve and we can’t rule out that there won’t be price skirmishes on certain routes, but at the moment, it looks good.”
When asked about a rate hike on the Asia-Europe lane for mid-December announced this week by its largest competitor, Mediterranean Shipping Co., Andersen said Maersk focuses on its own path.
“I can’t comment on the MSC increase,” he said. “There are so many rate increases going on, we have to follow our way, which is pushing rates up further. But if markets allow, yes, of course, we will take further increases.”
Meanwhile, Maersk’s oil business is going through a period of planned retrenchment in production ahead of its long-term goal of producing 400,000 barrels of oil per day by 2020. (For reference, Maersk produced 240,000 barrels per day during the third quarter, and 312,000 per day in the third quarter of 2011.)
Operating profit from the oil division is down 32.2 percent for the year, but still at a robust $4.1 billion.
Maersk’s other freight-related divisions, APM Terminals and freight forwarder Damco, saw their profitability down slightly from a year ago in the quarter.
APMT had operating profit of $204 million in the third quarter, compared to $214 million in 2011. For the year, however, operating profit is at $741 million, up 29.3 percent.
Andersen lauded the terminals’ business relative rate stability compared to the liner business. Revenue for the year is up 4.8 percent at $3.5 billion.
Damco’s operating profits slipped 32.4 percent to $25 million, in the third quarter, on revenue that rose 7.1 percent to $849 million. Year-to-date, Damco’s operating profit is virtually the same as in 2011 at $76 million, while revenue has increased nearly 11 percent. - Eric Johnson