A.P. Moller-Maersk Group — the conglomerate parent of Maersk Line, APM Terminals, the logistics company Damco and other businesses — reported a profit of $2.3 billion for the second quarter ending June 30, compared with $856 million in the 2013 period.
Excluding one-off events, the company said it had a profit of $1.3 billion in the second quarter, compared to a profit of $959 million in the second quarter of 2013. Revenues were $11.95 billion for the quarter, up from $11.69 billion a year earlier.
The company said its results were bolstered by a $2.8-billion gain from the sale of the majority share of its Dansk Supermarked Group, partly offset by impairments of $1.7 billion on Brazilian oil assets "due to disappointing exploration and appraisal results together with increasing project costs.”
The conglomerate had a loss from continuing operations of $475 million in the second quarter, compared to a profit of $775 million from continuing operations in the second quarter of 2013.
The company said Maersk Line, the world's largest container shipping company, had net operating profit after taxes of $547 million in the second quarter, compared with $439 million in the same period the prior year.
Maersk Line revenue was $6.9 billion in the second quarter, up 3.8-percent from the same period a year earlier.
The world’s largest container liner company, Maersk transported 2,396,000 40-foot equivalent units in the second quarter, compared with 2,247,000 FEU in the same period a year earlier.
Average freight rate per FEU was $2,634 per FEU, up $16 from the same period a year earlier, but the company's unit cost for moving a container was $2,585 per FEU in the second quarter, $118 less than it was year earlier. The company said that lower cost was "driven by vessel efficiencies and operational cost savings."
A.P. Moller-Maersk Chief Executive Officer Nils Andersen noted that during the second quarter, Chinese authorities had rejected the company's plans to create the P3 network with MSC and CMA CGM, and that the company has announced plans for a scaled-back global alliance with just MSC on the major East-West trades — the transpacific, transatlantic and Asia-Europe.
He said the so-called 2M vessel sharing alliance with MSC is a somewhat simpler partnership than the P3, and as a result will have lower economic benefits.
But he said 2M will realize reduced costs through the use of less bunker fuel. That lower fuel cost will come about through both the use of more large ships and by allowing the companies to reduce sailing distances by moving containers on more direct routes. There will not be the back-office, operational synergies that the P3 partners had hoped to achieve because each company will continue to operate its own ships.
Andersen said that, essentially, Maersk only needs approval from U.S. authorities to form the 2M alliance with MSC. In China and Europe, he said, the alliance will be "surveyed," but is not subject to approval.
Pressed if there was any way that Chinese authorities could block the 2M agreement, Andersen said that "within their historic behavior, within the legislation that we can see today, our interpretation is no. But to say never and under no circumstances, that is a guarantee that I think nobody can give."
Andersen said that during the second quarter, "we saw a relatively stable rate environment," but that rates are low, and with most companies doing poorly, at some time customers will have to accept rate increases.
"There is just not room for cutting rates any further," he said.
Asked about detention and demurrage costs, Andersen noted that if customers keep equipment a long time, that drives up capital costs for the company, and that "you may see more differentiation going forward between the base rate and the additional charges."
Andersen said, surprisingly, imports to Europe from Asia have been very strong, above 9 percent. He said Maersk believes that is largely due to refilling of inventories, but that backhaul cargo of cargo such as scrap and paper is down.
APM Terminals had a reported profit of $223 million, compared with $179 million. Revenue was $1.13 billion, compared with $1.07 billion.
He noted that the company has reached an agreement to divest its terminal in Portsmouth Virginia. The terminal was being leased to the Virginia Port Authority, and Andersen said "this is not really the way we want to operate, so we changed that."
Damco, the company's forwarding and logistics business, had a loss of $32 million. Andersen said ongoing restructuring is pulling results down.