AP Moller Group records 6% profit drop in 2013 amid market challenges

As a result of the challenges in the global shipping market last year, AP Moller Maersk Group, a Danish shipping conglomerate, has recorded about 6 percent drop in profit to $3.8 billion in 2013, down from $4.04 billion recorded in 2012.

According to the group, profit for 2013 was negatively affected by lower freight rates in Maersk Line, decline in Maersk Oil’s share production, decline in average oil prices and impairment losses in Maersk tankers, and non-recurring business transformation costs in Damco.

However, profit was positively affected by improved volumes and units cost reduction in Maersk Line, higher volume in APM Terminals, and higher operational uptime in Maersk Drilling.

“Maersk Line strengthened profitability despite challenging shipping markets, while APM Terminals and Maersk Drilling had their best result to date,” said Nils Andersen, group chief executive officer, AP Moller Maersk. “We have reason to be pleased with profit development in 2013 because the group reached $4 billion in underlying earnings, an increase of $1 billion from the previous year.”

He also attributed the profit to the improved results recorded in most of the group’s other businesses, such that six out of eight businesses came out of 2013 as top quartile performers in their industries.

Further breakdown shows that the group’s revenues were also 4 percent lower at $47.39 billion in 2013 compared to $49.49 billion of the previous year. Maersk Line grew its profit to $1.5 billion, from $461 million a year earlier, with the improvement credited to vessel network efficiencies resulting in lower units cost and lower bunker price. This is despite average freight rates decreasing by 7.2 percent to $2,674 per TEU compared to $2,881 per TEU in 2012. Bunker consumption was reduced by 12.1 percent.

APM Terminals also reported an increased profit of $770 million in 2013 compared to the $701 million in the previous year. The number of containers handled increased by 3 percent to 36.3 million TEU compared to 35.4 million TEUs recorded in 2012. Volume increase was as a result of portfolio addition and development of new terminals.

Also, full utilisation of its rig fleet yielded high result of $528 million for Maersk Drilling compared to $347 million of 2012. Maersk Drilling, in the year under review, secured contracts for six out of eight new buildings to be delivered in 2014 and 2016.

Expectedly, Maersk Tankers retained a loss of $317 million, from the $315 million loss recorded in 2012. The result was impacted by impairment losses and provisions and restructuring costs.

Listing the outlook for 2014, the group says it expects a result that is significantly above last year result to be driven by volume growth in both Maersk Line and APM Terminals. The positive result that would be recorded by the group is also expected to be driven by sale of Dank Supermarked Group as well as other underlying factors.

By: Amaka Anagor