Maersk Group adjusts 2015 result expectations over decline market volume

The global decline in the volume of container shipping market has started taking its toll on shipping liners as Maersk Group, the Danish shipping conglomerate, over the weekend, said it has adjusted its 2015 result expectations from an underlying result of about USD$4.0 billion down to an underlying result of about USD$3.4 billion.

According to the Group’s quarter two report, the earlier expectation was based on an underlying result contribution from Maersk Line, which was formerly above USD$2.2 billion while it now expects an underlying result from Maersk Line of around USD$1.6 billion.

“It is regrettable that we have to adjust our expectations for the 2015 result. All our business units delivered a positive result in the third quarter, despite difficult conditions across our industries,” says Nils S. Andersen, the Group’s chief executive officer. He further disclosed that the container shipping market has deteriorated beyond the Group’s expectations especially in the later part of quarter three and the Group does not expect market recovery in 2015.

“Maersk Line has over the years taken steps to ensure a cost effective and resilient operation, but the current deterioration in the container shipping market is impacting also on our business,” says the Group’s CEO.

However, the Maersk Group’s sensitivity guidance for the past six months of 2015 states that a general decline in the freight rate of USD100 per forty-foot equivalent (FFE) unit will impact on Maersk Line’s result negatively by around USD$0.5 billion, while a volume reduction of 100,000 FFE will have a negative impact of around USD$0.1 billion.

The Group however, disclosed that all of its other business units will maintain their result guidance for 2015. The Group, preliminary reported result for quarter three shows USD$778 million against USD$1,5 billion of the previous year with an underlying result of USD$662 million compared to previous result of USD$1,3 billion. The preliminary reported result for the first nine months is USD$3,436 million compared to USD$5 billion with an underlying result of USD$3,080 million as against USD$3,7 billion of 2014. In quarter three, Maersk Line achieved an average freight rate of USD2,163 /FFE as against the USD2,679 per FFE in quarter three of 2014 while it carried 2,427,000 FFE against the 2,401,000 FFE recorded in quarter three of 2014, and this was lower than expected.

Nevertheless, the Group says it has initiated moves to adjust Maersk Line’s network accordingly as a result of market circumstances but the Group’s Interim Report for Q3 2015 will be released on 6 November 2015.

Maersk Group is made up of five core businesses which include Maersk Line, APM Terminals, Maersk Oil, Maersk Drilling and APM Shipping Services.

UZOAMAKA ANAGOR-Ewuzie