By Mike Wackett

AP Møller-Maersk’s container business was once again the group’s star performer at the half-year, contributing $1 billion of the overall $2.4 billion underlying profit, further distancing itself from its competitors, many of which are still struggling to break even. After recording $454 million in the first three months, Maersk Line added further profit of $547 million in the second quarter of the year, which represented the seventh consecutive quarter when the carrier had an EBIT margin of more than 5 per cent above its industry rivals. As a consequence, APMM has revised its full year outlook for Maersk Line to “significantly above” the $1.5 billion result achieved in 2013.

APMM chief executive Nils Andersen said the result for Maersk Line was “better than expected”, and had been driven by a significant growth in Asia-Europe volumes over the period supported by “relatively stable” freight rates. Volumes carried increased by a quarter-on-quarter 6.6 per cent to 4.8 million TEUs, but average revenue declined by 2.7 per cent to $2,880 per FEU. However, this was more than mitigated by a 4.4 per cent reduction in unit costs, mainly achieved from a 7.2 per cent per FEU reduction in bunker consumption. Nevertheless, Mr. Andersen believed that freight rates would have to start going up soon. “At some point customers will have to accept rate increases, there is just not any further scope for rate decreases,” he said.

Mr. Andersen said that the proposed east-west trades vessel-sharing agreement with MSC – to be known as the 2M – was on track to commence in early 2015 and, unlike its defunct predecessor (P3), he said that it would not require the same level of regulatory approval, i.e. not in China or Europe but only in the US.

He was confident the 2M would proceed and create more savings – although not as great as those envisaged from the P3 due to the absence of back office rationalization. But they would nonetheless be significant, he added, coming mainly from bunker costs reflecting better optimization of vessels in terms of load factors and routings.

Meanwhile, the ever reliable APM Terminals made a profit of $223 million in the quarter, compared with $179 million in the same period of last year, on the back of a volume increase of 8 per cent to 9.8 million TEUs.

But it was not all good news from APMM in the period, with its unpalatable $1.7 billion write-down on its Brazilian oil assets masked by a $2.8 billion gain from the sale of its majority stake in the Dansk supermarket group. Moreover, forwarding arm Damco remains a thorn in the side of APMM, delivering a loss of $32 million in the quarter due to “ongoing restructuring initiatives and high overheads”. Turning it around was, admitted Mr. Andersen, “taking quite a bit of time”.

Reprinted courtesy of The Loadstar (