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Maersk Line reports first loss since financial crisis

Xinhua, August 12, 2016 Adjust font size:

Denmark's Maersk Line, the world's biggest container shipping company by volume, reported on Friday its first loss since the financial crisis.

The container company under Danish shipping and oil group A.P. Moller-Maersk suffered a net loss of 151 million U.S. dollars for the second quarter 2016, against 507 million dollars profit for the same period last year, the group said in its interim financial report.

The second quarter revenue totaled 5.1 billion kroner(764 million U.S. dollars), down 19 percent from the same period a year earlier.

Maersk said the development was driven by a 24 percent decline in average freight rates, mainly attributable to lower bunker prices and weak market conditions.

According to Maersk, global container demand grew around 2 percent in the second quarter year-on-year, while the global container fleet grew around 6 percent.

"We have had many years in which the capacity of the market is growing faster than demand. Therefore we have ended up in the situation," said Maersk Group CEO Soeren Skou in a webcast conference call on Friday.

The container shipping industry has continued to see steps towards consolidation through mergers and acquisitions as well as formation of large scale alliances. In the second quarter, Maersk Line together with the global 2M shipping alliance MSC redesigned the Asia to North Europe network to offer customers better flexibility and reliability.

Maersk Line said it welcomes consolidation as the industry is fragmented and consolidation will enable carriers to create economies of scale and optimise networks, which in the long-run will benefit customers.

Overall, Maersk Group delivered an underlying profit of 134 million dollars in the second quarter, down from 1.1 billion dollars for the same period last year.

Skou said "the result is unsatisfactory," noting that nearly all the group's markets were negatively impacted by low growth and falling prices in the second quarter.

Maersk kept its earnings guidance for the full year 2016, forecasting an underlying result "significantly below last year."

Meanwhile, gross cash flow used for capital expenditure is now expected to be around 6 billion dollars in 2016, down from around 7 billion dollars in 2015.

According to Skou, the Board of Directors have initiated a process to develop and consider the strategic and structural options for the Maersk Group and will report on progress of the review before the end of the third quarter, 2016. Endit