INTERVIEW: Maersk CEO Optimistic Shipping Will Swing To Profit
May 16 2012 - 6:19AM
Dow Jones News
Danish oil and shipping conglomerate A.P. Moller-Maersk A/S is
increasingly optimistic that its container-shipping arm Maersk Line
can return to profit in 2012, after freight rates have seen a
positive upward trend since March, Maersk Chief Executive Nils
Smedegaard Andersen said Wednesday.
For the container shipping industry, 2011 was an annus
horribilus, when surging bunker fuel prices, lower freight rates,
tough competition and increasing over-capacity combined to send the
entire industry deep in red. In the new year, however, rates have
seen a marked improvement, as shippers have taken out capacity and
abandoned the fierce price competition to plug the outflow of
cash.
"We have implemented a number of price increases, which makes us
more optimistic that we can achieve a small profit in the full
year," Smedegaard Andersen told Dow Jones Newswires in an
interview.
"We have seen good rate increases, and so far, it looks like the
rate increases are being absorbed well by the market," he said,
adding that he sees the trend continuing in coming quarters.
Earlier Wednesday, Maersk reported a 1.3% increase in
first-quarter net profit to DKK6.15 billion, overshooting analysts'
expectations, but mainly due to a one-off tax gain from the
settlement of a lawsuit in Algeria.
Maersk Line reported a loss of DKK3.4 billion in the first
quarter, compared with a year-earlier profit of DKK2.32 billion, as
weak shipping rates and overcapacity weighed on results.
"Maersk Line expects a negative to neutral result in 2012, based
on the expectation that the improvement in freight rates since
March will continue," Maersk said in its guidance for the full year
and the overall net result is expected to slightly below that of
2011.
Smedegaard Andersen said Maersk Line maintained its market share
in the first quarter and will focus on profitability rather than
market-share gains for the remainder of the year.
"We are satisfied with Maersk Line's current market share. We
are not aiming for further gains," Smedegaard Andersen said, and
Maersk Line has no intention of offering rates at the low end of
the industry.
Maersk will maintain its overall group strategy, despite the
recent death of 98-year-old company patriarch Maersk-McKinney
Moller, Smedegaard Andersen said.
Analysts and observers have speculated that Moller's death could
pave the way for the sale of assets, including the company's 20%
stake in Denmark's largest lender Danske Bank A/S (DANSKE.KO), a
move Moller firmly rejected. But Smedegaard Andersen maintained
that the stake will not be sold.
"Mr. Moller's death has no effect on the strategy. We will
definitely keep the stake," he said.
At 0947 GMT, A.P. Moller-Maersk shares were down 6.3% at
DKK37,780.
-By Flemming Emil Hansen, Dow Jones Newswires; +45 33 12 44 88;
flemming.hansen@dowjones.com
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