Depressed Freight Rates to Push Down Maersk Line’s Results
Danish shipping and energy conglomerate Maersk has lowered its expectations for Maersk Line’s business results for 2015 amid depressed market.
The previous expectation, as announced in the Q2 report, was based on an underlying result contribution from Maersk Line above USD 2.2bn. However, this has now been reduced to USD 1.6bn.
“The group’s sensitivity guidance for the last six months of 2015 states that a general decline in the freight rate of 100 USD/FFE will impact Maersk Line’s result negatively by around USD 0.5bn, and that a volume reduction of 100,000 FFE will have a negative impact of around USD 0.1bn,” Maersk said in an announcement.
Nevertheless, Maersk said that all other business units maintain their result guidance for 2015.
“It is regrettable that we have to adjust our expectations for the 2015 result. All of our business units delivered a positive result in the third quarter, despite difficult conditions across our industries,” says Maersk Group CEO Nils S. Andersen.
The group’s preliminary reported result for Q3 is USD 778m (USD 1,5bn) with an underlying result of USD 662m (USD 1,3bn). The preliminary reported result for the first nine months is USD 3,436m (USD 5bn) with an underlying result of USD 3,080m (USD 3,7bn).
Maersk attributed the downturn to deterioration of the container shipping market beyond the group’s expectations especially in the later part of Q3 and October which are not expected to rebound 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 our business,” says Andersen.
In Q3 Maersk Line achieved an average freight rate of 2,163 USD/FFE (2,679 USD/FFE in Q3 2014) and carried 2,427,000 FFE (2,401,000 FFE in Q3 2014) which were lower than expected.
“As a result of the market circumstances, initiatives have been taken to adjust Maersk Line’s network accordingly,” the announcement reads.
