Danish shipping and offshore energy conglomerate Maersk Group reported its profit at USD 224 million for the first quarter of 2016, a drop of 86 percent compared to USD 1.6 billion seen in the same period a year earlier.
Maersk’s underlying profit was at USD 214 million for the quarter, against USD 1.3 billion in the first quarter of 2015, with six out of eight businesses returning to profit.
Maersk added that the underlying profit was significantly lower than same period last year due to all businesses except Maersk Drilling, Maersk Tankers and Damco being lower and Svitzer being at the same level.
The company said that the result was negatively impacted by the low oil price and low average container freight rates.
The group’s revenue decreased by USD 2 bn or 19 percent compared to the same period of 2015, predominantly due to 37 percent lower oil price and 26 percent lower average container freight rates. This was partly offset by 7 percent higher container volumes and 15 percent higher oil entitlement production.
“The Maersk Group delivered an underlying profit of USD 214m in the first quarter. While market conditions remain challenging, we continue to adjust our cost base to the new conditions and maintain a good operational performance across our businesses,” Group CEO Nils S. Andersen said.
“We maintain our focus on strengthening the group’s position in the market and have completed acquisitions within APM Terminals and Maersk Oil, and in Maersk Line we have defended our market leading position,” he added.
The group’s subsidiary Maersk Line saw its profit slide to USD 37 million for the period, against the USD 714 million reported in the first quarter of 2015.
Revenue of USD 5 billion was 20 percent lower than in same period a year earlier, driven by a 26 percent decline in average freight rates to 1,857 USD/FFE from 2,493 USD/FFE in 2015, and only partially offset by a 7 percent increase in volumes to 2,361k FFE.
“The freight rate decline was attributable to lower bunker prices and deteriorating market conditions. Container freight rates declined across all trades, especially Maersk Line’s key trades to/from Europe as well as Latin America and North America were impacted,” the company said, adding that the recognised freight revenue decreased from USD 5.6 in the first quarter of 2015 to USD 4.5 billion.
The group’s APM Terminals also experienced a decrease in its profit from USD 190 million to USD 108 million, mostly attributed to a weak demand, especially in Europe, slowing growth in China, and the low oil price.
Decreased volumes on the westbound Asia-Europe trade lane impacted terminals in both China and Europe.
APM Terminals’ revenue decreased by 15 percent to USD 962 million, while operating businesses generated an underlying profit of USD 116 million.
Maersk Tankers, however, was positively affected by improved commercial performance and cost savings, therefore the company saw an increase in its profit from USD 36 million to USD 48 million.
The group’s Maersk Supply Service business made a loss of USD 2 million for the quarter, against a profit of USD 38 million reported in the same period a year earlier.
“The market situation in the offshore industry continued to be challenging with significantly reduced demand for offshore services,” the company said.