Maersk, NOL profits gone

Danish shipping and energy group AP Moller-Maersk posted its worst ever quarter, with a net loss of US$373m, compared with a profit of just over US$1bn in the corresponding three months of 2008, as its container shipping activities plunged into the red.
In a period that covered the most difficult trading conditions liner shipping has ever experienced, Maersk Line, Safmarine and related businesses lost US$559m after tax, on 27% less revenue of US$4.9bn, against a profit of US$80m a year earlier.
Singapore’s Neptune Orient Lines also suffered a sharp reversal, with a first quarter net loss of US$245m compared with a profit of US$121m in the same period of 2008.
Revenue from container shipping was down 36% to US$1.3bn as NOL’s liner shipping division APL saw volumes drop by 27% to 962,000 teu.
Average revenue per box was down 16%, with chief executive Ron Widdows warning that the company anticipated adverse business operations for the rest of the year and expected to post “a significant full year loss”.
The message was much the same in Copenhagen, where AP Moller-Maersk chief executive Nils Andersen would not rule out the possibility of a negative result for 2009.
A further US$1bn of savings will be sought across the business, with more job losses a possibility.
Headcount has already been cut by 20% at Maersk Line since early 2008.
The world’s largest container line transported 2.6m teu in the first quarter, a decline of 14% on the year.
Overall, Maersk said it maintained market share and Mr Andersen pledged to protect its customer base without embarking on a rates war.
“We feel we have a competitive price structure,” he told Lloyd’s List. But all rates are under severe pressure, with only very modest gains achieved on some routes in recent weeks.
In the first quarter, average rates were 24% below corresponding 2008 levels, partly reflecting lower compensation for higher fuel costs. Volumes in the Asia-Europe trades were 8% lower, but rates crashed by 44% compared with a year earlier.
On the Pacific, volumes fell 14%, while average rates were 5% below the corresponding period of 2008.
The company said Maersk had achieved reasonable volumes in annual contracts that were renewed on May 1 but disclosed that rates were considerably lower.
The group is not asking yards to cancel any of the containerships scheduled for delivery in 2011 and 2012 but is in discussion about adjusted delivery schedules.
Despite massive losses notched up by Maersk Line, Mr Andersen said the group remained committed to container shipping and determined to be the number one in terms of quality and, “hopefully”, profitability.
Whether Maersk also stayed in the top spot when measured by ship capacity depended partly on what the competition did “and what we find financially sensible”, Mr Andersen said.
Mediterranean Shipping Co has been narrowing the gap on Maersk as it continues to expand its fleet but Mr Andersen was adamant that the Danish line would not follow suit and charter ships at cheap rates when there was so much surplus capacity already.
“We are not going to do illogical things to defend our number one position,” he said.