A.P Moller-Maersk stormed back into the black with a $2.52 billion profit in the first half of 2010 and raised its full-year earnings forecast for the second time in two months on surging ocean container freight rates and higher cargo volume.
The Danish shipping and energy conglomerate, which lost money for the first time in its history last year in compiling a $540 million loss in the first half of 2009, boosted revenue 20 percent to $27.4 billion.
The company now projects net earnings in 2010 “will exceed $4 billion,” although the operator of the world’s largest container ship line said it remains cautious about the outlook for the fourth quarter.
The rebound was driven mainly by container shipping and related activities which swung to a profit of $1.23 billion from a $995 million loss in the first six months of 2009 as revenue climbed to $12.5 billion from $9.4 billion.
Oil and gas shared star billing, benefiting from rising crude prices to raise profit to $909 million from $504 million in the first half of 2009.
Maersk Line, the world’s largest ocean carrier, has been transformed into a much more solid operating unit than it was two years ago after focusing on cutting costs and boosting its competitiveness, said A.P. Moller-Maersk CEO Nils Andersen.
“If we had not done so we would have had a result close to zero,” Andersen told investment analysts in a conference call.
“Overall expectations ... are that the result for 2010 will exceed $4 billion,” the Copenhagen-based company said, raising its forecast in early July that profit would exceed the $3.5 billion earned in 2008.
“Container shipping and related activities are expected to post a positive [second half] result at the level of that in the first half of 2010, however with significant uncertainty especially for the fourth quarter.”
Average freight rates, including bunker surcharges, soared 31 percent to $2,986 per 40- foot container in the first half of 2010 from $2,288 in the same period in 2009. In the second quarter, freight rates increased 43 percent from year earlier levels.
That gave Maersk an average profit of $364 per FEU — excluding gains from ship sales — compared with a $261 loss in the first half of 2009.
Despite the gains from a very weak “absolutely abnormal “ 2009, rates remain below levels in 2008, Andersen said. “Rates have reached a reasonable level ... the trick is to make more return than the market average.”
Rates will fall back in the fourth quarter when Maersk removes the peak season surcharge, Andersen said.
Maersk Line and sister company Safmarine boosted container traffic 11 percent in the first half to 7.2 million TEUs from 6.6 million TEUs a year ago. But the cargo volume growth slowed to 5 percent in the second quarter, trailing the market average. “We took market share in 2009 and we are losing a little in some trades in 2010,” Andersen said.
Trans-Pacific volume rose 11 percent amid “substantially improved” capacity utilization.
Traffic on the headhaul route from Asia to Europe increased 11 percent in the first half while backhaul volume fell 2 percent. Traffic on the Trans-Atlantic rose 4 percent.
Maersk re-activated 10 laid-up vessels during the first half in response to growing demand, leaving nine ships idled at the end of June compared to nineteen at the end of 2009.
The Damco logistics and forwarding unit boosted first half revenue 31 percent to $1.3 billion and operating profit rose by $27 million to $30 million
APM Terminals, Maersk’s global container terminal business, booked a profit of $528 million against $211 million a year ago, bolstered by the $423 million pre-tax proceeds from the sale of a stake in the Yantian International Container Terminal in China.
The company, which trimmed its payroll by 1,150 in the first half, said it launched initiatives to take out an additional $500 million of costs through 2010.