Maersk Line, the world's biggest ocean container carrier, trimmed losses to $47 million in the first quarter from $198 million in the first three months of 2007 on improved cost control, and higher freight rates and cargo volumes.
Results were helped by a gain of $141 million on the sale of ships and a one-time charge of $58 million for restructuring aimed at restoring profitability following the carrier's troubled integration of P&O Nedlloyd.
There was an underlying increase in profitability of the container business of $120 million during the quarter, said Nils S. Andersen, chief executive of parent A.P. Moller-Maersk of Denmark.
The container shipping unit , which includes Safmarine, boosted traffic by 4 percent to around 1.7 million FFE [forty-foot equivalent units] from a year ago, mainly on a 7-percent increase in volumes on the Asia-Europe trades. Traffic on the trans-Pacific declined 18 percent, largely reflecting a 30-percent cut in Maersk's capacity. Volume on other trades grew on average by 11 percent.
Average freight rates, including the bunker adjustment factor, rose 13 percent from a year ago, but just 5 percent after stripping out fuel surcharges.
There was a "considerable "increase in freight rates on the Asia-Europe route, Maersk's biggest trade lane, during the first quarter, Andersen said. Rates are coming under pressure as more ships enter the trade, but are "nicely above" last year's levels, he said. Cargo growth also is slowing. "We definitely don't expect to see growth like last year?but we still expect nice growth," he said.
Trans-Pacific operations are benefiting from rising freight rates while the bunker adjustment factor is recouping a greater portion of higher fuel costs than before. But it is too early to say when Maersk will break even on the route where carriers have been losing money "for years," Andersen cautioned.
The restructuring program has included 3,000 jobs cuts, or 15 percent of Maersk Line's payroll. "We are pleased we have got a new organization in place," Andersen said.
Restoring profitability at Maersk is Moller's top priority, Andersen said. Progress was achieved during the first quarter but "there's no question we're not where we want to be."
The container terminal unit, APM Terminals, boosted first-quarter revenue by 27 percent from a year ago. Volumes slipped by 2 percent in the United States but were up 13 percent in the rest of the world.
The company, which was split off from Maersk Line in January, will focus on boosting third-party business, especially in the U.S., Andersen said.
Moller's revenue improved by 31 percent in the first quarter to $14.4 billion from $11 billion, on higher oil and gas prices at its energy division and higher freight rates and container volumes. Net income rose to $1.1 billion from $390 million.
Moller maintained its full-year net profit forecast of between $3.6 billion and $4 billion against $3.4 billion in 2007 and sales of about $60 billion compared with $51 billion.