Maersk sees $1 bln FY loss on poor freight rates
13.11.2009 (12:36)
Danish shipping and oil group A.P. Moller-Maersk (MAERSKb.CO: Quote, Profile, Research) reported a deeper-than-forecast net loss for the first nine months of the year, hit by a global slump in freight, and said it would lose $1 billion in 2009.The full-year 2009 outlook, unchanged from three months ago, points Maersk -- the world's biggest container shipping line -- towards its first year loss on record as container freight rates and volumes have plunged in the global downturn.
"The main problem is still rates," Chief Executive Nils Smedegaard Andersen said in a conference call, noting that third-quarter container rates were down 32 percent from a year earlier while volumes were only 3 percent lower in the quarter.
In a related sign of market weakness, Hamburg port operator HHLA (HHFGn.DE: Quote, Profile, Research) said on Thursday it expected a 30 percent drop in 2009 container turnover volume. [ID:nLC119830] [ID:nLC405632]
Container shipping rates in the fourth quarter are seen slightly above the third-quarter level, but volumes are expected to be somewhat lower due to seasonal fluctuations, said Maersk.
The trillion-dollar shipping industry carries around 90 percent of the world's traded goods by volume, and many analysts look to seaborne activity for signs of economic recovery. The global economic crisis has prompted shipping lines to cut freight rates and capacity. [ID:nLS245625] [ID:nLL685683]
World Trade Organisation Director-General Pascal Lamy said on Wednesday Asian economies may be leading a new expansion in world trade. [ID:nSP487891] [ID:nL9453301] [ID:nLJ96630]
"Rates are coming up, rates are edging back up," Andersen said, "but they are still below the entry level of 2009 and are not rising faster than bunker (fuel) so if we take the bunker factor out, rates are still below the first half of 2009."
Singapore's Neptune Orient Lines (NEPS.SI: Quote, Profile, Research), the No. 5 container shipper, said on Nov. 9 container revenue fell 29 percent year-on-year in the four weeks to mid-October. [ID:nSIN436618] [ID:nSGC003352]
OUTLOOK STEADY
Maersk said its outlook for the result for 2009 was unchanged from its half-year report in August, or "negative in the order of $1 billion".
After losing 3.02 billion crowns in the first half, Maersk said at the time that second-half results would be as weak.
"The guidance for the full year is definitely not below, maybe even slightly better, than at the half year," Andersen said noting that Maersk has also taken some impairment charges.
Andersen said that Maersk expects the global economy to improve into next year and added: "Our expectation is that the container market and the tanker market, the shipping industry in general, will remain under pressure in 2010."
Maersk's net losses piled up to 3.86 billion Danish crowns ($778 million) in January-September, against a profit of 17.69 billion in the same period last year.
The loss was 16 percent bigger than the average forecast of 3.33 billion crowns in a Reuters poll of analysts, but was within the range of estimates.
Maersk's oil and gas operations made profits, but those were wiped out by the shipping business.
Maersk B shares lost 4.3 percent to 36,000 crowns by 1119 GMT, underperforming the MSCI European transport sector index .MIEU0TP00PEU, which was virtually flat.
"Maersk Line delivered a markedly negative surprise while Maersk Oil & Gas surprised on the positive side," said Jyske Bank, which rates Maersk shares "accumulate".
"There was a lot of speculation as to whether the interim report would contain an upgrade of the 2009 forecast. That did not materialise," Jyske Bank said in a note to clients.
Andersen said he was very pleased with Maersk's 750 million euros ($1.13 billion) bond issue last month, and that the group would likely borrow more on the bond market in the future.
Maersk, which with Shell (RDSa.L: Quote, Profile, Research) and Chevron (CVX.N: Quote, Profile, Research) produces most of the oil and gas in the Danish part of the North Sea, said its 2009 petroleum output would be level with 2008 but fourth-quarter output considerably lower than a year ago.
Roughly half of Maersk group revenue comes from container shipping, while oil and gas output makes up less than a fifth. ($1=.6668 euros) (Additional reporting by Peter Starck and Anna Ringstrom, editing by Will Waterman and Mike Nesbit)
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