A.P. Møller - Mærsk A/S revenue is increased for the first three months of 2010

13.05.2010 (12:36)

A.P. Møller - Mærsk A/S Interim Management Statement says the revenue (in USD) for the first three months of 2010 is increased by 20%, primarily as a result of higher oil prices and increasing freight rates and volumes in the container activities.

In the first quarter of 2010, the Group’s container vessels transported 1.8 million FFE (Forty Foot Equivalent container units), compared to 1.5 million FFE in the same period of 2009. Growth was seen mainly on the head haul routes and Intra Asia, which increased by 18% and 70%, respectively.

Average rates in the first quarter were USD 2,863 per FFE, up by 18% compared to the same period of 2009 as a result of improved market conditions and higher bunker surcharges.

Volumes on the head haul routes between Asia and Europe increased by 16% in the first three months of 2010 compared to the same period of 2009, while volumes on the lower-paying back haul routes increased by 15%.

The Transpacific routes were negatively affected by the low rate levels on contract cargo during the first quarter of 2010. Considerable rate increases and reasonable volume coverage have been achieved for the contract season as at 1 May 2010.

The other routes have seen general improvements with rising volumes and rates.

The result for the period was a profit of USD 639 million, compared to a loss of USD 373 million in the same period of 2009.

“Markets have improved, and our efforts are paying off. We expect an improved result compared to earlier expectations of a modest profit, mainly because of the recovery in our container business, which is now expected to post a profit in 2010. Due to the development in the global economy, especially in the second half of the year, there is still uncertainty in how the volumes and the rates will develop the rest of the year. But we will continue to improve our competitiveness, and we are ready to seize opportunities that arise in the wake of the crisis,” says CEO Nils S. Andersen.

• During the first three months of 2010, the container shipping market was positively affected by higher volumes and better rates compared to the same period of 2009. The growth in activity was partly related to general restocking in the USA and Europe. Considerable rate increases and reasonable volume coverage were achieved in connection with the contract negotiations on the Transpacific routes. The Group also achieved higher coverage of fluctuations in fuel prices by means of surcharges.

• The average oil price was USD 76 per barrel in the first quarter of 2010, compared to USD 45 per barrel in the first quarter of 2009. The Group’s share of oil and gas production in the first quarter 2010 was 20% below the first quarter of 2009, mainly due to a lower share in Qatar. The result in the first quarter was positively affected by lower exploration costs than in the same period of 2009.

• Rates for Maersk Tankers’ carriers in the first quarter were lower than in the same period of 2009. The markets for the Group’s offshore activities saw increasing activity, but the addition of new tonnage led to continued pressure on rates. Tankers, offshore and other shipping activities were negatively affected by impairment losses of USD 75 million concerning the Group’s LNG carriers.

• The Group maintains its strong focus on reducing costs, and further cost-cutting initiatives have been launched in 2010.

• On 29 April 2010, the Group entered into an agreement to sell its ownership interest (13.7%) in Sigma Enterprises Ltd., which owns an interest in Yantian International Container Terminal, to Crestway International Ltd. The agreement is subject to a number of approvals. The transaction, which is expected to be completed by 31 July 2010, will have a positive effect on the profit before tax in the order of USD 400 million in 2010.

• Cash flow from operating activities in USD was 10% above the same period of 2009, positively affected by growing activity and cost reductions. The cash flow used for investments declined by 51% compared to the first quarter 2009, as a result of a generally lower investment level, primarily in container shipping and tankers, offshore and other shipping activities.

Outlook for the full year 2010
The Group’s container shipping and related activities are now expecting a positive result for 2010 based on the improved market conditions for the container shipping activities.

Global cargo volumes for 2010 are expected to rise by minimum 5%, driven mainly by the strong development in demand in the first quarter. A 6-9% addition of tonnage is expected for the global container fleet.

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