Friday, August 21, 2009

Maersk suffers first-half loss

Danish shipping and oil group A.P. Moller-Maersk pointed to signs of market recovery in freight traffic yesterday after posting a record first-half loss and predicting similar in the second half.

Losses piled up as the plunge in world trade hit freight rates and volumes at the world's biggest container shipping line and oil prices fell.

Maersk, a barometer for the health of global trade, said yesterday that it had swung to a net loss of 3.02 billion Danish crowns (100 crowns = RM70.30) from a profit of 11.98 billion a year earlier, missing analysts' average estimate for a loss of 2.91 billion in a Reuters poll.

However, chief executive Nils Smedegaard Andersen said he saw some signs of improvement, with shipping volumes and rates starting to rise. He said that the shipping cycle would lag global economic recovery as expansion of the world fleet kept a lid on rates.

"The global economy is moving into a better situation - we are expecting growth going forward and the worst to be behind us," Andersen said in a conference call.

"Given deliveries (of vessels) in container shipping and tankers, it is likely that the shipping cycle will be somewhat slower in improving, but we are optimistic that the things that we are doing for the long term are right," Andersen said.

Maersk, a conglomerate whose businesses range from shipping to retail and a more than 20 per cent stake in Danske Bank, said it expected similar weighty losses in the second half.

The global economic crisis had a "severe negative impact" on the group's activities in the first half, said Maersk, whose container shipping fleet consisted of 501 vessels at the end of the first half.

Container freight rates were 30 per cent lower and volumes 7 per cent lower than in the first half of 2008, Maersk said.

"The trend is now expected to reverse, with rate increases, albeit modest, in the third quarter of 2009," the company said.

Maersk operates the world's largest container shipping fleet, Maersk Line, and controls about 85 percent of Danish oil production in the North Sea, together with partners Shell and Chevron.

Andersen said the group's offshore activities - oil drilling and supply ships - performed well.

Revenues fell to 127.39 billion crowns in the first half from 148.37 billion in the same period last year, in line with analysts' average forecast of 127.33 billion.

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