AP Moller-Maersk earnings plummet US$4.5bn

- Shipping and logistics giant AP Moller-Maersk has posted its first ever loss of US$1.02bn in 2009, compared with a profit of US$3.46bn in 2008.

Group CEO Nils S Andersen said that while the loss was significant, 2009 had been an extraordinary year with historically low rates and demand. “We managed to limit the loss by saving about US$2bn and we will continue to strengthen our competitiveness even further,” he said.

In 2009, the AP Moller-Maersk Group was significantly affected by the global economic crisis with freight rates for the Group’s container activities 28% lower than in 2008, resulting in a negative result of US$2.bn in that sector.

At the same time tanker rates were also substantially lower, with the average price of crude oil 36% lower in 2009 compared to 2008, although the Group’s share of oil and gas production remained at the same level as in 2008.

Oil and gas activities, APM Terminals, Maersk Supply Service, Maersk Drilling, Damco and the Dansk Supermarked Group produced positive results despite lower oil prices and lower demand as a consequence of the economic crisis.

The Group achieved cost reductions of US$2.0bn through restructurings, reducing fuel consumption, optimising networks and renegotiating supplier contracts, of which US$1.6bn were related to its container activities.

Looking to this year (2010), the Group believes that the additional 7% to 10% in the global container fleet tonnage and the expected 3% to 5% rise in cargo volumes, with a subsequent rise in freight rates, will lead to a significant improvement in results if the level of vessels taken out of service is sustained. However, rates are not expected to lead to an acceptable return during this year.

APM Terminals experienced a continued stabilisation of volumes in the beginning of 2010, with future overall volumes for the year expected to rise moderately.

The tanker markets have benefited from the cold winter and declining oil stocks at the beginning of the year, however, rates remain unsatisfactory and the addition of new tonnage combined with weak demand for crude oil and refined products is expected to cause challenging market conditions.

Overall, the AP Moller-Maersk Group says it expects to post a modest profit in 2010. Cash flow from operating activities is expected to be well above that of 2009, although cash flow used for investing activities is expected to be well below.

However, it warns that the outlook for 2010 is subject to considerable uncertainty, not least due to developments in the global economy, citing, “Specific uncertainties relate to container freight rates, transported volumes, the USD exchange rate and oil prices.”

(Source: Container Management)