MAERSK LOWERS PROFIT FORECAST
Shipper restates annual guidance after Total deal, lowers forecast for its key container business
COPENHAGEN
THE world’s largest container shipping group, A.P. Moller-Maersk, cut the profit forecast for its core business on Tuesday after a costly cyber attack and a weaker than expected third quarter result.
Maersk, which agreed to sell its oil and gas business to Total in a US$7.5 billion (RM31.69 billion) deal this year, has to prove to investors that the firm’s strategy to focus on transport and logistics is the right one even with oil prices rising again.
Expectations for the container shipping business had been high after chief executive Soren Skou said in August that fundamentals were “at their best since 2010”.
However, Maersk’s freight rates declined 1.1 per cent compared to the second quarter, further signs of the impact of overcapacity that has dogged the industry.
“The freight rates sticks out as the most negative element ... I’m very surprised that they as a minimum can’t deliver the same rates as in the second quarter,” said Sydbank analyst Morten Imsgard. Sydbank has a “hold” call on the company’s stock.
A sweeping consolidation of container lines, which transport everything from televisions to fresh fruit, has helped the industry recover from a severe downturn that culminated in last year’s collapse of South Korea’s Hanjin Shipping.
Maersk shares are up about 25 per cent so far this year, but has slipped since mid-July due to softer growth in freight rates. Maersk shares were trading four per cent lower at 1000 GMT.
The group reported a net loss of US$1.4 billion in the third quarter after it took a US$1.75 billion impairment on its offshore drilling business.
Analysts had expected a US$383 million profit.
For the container business, Maersk now expects an improvement of around US$1 billion in underlying profit versus a previous guidance of above US$1 billion due to higher costs related to the June cyber-attack and higher bunker fuel costs.
“The third quarter has been more difficult for us and we could have grown more if we hadn’t had this terrible criminal cyber attack,” said Maersk chief financial officer Jakob Stausholm.
The company put the cost of the cyber attack at between US$250 and US$300 million after it hit its computers and delayed cargoes.
Stausholm also said that container freight rates had been worse than expected during the quarter but that the market still looked “reasonable”.
For the whole group, the Danish logistics conglomerate had previously expected underlying profit for the year above the US$711 million from last year.
Its new guidance is adjusted for the discontinued operations of its energy assets which it said meant the year-ago number for continued operations was a loss of US$546 million.
“This is actually a small upward revision... What we’ve said was that we would get a better result than last year and when we reclassify the result last year was actually negative,” said Stausholm. The company’s earnings before interest, tax, depreciation and amortisation stood at US$978 million, below the US$1.2 billion average forecast in a Reuters poll.
Meanwhile, China’s commerce ministry said yesterday it had granted conditional approval for Maersk Line’s planned acquisition of Hamburg Sud.
Maersk Line will pay €3.7 billion (US$4.3 billion) to buy German rival Hamburg Sud.