Maersk Line expects loss in 2006
The AP Moller-Maersk group, the owner of the world's largest ocean carrier, Maersk Line, is forecasting that its container shipping business will post a loss of US$600 million for the 2006 financial year.The result includes gains on sales of ships plus deducted integration costs related to the acquisition of P&O Nedlloyd. A group statement said the integration costs are expected to be "well below" the previously expected amount of $180 million. The company is forecasting a hefty loss for its container shipping operation partly due to a six per cent drop in freight rates in the first nine months of the year compared to the same period a year ago. Also, reducing earnings further was a 35 per cent rise fuel expenses per tonne during the first three quarters of the year.
This is despite container volumes being expected to increase about 10 per cent in the second half of the year.
The group result, however, for the whole of 2006 is still predicted to be in the range of DKK16 billion (US$2.86 billion), a marked decline on 2005's DKK 20.2 billion result.
Cash flow from operating activities is still anticipated to be in the order of DKK25 billion with the total revenue of DKK270 billion. Looking ahead, the Maersk statement added: "The expected result is still sensitive to changes in freight rates and volumes as well as oil prices and exchange rates in the last months of the year."