Maersk Line reports results for third quarter 2015
Maersk Line’s third quarter 2015 (Q3) result was USD 264 million which is 61.4% lower than Q3 2014 (USD 685 million) as consequence of low freight rates, the company said in its press release.
Revenue for the third quarter 2015 (Q3) was USD 6,018 million which is 14.9% lower than Q3 2014 (USD 7,074 million). Volumes were 1.1% higher to 2,427,000 FFE (2,401k FFE in Q3 2014). The Return On Invested Capital (ROIC) was 5.2%, down from 13.5% in Q3 2014. The result is below our ROIC target of 8.5-12%.
Throughout 2015, the average freight rate has declined due to weak demand, over-capacity and intense price competition. Maersk Line’s average rate decreased by 19.2% compared to Q3 2014 and 4.3% compared to the last quarter (Q2). In the Asia – Europe trade, rates reached an all-time low and the trade has contracted with 6.5% year-to-date.
“Our third quarter result is clearly less than satisfactory. This result is driven by much weaker than expected demand and low rates. We will accelerate efforts to drive out cost and we will reduce capacity to increase network utilisation,” says Søren Skou, CEO of Maersk Line.
Maersk Line expects the container shipping market to remain weak and it will not recover in 2015. We expect the rates to remain under pressure due to continued over-capacity. Maersk Line expects global container demand in 2015 to grow by 1-3% against a previous expectation of 2-4%.
On 4 November 2015, Maersk Line announced that it will accelerate efforts to reduce operating cost and postpone investments in new capacity. This includes lowering SG&A cost by USD 250 million annualised, capacity reductions in Q4 2015 and throughout 2016, and not exercising the options for six (6) 19,630 TEU vessels and two (2) 3,600 TEU feeders.
About Maersk Line
Maersk Line is the world’s largest container shipping company, known for reliable, flexible and eco-efficient services. We provide ocean transportation in all parts of the world. We serve our customers through 374 offices in 116 countries. We employ 7,100 seafarers and 23,000 land-based employees and operate 619 container vessels. We market our services through the Maersk Line, Safmarine and SeaLand (Intra-Americas) brands. Maersk Line is the holding company for MCC Transport (Intra-Asia) and Seago Line (Intra-Europe). Maersk Line is part of the Maersk Group, headquartered in Copenhagen, Denmark. The Group employs about 89,207 people in around 130 countries. 2014 revenue: USD 48 billion.
