Maersk sees some recovery in freight rates
Danish shipping and oil group A.P. Moller-Maersk nudged up its year profit forecast on Tuesday on the prospect of a pick-up in freight rates, despite reporting a drop in earnings in the second quarter, Reuters reports.
The global shipping industry has been h it by weaker demand d ue to t he world economic slowdown and a n o versupply of vessels i n the last four years but Maersk said it now expects higher average freight rates in the second half of the year.
The conglomerate, whose Maersk Line is the world's biggest container shipping company, also said it expects group earnings to be "slightly above" last year's result, having previously predicted a slight drop.
It said it expected Maersk Line to reach a "modest positive result" based on higher average freight rates in the second half of the year instead of its earlier outlook for a "negative up to neutral result" despite the euro zone crisis affecting container trade into Europe.
" Global demand for seaborne containers is expected to increase by 4 p ercent in 2012, but with declining i nbound European volumes," th e company sa id, lowering its view of demand growth from an earlier 4-6 percent.
" Container rates have been improved, Maersk Line is back in black figures and our other core growth businesses are executing well on strategy," Chief Executive Nils Smedegaard Andersen said in a statement.
Maersk's net profit in the second quarter of 2012 fell to $965 million from $1.57 billion in the same period last year, missing the average forecast of $994 million given by analystso in a Reuters poll but coming within the range of estimates.
The container shipping business, a baromet er of world trade as the Maersk Line fleet carries more than 15 percent of all seaborne containers, swung back in to profit in the second quarter from losses a year ago and in the first quarter.
But Maersk Line's operating profit of $227 million for the second quarter, against a year-ago loss of $95 million, missed th e average forecast by an alysts o f $439 million a s contract freight rates lagged the rebound in the spot market.
The average freight rate was 4 percent higher in the second quarter c ompared with t he corresponding period last year and 1 4 p ercent h igher than in th e first quarter of 2 012, Maersk said.
Oil and gas earnings , hit by lower production, fell less than expected, and the group maintained its f orecast f or i ts oil business results to be similar to last year.