Analysts look for guidance hike in Maersk Q3


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10 Nov 2010

latest_maersk_line.jpgDanish shipping and oil group A.P. Moller-Maersk was widely expected to shrug off a drop in freight rates and raise full-year guidance when it publishes third-quarter results on Wednesday.

In August, the owner of the world's biggest container shipping company,
Maersk Line, raised guidance for its 2010 net result to more than $4
billion. A Reuters poll found it reaching that level in the first nine

"The business environment has markedly recovered for Maersk, and
freight rates have not come under too much pressure since they reported
last time ," ING analyst Axel Funhoff said. "The volume peak was in May
already, but freight lines have been able to keep rates up fairly well."

Strong third-quarter results from Asian competitors, such as China
COSCO and Neptune Orient Lines, pointed to a sustained recovery from a
dismal 2009 for the shipping industry as global trade regained
momentum. Nordea Markets said in the headline of a new note to clients
on Monday: "Market demands guidance upgrade".

January-September net profit was forecast, on average, at 21.4 billion
Danish crowns , with estimates in a 19.9-22.9 billion range.

"We expect continued underlying improvement from (the second quarter)
and we see upside to full year 2010 guidance," DnB NOR analyst Erik
Bergoo said in a Nov. 5 note to clients.

"Unless the container market collapses over the next six weeks , the
company will report a higher full-year 2010 net profit than $4
billion," Bergoo said.

Although freight volumes have probably not been particularly
impressive, freight rates -- the key factor of profitability -- have
fallen only modestly, thanks largely to new-found capacity discipline
among liners, analysts said.

Nordea said average container freight rates have fallen about 10 percent since August.

DnB NOR Markets said pot rates on Maersk's most important Asia-Europe
trade lanes peaked in mid-March and fell about 10 percent from those
levels to mid-September. "However, the volatility has been high and our
rate observations have been fairly stable since May."

The third-quarter peak season for container shipping has been
lacklustre, and Maersk Line said in mid-October it would suspend about
10 percent of its Asia-Europe service to adjust to weaker demand after
the peak season.

Analysts still saw capacity expanding and keeping rates under pressure.
"The problem for the container market in 2011, with 9-10 percent
planned additions to supply, remains, and we still believe that 2011
container profits will be lower than 2010 due to pressure on freight
rates," DnB NOR said.

Nine-month operating profit in Maersk's oil business, the
conglomerate's second important leg, was seen up 24 percent despite
being held back by lower output, analysts said.

The group's previous guidance for 2010 excluded a gain of about 4.6
billion Danish crowns from the sale of its Netto supermarkets in

Source: Reuters


Maersk Line is one of the leading liner shipping companies in the world, serving customers all over the globe.

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