Maersk Line reports Q3 2014 results: improved and stable returns
- USD 685 million profit (USD 554m); a 23.5% improvement compared to Q3 2013
- 13.5% return on invested capital (10.9%); 11.1% year to date
- Volumes increased by 3.7%; growing with the market
- Average rate is 0.9% higher
- Unit cost is 0.9% lower
- VSA with MSC (2M) approved; will be implemented as planned
- Result for 2014 expected to be above USD 2 billion
- Global container shipping demand in 2014 expected to grow by 3-5%.
Maersk Line delivers improved results in the 3rd quarter of 2014 (Q3) through lower costs and increased rates. We achieved the lower unit cost through better vessel utilisation and network efficiencies.
Revenue in Q3 was USD 7,074 million. Volumes increased by 3.7% to 2.4 million FFE. Our strategy is to grow with the market and the increase is in line with the above 3% market growth.
“I am very satisfied with the result. Not least our return on invested capital is satisfactory and again above our long-term target of 10%. Our strategy is paying off. We have proven it is the right strategy for us. Now we have to prove it is sustainable in the long-term,” says Søren Skou, CEO of Maersk Line.
In September at the Maersk Group’s Capital Markets Day, Maersk Line revealed that new vessel capacity - 425,000 TEU in total - is needed for delivery in 2017-2019 in order to grow with the market. We expect to start ordering new vessels within the next 6 months.
In West Africa, Ebola has negatively affected trade and business in Guinea, Liberia and Sierra Leone. Maersk Line maintains shipping services to and from these countries and our local offices remain operational. We believe it is important not to isolate the affected countries, to keep trade and business working, and to ensure aid supplies can be delivered.
On 9 October, the U.S. Federal Maritime Commission (FMC) announced that it will allow Maersk Line’s vessel sharing agreement (VSA) with MSC to come into effect. The U.S. was the only remaining jurisdiction where the VSA – also known as 2M - had to obtain approval. The VSA will enable us to offer our customers more services and ports in the Asia-Europe, Transatlantic and Transpacific trades. We will also benefit from cost savings (estimated at USD 350 million per annum) through the deployment of larger and more efficient vessels and improved utilisation. In addition, we will be able to lower our CO2 emissions.
60% reduction in CO2 emissions by 2020
On 5 November, Maersk Line announced a new and ambitious CO2 target. The objective is now a 60% reduction in CO2 emissions per container transported by 2020 (2007 baseline). The previous target was 40%, which we will reach this year.
“Our new 60% target is very ambitious, but it reflects our strong belief in our energy efficiency efforts. We have proved that we can grow our business - transport more containers – and in the same time decrease our fuel consumption and cut CO2 emissions. By being innovative and dedicated, we believe that we can continue to push the boundaries,” says Søren Skou.
In Q3, Maersk Line’s bunker consumption was 2.4% lower compared to Q3 2013. Bunker efficiency improved by 5.9% to 916 kg/FFE (974 kg/FFE).
Due to the strong financial performance, Maersk Line expects a full-year result above USD 2 billion. This is a specification of the previous “significantly above 2013 (USD 1.5bn)” result expectation. We expect the global demand to grow by 3-5%.
“We are on a strong trajectory, but we also have some big challenges ahead of us. Rates are on a long-term, declining trend, the profitability on the East-West trades is unsustainable, and supply will continue to outstrip demand. Imports to emerging markets are also slowing down. So we have to remain focused and committed to cost leadership,” concludes Søren Skou.
Communiqué de Maersk Line, 12/11/14