Maersk to Continue Cost Cuts, Seeks Drilling Unit Listing
17 August 2018 - 5:20PM
Dow Jones News
By Dominic Chopping
A.P. Moeller-Maersk A/S (MAERSK-B.KO) will continue to cut costs
after lower freight rates and higher fuel costs weighed on
second-quarter earnings. The Danish freight carrier said it will
seek a separate listing of its drilling unit next year.
Maersk said last week that its earnings would be weaker than
expected this year, citing escalating trade tensions as well as
higher costs and lower rates, but in its report Friday it said cost
cuts and higher freight rates ahead will help improve
profitability.
Maersk, which moves about 18% of all containers world-wide and
is considered a barometer of global trade, said last week that it
expected its core profit this year to come in at $3.5 billion to
$4.2 billion compared with previous guidance of between $4 billion
and $5 billion.
Maersk said its profit will be hit by a 28% increase in its fuel
bill and a 1.2% decline in average freight rates.
With its previous 2018 guidance, Maersk was expecting an
underlying annual profit above the $365 million booked last year.
Without citing any numbers, it now forecasts "a positive underlying
profit."
The shipping firm Friday said second-quarter net profit was $18
million, from a $269 million loss in the same period last year. As
previously announced, revenue rose to $9.51 billion from $7.69
billion.
Maersk has been transforming itself from a sprawling shipping
and energy conglomerate into a more streamlined shipping and
logistics firm. It had set a deadline to sell its oil-drilling arm
by the end of this year, but Friday said a listing in Copenhagen
next year would offer the most optimal and long-term prospects for
its shareholders.
For Maersk Supply Service, the pursuit of a solution will
continue but the company said that due to challenging markets the
timing for defining a solution is difficult to predict.
Amid continued pressure on freight rates and a significant
increase in fuel prices and adverse changes in foreign exchange
rates, the company said it would continue to make network changes
and reduce capacity on trades not yielding the desired
profitability.
It also pledged to halt all new vessel orders until at least
2020 and to increasingly lease new dry containers as opposed to
buying them.
Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter:
@domchopping @WSJNordics
(END) Dow Jones Newswires
August 17, 2018 03:05 ET (07:05 GMT)
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