Maersk Line Lowers Profit Guidance As Low Rates Drag Down Results

The company will be impacted to the tune of half a billion dollars.

Maersk Line has lowered its guidance for 2015 as plummeting freight rates are expected to impact the company's underlying results by an estimated half a billion dollars, the company said in a statement.

Another 100,000 forty-foot equivalent unit (FFE) reduction in volumes is also expected to knock off another $100 million, with the overall forecasted underlying result for Maersk Line having been lowered to $1.6 billion from its original $2.2 billion.

As a consequence, the wider Maersk Group's forecasted underlying result has also dropped to $3.4 billion from $4 billion.

"It is regrettable that we have to adjust our expectations for the 2015 result," said Maersk Group CEO Nils S. Andersen.

"All of our business units delivered a positive result in the third quarter, despite difficult conditions across our industries."

The company added that the deterioration of the container shipping market has been more severe than expected, with the latter part of the third quarter and October particularly challenging.

"Maersk Line has over the years taken steps to ensure a cost effective and resilient operation, but the current deterioration in the container shipping market is impacting also our business," Andersen said.

The company said it doesn't expect a recovery to occur in 2015.

In an interim report, Maersk Group said that the preliminary reported result for the third quarter had come in at $778 million, with an underlying result of $662 million, both of which would be a far cry from last year's figures.

Earlier this year, Ship & Bunker hard reported that the Group's second quarter net profits had also experienced a 7.3 percent year-over-year decline.