Lower Bunker Costs Help Maersk Line to Q1 Profit

A.P. Moller - Maersk CEO Nils S. Andersen saw Maersk Line back in the black for Q1.

Container shipping giant Maersk Line reports it achieved a profit of $204 million in the first quarter of 2013 after losing $599 million during the same period last year, although parent company A.P. Møller-Maersk (Maersk) saw its results decline.

Maersk Line's revenue held steady at $6.3 billion, but lower costs, including lower bunker costs, allowed for the increase in profits.

Maersk Line said that continued use of super slow steaming helped it lower bunker consumption by 19 percent compared to the period last year, while it saw a 9 percent decrease in the average bunker price, saying it paid an average price of $626 per metric tonne (pmt) for bunkers, compared to $685 pmt in the period last year.

Overall it saw a 26 percent decrease in bunker cost to 1.4 billion compared to Q1 2012.

Average freight rates rose 4.7 percent year-over-year but were partly offset by 4 percent lower volumes, while efficiency improvements helped reduce per-unit costs by 7.1 percent.

"Maersk Line is much more competitive and has gained strength to deal with the challenging shipping markets," group CEO Nils S. Andersen said in a statement.

Overall, Group revenue for the quarter declined 2 percent to $14 billion year-over-year while profit fell 33 percent to $790 million.

The company's bottom line in Q1 2012 got a $899 million boost from the settlement of an Algerian tax dispute.

For the full year, Maersk Line expects to improve on its 2012 results of $461 million mainly due to unit cost reductions, and it expects global demand for container shipping to be 2 to 4 percent higher than in 2012.

While Asia-Europe trades are expected to decline, imports to emerging economies should experience higher growth, it said.

"The outlook for 2013 is subject to considerable uncertainty, not least due to developments in the global economy," the company said.

Maersk Line said that in 2012 improvements in fuel efficiency pushed its bunker costs $1.6 billion lower than they would have been otherwise, making the difference between a profit and loss for the year.