Nordea: Low Bunker Prices Will Save Maersk $2bn

Maersk stands to benefit from low oil prices if it can hang on to savings

Maersk Group stands to save up to $2 billion per year at current oil prices, according to Nordic bank Nordea, Shippingwatch reports.

According to a Nordea analysis of Maersk Group shares, it said that the group's oil business would suffer but that bunker savings across the board would make up for the losses.

The low oil price is a potential boon for shipping lines such as Maersk Line and Maersk Tankers, for whom bunkers is the single biggest expense.

However, the situation is much less welcome for Maersk Oil and Maersk Drilling, whose earnings potential is dramatically reduced at current prices.

"Part of the lost earnings will, however, be compensated for through reduced oil exploration costs and an increased production share in Qatar," said Nordea.

"Furthermore, one should not forget that tax payment for the oil business is around 70 percent.

"The upside of this story is that the falling oil price brings major savings on fuel purchases for Maersk Line.

"At the current price, this could result in annual savings of around USD 2 billion compared to before the oil price dropped."

According to the report, Maersk Group's share price has dropped around 20 percent in value as the price of oil has continued to fall, but Nordea suggested that the result for the group as a whole should be net positive.

Nordea estimated Maersk Group profit to hit $4.5 billion for 2015.

The group reported a $3.38 billion profit from continuing operations in 2013, and $2.15 billion profit in the first nine months of 2014.

But Maersk Group has said it will not derive a long term benefit from the fall in bunker prices, saying savings will passed on to customers through reduced bunker surcharges.

"Customers must be expected to claim part of these savings," said Nordea, but it still expects that Maersk Group will be able to hang on to some of the savings.

An analyst for Jeffries recently suggested that the benefit of low oil prices for box shippers had been underestimated, saying container lines would be the "biggest beneficiaries."