A.P. Moller - Maersk profit up 15%, box business turns modest profit

A.P. Moller - Maersk today reported a modest annual profit in its container shipping division as the Danish group achieved a 15.3 percent increase in net profit for 2007 of 18.66 billion Danish Krone

($3.4 billion).

Group revenue for the year improved 7.2 percent to DKr278.9 billion ($51.2 billion).

The Copenhagen-based giant said its profits from container activities showed significant progress, but remain unsatisfactory.  

The liner business' profit after tax was DKr 1.18 billion ($217 million), from last year's loss of DKr 3.38 billion. Profit before financial items and tax (EBIT) in the segment gained six-fold at DKr

5.35 billion ($982 million) despite a revenue drop of 3.4 percent to DKr 145.2 billion ($26.7 billion).

Other highlights from the container segment include:

Profit at Maersk Line's sister company Safmarine jumped 66 percent to $83 million and APM Terminals' earnings increasing 12.1 percent to $111 million on a revenue gain of 22 percent at $2.5 billion. APM handled an extra 13 percent containers in 2007 at 31.4 million TEUs.

Maersk Logistics, which was last year divided into two business units -- forwarding under the name of Damco, and global supply chain management under the existing brand -- saw its revenue go up 9 percent to $3 billion, although profit was down for the year at $6 billion.

The combined volume transported by Maersk Line and Safmarine was behind the global container growth -- given as 9 percent -- with shipments only up 2 percent at 6.8 million FEUs. Maersk said it trimmed its non-profitable transpacific capacity by 17 percent while at the same time raising its volumes in the Asia/Europe trade by 12 percent and Africa trades by 15 percent.

During the 12 months, average liner freight rates, including bunker adjustments, were 5 percent higher. Average unit costs, including depreciation and amortization, were down 1 percent despite an approximate 10 percent hike in bunker costs.

In January, Eivind Kolding, Maersk Line's chief executive officer, announced a streamLINE initiative to focus on cutting costs, increasing vessel utilization and simplifying procedures. The move will see job cuts of 2,000 to 3,000 people, mostly from middle management. Non-recurring costs for the implementation of streamLINE are expected to total about $250 million in 2008.

A.P. Moller - Maersk said the outlook for 2008 is subject to significant uncertainty due to a potential slowing of the global economy, record fuel prices and the ongoing reorganization of Maersk Line.