Strong Q2 drives $1bn first half profit for Maersk Line

The world’s largest container line, a unit of AP Moller – Maersk, reported a net profit of $547m in Q2 up from $439m in the same quarter last year, bringing its 2014 half year result to the $1bn mark, compared to $636m in the first half of 2013.

Revenues for the second quarter of 2014 were $6.9bn, up 3.8% from the corresponding period in 2013.

Maersk Line said that higher profitability had been driven by a combination increased volumes lower unit cost. “This came through the continuous focus on operational cost savings mainly from vessel network efficiencies and improved vessel utilisation,” the company said.

It said that unit cost had decreased by 4.4% to $2,585 per feu. In particular bunker cost has been reduced and was 7.2% lower on average per feu in the second quarter of 2014 compared to the same period in 2013. “Total bunker cost of $1.3bn was reduced by 2.8% compared to same quarter last year due to 1.0% lower total bunker consumption, despite 6.6% volume growth and also due to a 1.8% decrease in the average bunker price,” the company said.

While the second quarter was financially successful for Maersk Line it also saw it abandoning its planned P3 alliance with Mediterranean Shipping Co (MSC) and CMA CGM after China blocked its regulatory approval in June. The line said it would have “no material impact” on its full year 2014 result.

Meanwhile it flagged-up its 10-year vessel sharing agreement with MSC, called 2M announced on 10 July. “Most significant is Maersk Line’s initiative to enter into a 10 year vessel sharing agreement with the world’s second largest carrier in order to improve network efficiencies combined with increased port coverage and service frequency on all East-West trades,” the company said.

It said 2M is expected to start in early 2015 subject to approval from relevant authorities. Notably though the Chinese authorities have already expressed concern over the planned vessel sharing agreement.

Looking ahead to the year as whole Maersk Line revised its result upwards from being above $1.5bn in 2013 to being “significantly above” that level due to its strong performance in the first half of the year.