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AP Moller-Maersk profits plunged on low freight rates and oil prices

AP Moller-Maersk profits plunged on low freight rates and oil prices
Denmark’s shipping conglomerate AP Moller-Maersk saw its first half profit plunged 87% year-on-year to $342m, impacted mainly by lower container freight rates and oil prices.

The January-June 2016 profit of $342m compared to a much bigger gain of $2.66bn in the same period of last year.

Revenue for the group fell to $17.4bn from $21.07bn in the year-ago period, while operating expenses decreased by $1.8bn predominantly due to lower bunker prices and focus on cost efficiency.

The group’s core container carrier business under Maersk Line posted a first half loss of $114m as against the profit of $1.22bn in the previous corresponding period.

“Recognising the group’s low growth and returns the board of directors has during Q2 initiated a process to develop and consider the strategic and structural options for the Maersk Group to further increase agility and synergies,” AP Moller-Maersk stated in its results statement.

Part of that strategic review involved the appointment of Soren Skou as the new ceo, replacing Nils S Andersen, effective 1 July 2016. Skou will remain ceo of Maersk Line in addition to his position as ceo for the group.

Maersk Oil made a first half profit of $102m, negatively impacted by lower average oil prices, while Maersk Drilling reported a profit of $386m, positively impacted by the contract termination of Maersk Deliverer in Q1 by $40m, high operational uptime and savings on operating costs.

Its other units APM Terminals and APM Shipping Services registered first half profit of $220m and $31m respectively.

“The group’s expectation of an underlying result significantly below last year ($3.1bn) is unchanged,” AP Moller-Maersk stated.