Global carriers Maersk Line and Hapag-Lloyd report improved their bottom lines in the first quarter of the year, as volume and rate declines in a tough environment were offset by lower fuel costs and a stronger dollar performance.
Danish liner Maersk Line announced a profit of US$714 million in the quarter, a 57.1% improvement compared to $454 million posted year-over-year.
However, revenue dropped to $6.254 billion, which is 3.2% lower than that for the first quarter of 2014. Similarly, volumes in the same quarter decreased, going down by 1.6% to 2.207 million forty-foot equivalent units even as unit costs increased by 2.1% as a result of lower vessel utilization.
“I am very satisfied with our reported Q1 result. It is the best Q1 result ever. Our return on invested capital is also very satisfactory and well above our targets. However, we are not satisfied with the fact that our volumes dropped and our unit costs increased. We will regain lost ground and do more to adjust capacity to demand,” said Soren Skou, CEO of Maersk Line.
Average rates decreased by 5.1% to $2,493 from $2,628 in Q1 2014 partly due to lower fuel costs. Furthermore, the supply-demand gap increased as global supply grew by 7.2% and demand 1.6%, putting rates under additional pressure.
Maersk Line plans to take out capacity in the Asia-Mediterranean and West Africa trades. “In these trades, our capacity has grown more than demand. We will also consider further blanking of services in order to improve our vessel utilization and save cost,” it said in a statement.
Looking ahead, the carrier is maintaining its previous guidance on the full-year result, expecting the 2015 result to be above that of 2014.
Hapag-Lloyd out of red
On the other hand, German box liner Hapag-Lloyd made a dramatic turnaround in the first quarter of this year, racking up a profit of EUR128.2 million (US$146.2 million) from a net loss of EUR119.1 million in the same period last year.
The sharp increase in profit was achieved in a challenging market environment, said the company, by carving gains from improved efficiency, a jump in transport volume and revenue with acquisition of CSAV’s container shipping business, a stronger dollar, and lower bunker prices.
EBITDA in the first three months reached EUR283.6 million from the year-ago amount of EUR2.9 million, and the underlying EBIT was EUR160.5 million versus a prior-year loss of EUR63.2 million.
The company said the profit was despite average freight rate in the first quarter going down by $91 per TEU to $1,331 per TEU year-over-year. It linked the drop in freight rate to the consolidation of CSAV’s container business, which had a lower average freight rate.
Without this, freight rates were down 1.9%. Transport volume totaled almost 1.8 million TEUs against 1.4 million TEUs in the year-ago quarter, while revenue came to EUR2.3 billion from EUR1.55 billion in the same quarter a year earlier, due to the inclusion of CSAV’s container shipping activities in Hapag-Lloyd’s consolidated financial statements.
“This is a solid start to the year, in spite of the continued price pressure in many of the trades,” said Rolf Habben Jansen, CEO of Hapag-Lloyd AG.
