Danish shipping giant Maersk Line has reported a loss of US$151 million in the second quarter of the year from a profit of $507 million in the same period last year amid challenging market conditions.
Continued pressure on container freight rates in the quarter led to an underlying loss of $139 million and a negative free cash flow of $20 million, said the company in a statement.
Revenue for the period reached $5.1 billion, which was 19% lower than in Q2 of 2015. The development was driven by a 24% decline in average freight rates, partially offset by a 6.9% increase in volumes.
The Danish carrier said container freight rates declined across all trades, even as global container demand grew around 2% in the second quarter compared to the same period last year.
In the first half of the year, Maersk Line registered a loss of $114 million after making a profit of $1.2 billion in the same period of the preceding year.
Meanwhile, for parent corporation Maersk Group, the organization delivered a profit of $118 million in the second quarter after posting $1.1 billion in profit last year, and logged an underlying profit of $134 million against $1.1 billion in the comparative period of 2015.
The group said profit was negatively impacted by the average container freight rates and oil prices. The underlying profit for the group was significantly lower than for the same period last year for all businesses except Damco.
“In a second quarter impacted by low growth and falling prices in nearly all our markets, the Maersk Group delivered an underlying profit of USD 134m. The result is unsatisfactory. Cost reductions and operational optimizations, however, made a significant contribution to mitigating the impact of the negative market conditions,” said Maersk’s group CEO Soren Skou.
For the first six months of 2016, the group delivered a profit of $342 million as opposed to $2.7 billion a year ago. Revenue decreased to $17.4 billion from $21.1 billion in the comparative time last year, predominantly due to lower average container freight rates and lower oil price.
But the group managed to lower operating expenses by $1.8 billion mainly due to lower bunker prices and a focus on cost efficiency.
Skou said that “the group’s expectation for 2016 of an underlying result significantly below last year is unchanged.”
He added that to ensure the future strength and profitability of the company and develop new growth opportunities, “the Board of Directors have initiated a strategic review of the company and will report on progress of the review before the end of Q3, 2016.”
