Maersk raises 2014 profit forecast as container volume grows
COPENHAGEN, Denmark (Bloomberg) -- A.P. Moeller-Maersk A/S raised its full-year profit forecast after the company’s container-shipping line, the world’s largest, said earnings are rising because of higher freight volumes and lower costs.
Earnings excluding discontinued operations, impairment losses and divestment gains will total $4.5 billion compared with a previous forecast of $4 billion, Copenhagen-based Maersk said on Aug. 19 in a statement. The stock jumped the most in a year after the company also said it’s buying back shares.
Maersk Line, which transports about 15% of the world’s containers, has been battling industry overcapacity after a boom in ship orders coincided with the global recession, triggering the worst slump in prices for carrying cargo since containerization became global in the 1970s. The unit said today 2014 profits will be “significantly” above last year’s result of $1.5 billion, compared with a previous forecast of a result “above” 2013’s level.
The company will buy back shares for about $1 billion within the next 12 months “due to the current strong financial situation,” CEO Nils Smedegaard Andersen said in the statement.
“We find it highly positive that they show clear commitment to return on capital and distribution of this to shareholders through share buybacks and dividends,” Frode Moerkedal, an analyst at RS Platou Markets, said in a report to clients, reiterating a buy recommendation on the stock.
Maersk jumped as much as 5.6%, the steepest intraday gain since Aug. 16, 2013, and was trading up 4.7% at 14,130 kroner in Copenhagen. The stock has risen 20% this year, compared with a 2.1% advance in the Stoxx Europe 600 Index.
Second-quarter earnings before interest, tax, depreciation and amortization rose 9% to $3.09 billion, beating the $3.05 billion median estimate of four analysts surveyed by Bloomberg News. Net operating profit after tax at the Maersk Line container unit jumped 24% to $547 million. Volumes increased 6.6%, while costs declined by 4.4% in the quarter.
Maersk also raised profit forecasts for its oil-exploration and port-terminal divisions.
The oil unit, which posted a $1.7 billion writedown on its Brazilian assets last month, will report an underlying profit in 2014 in “line with” last year’s $1 billion, compared with a previous forecast for declining earnings, Maersk said. Profit will be helped by higher oil prices, which Maersk says it sees at $108 a barrel compared with $104 a barrel previously.