Danish shipping and oil group A.P. Moller-Maersk first-quarter profit plunges to $224 million from $1.5 billion a year earlier, with all sectors showing a drop in performance except drilling and tanker shipping services
COPENHAGEN, Denmark (AP) -- Low oil prices and freight rates weighed on profits at Danish shipping and energy group A.P. Moller-Maersk, though not as sharply as analysts had feared.
The company said Wednesday that underlying profit plunged to $224 million from $1.5 billion a year earlier. Revenue fell almost 20 percent to $8.5 billion.
Still, the results beat market expectations, and the company's share price rose more than 5 percent to 9,195 kroner in afternoon trading.
The group's main shipping operations, Maersk Line, the world's largest container-ship operator, showed a profit of $37 million, down from $714 million a year earlier mainly because of a 26 percent drop in freight rates caused by lower bunker prices and poor market conditions.
CEO Nils Smedegaard Andersen conceded that market conditions remained "challenging," but maintained that the Copenhagen-based group was continuing to "adjust our cost base to the new conditions and maintain a good operational performance across our businesses."
At the end of the quarter, Maersk Line had a fleet of 287 vessels and 318 chartered ships - a 2 percent increase in capacity from a year earlier. But it said that idle capacity more than doubled.
The company said that cutting capacity in line with falling demand will remain a focus for the company, to "defend its market leading position and meet customers' demands."
Maersk Oil, which turned a loss of $29 million in the quarter, from a $208 million profit a year earlier, was hit by a 37 percent drop in the average oil price to $34 per barrel, but noted that since then there has been "a slow but increasing upward trend."