Danish shipping and oil company A P Møller-Maersk has upgraded its full-year outlook after posting a 62 percent increase in first-quarter profit as lower costs outweighed lower freight rates in its container business, resulting in Maersk line doubling profits from US$204 million to $454 million.
Maersk Line made a ROIC (return on invested capital) of nine percent in the first quarter compared to four percent in the same period last year, reported Dow Jones Newswires.
The improvements, despite 5.1 percent lower freight rates, were achieved through nine percent lower unit costs supported by lower bunker price and impairment reversal of $72 million.
APM Terminals, the group’s terminal operating arm, made a profit of $215 million compared with $166 million a year ago and a ROIC of 14 percent compared with 12 percent.
Volumes increased by nine percent to 9.4 million TEUs supported by volumes from terminals becoming fully operational and new terminals added to the portfolio.
Cash flow from operating activities was $305 million ($242 million) and cash flow used for capital expenditure was $120 million ($164 million).
For 2014, the underlying result for the group is now seen at about $4 billion from an earlier estimate of $3.6 billion. Maersk Line, the company's biggest unit which generates about half of the company's revenue, now sees its full-year result above 2013's profit of $1.5 billion.
Net profit for the group as a whole is still seen significantly above last year's $3.8 billion.
"The group's revenue increased by 0.9 percent in part impacted by higher container volumes and higher oil entitlement production partly offset by lower average container freight rates and lower average oil price," the company said.
The company, whose Maersk Line unit is the world's biggest container shipper, said that global demand for sea freight is seen at for to five percent in 2014 and Maersk will grow with the market. Excess capacity will put pressure on rates though, it said.
In the first quarter of 2014, the group reported a net profit attributable to shareholders of $1.15 billion, compared with $710 million a year earlier. Analysts had expected a net profit of $1.05 billion.
EBIT was $2.24 billion compared with $1.86 billion a year earlier and above analysts' estimate of $1.95 billion. Revenue came in at $11.74 billion, one percent higher than a year earlier against forecasts of $12 billion.
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