“I am satisfied with our first half year result. Our strong financial performance is the result of our cost leadership strategy. It has proven to be the right strategy,” says CEO Søren Skou.
- USD 1.2 billion profit – a 22% improvement compared to H1 2014 (USD 1bn),
- 12.2% Return On Invested Capital (ROIC),
- Volumes increased by 1.1%, average rate decreased by 8.1% and unit cost decreased by 9.9%,
- Global container demand was very weak in H1 2015 and likely to grow by only 2-4% in 2015, which is slower than expected,
- Maersk Line adjusts its growth ambition from growing in line with the market to growing at least with the market to defend its market leading position,
- The 2015 underlying result is expected to be above the 2014 underlying result (USD 2.2bn).
Maersk Line reported a first half-year 2015 (H1) result that is USD 220 million higher than H1 2014. We achieved this due to lower costs.
Revenue in H1 was USD 12,517 million, which is 6.8% lower than H1 2014 (USD 13,365 million). Volumes were 1.1% higher. The market share that Maersk Line lost in Q1 was regained in Q2, where volumes increased by 3.7% ahead of estimated global market growth of 1-2%.
In H1, the Return On Invested Capital (ROIC) was 12.2% and in Q2 the ROIC was 10.1%. In six (6) consecutive quarters, we have delivered a ROIC above 8.5%, which is Maersk Line’s medium-term target for return on invested capital.
The average freight rate has continued to fall throughout the first half of 2015 due to weak demand, overcapacity and an intense competition on price. Maersk Line’s average rate decreased by 8.1% compared to H1 2014, and in Q2 alone, the rate decreased by 14.1% to USD 2,261. In the Asia – Europe trade rates reached an all-time low as the trade contracted with 3%. The China Containerized Freight Index (CCFI) fell to its lowest level since 2009.
“We have built a business which remains profitable despite fierce competition, falling rates and wavering demand. Driven by our low cost position, we continue to lead the industry on profit and margins. I am convinced we can do more and in the coming years grow our business at least in line with the market. We have the people and we have the assets. Most importantly, we continue to improve and deliver the services our customers want,” says Søren Skou, CEO of Maersk Line.
On 2 June, Maersk Line signed a contract for eleven (11) second generation Triple-E vessels with a capacity of 19,630 TEU each to be delivered in 2017-18. The value of the contract is USD 1.7 billion and includes an option for six vessels. The new vessels are intended for the Asia-Europe trade, where they will replace smaller, less efficient vessels.
In addition, on 8 July Maersk Line signed a contract for nine (9) vessels with a capacity of 14,000 TEU each to be delivered in 2017. The value of the contract is USD 1.1 billion and includes an option for up to 8 (eight) additional vessels. The vessels will be designed to operate in and perform efficiently across multiple trades.
We expect the market to remain weak. We expect – with continued over-capacity – the rates to remain under pressure. We expect global container demand in 2015 to grow by 2-4% against a previous expectation of 3-5%. We will continue to actively adjust our network, hereunder reduce capacity, to match the market demand.
“I am satisfied with our first half year result and return on invested capital. Our strong financial performance is the result of our cost leadership strategy. It has proven to be the right strategy, especially at a time with very tough competition, falling rates and stagnating demand,” concludes Søren Skou.
More information on Maersk Line’s strategy will be presented at Maersk Group’s Capital Markets Day 2015, 9 September 2015 in Copenhagen.
Maersk Group Interim report 2nd Quarter 2015: http://investor.maersk.com/financials.cfm
Contact: Senior Press Officer, Michael Christian Storgaard, +45 3363 3534 or michael.storgaard@maersk.com
About Maersk Line
Maersk Line is the world’s largest container shipping company, known for reliable, flexible and eco-efficient services. We provide ocean transportation in all parts of the world. We serve our customers through 374 offices in 116 countries. We employ 7,100 seafarers and 25,500 land-based employees and operate 619 container vessels. We market our services through the Maersk Line, Safmarine and SeaLand (Intra-Americas) brands. Maersk Line is the holding company for MCC Transport (Intra-Asia) and Seago Line (Intra-Europe).
Maersk Line is part of the Maersk Group, headquartered in Copenhagen, Denmark. The Group employs about 89,207 people in around 130 countries. 2014 revenue: USD 48 bln.
Key Financial Figures
(USD million)Q2/2015Q2/2014Revenue6,2636,902Reported profit507547Volume (FFE ‘000)2,4842,396Rate (USD/FFE)2,2612,634ROIC (%)10.1%10.8%FFE: Forty-Foot Equivalent Unit
Source: Maersk Line press release
Source: Maersk Line press release