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A.P. Moller-Maersk A/S, the world's largest container line and bunker buyer, has said that it expects the rise in marine fuel prices to continue to have a negative effect on margins during the remainder of the year.

In its intermin management statement, Maersk said: "The group expects freight rates to remain under pressure short term, but see a stronger market in the second half year, while increased bunker and time charter costs are expected to continue to impact margins negatively."

During the first three months of 2011 Maersk achieved a profit increase of 82% to USD 1.2bn (USD 0.6bn) and was driven by better operational performance in most business units. The group’s ROIC increased to 11.7% (7.6%) and revenue for the period rose by 10% to USD 14.5bn (USD 13.2bn), primarily due to higher container freight rates, container volumes and oil prices.

"We have had a good start to the year and are very satisfied with the results. Our businesses have performed very well, even as tanker rates have remained low and container rates have been decreasing during the period. In the past six months we have made significant investments in ships, terminals, drilling rigs and oil fields. These reflect our continued strong confidence in the long term future of our markets and not least our ability to continue to compete successfully,” said Group CEO Nils S. Andersen.

Group Activities

The group's container activities made a profit of USD 438m (USD 169m) and a ROIC of 10.2% (3.9%). The number of containers carried increased by 5% to 1.84m FFE, while the average freight rate of USD 2,908 per FFE was 2% higher than the same period last year.

Maersk Oil made a profit of USD 512m (USD 450m) and a ROIC of 44.1% (35.2%), positively affected by a 38% higher average oil price at USD 105 per barrel, partly offset by tax rate increase in the UK. The group’s share of oil and gas production declined by 13% to 30 million barrels, primarily due to higher oil prices as well as reduced investments and costs in Qatar. Exploration costs of USD 141m were at the same level as last year.

The result for terminal activities was a profit of USD 139m (USD 114m). Container throughput increased by 8% to 7.8m TEU and ROIC increased from 8.8% to 11.6%, primarily through efficiency gains and cost reductions.

Tankers, offshore and other shipping activities made a profit of USD 213m (USD 115m) and a ROIC of 5.9% (3.1%). The group said it is seeking to divest Maersk LNG.

Other businesses made a profit of DKK 241m (DKK 97m) and a ROIC of 4.5% (1.9%).

Outlook for the full year 2011

The group still expects a result lower than that achieved in 2010, as stated in the annual report for 2010.

Maersk expects the global demand for seaborne containers to grow by 6-8% in 2011. The global supply of new tonnage is expected to match or grow more than the freight volume, especially on the Asia to Europe trade. Freight rates are forecast to remain under pressure short term, but see a stronger market in the second half year. The group’s container activities expect a 'satisfactory' year, but below the results achieved last year.

Maersk Oil expects a result below the 2010 result, based on a higher level of exploration activities, a share of oil and gas production of around 120 million barrels which is 13% below 2010, and an oil price of USD 100 per barrel.

The outlook for terminal activities, tankers, offshore and other shipping activities, retail activity and other businesses is expected to be above 2010.

"The outlook for 2011 is subject to considerable uncertainty, not least due to developments in the global economy and global trade conditions. The oil price has been affected by political unrest in North Africa and the Middle East and the outcome can have material impact on the group’s result," Maersk said.