Maersk Line posts $336m profit swing despite spending $218m more on bunkers

Maersk Line records Q3 after-tax net profit of $220m as marine fuel expenses increase 37% YoY.

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Updated on 07 Nov 2017 11:14 GMT

Maersk Line reports that it achieved a $336 million profit swing in the third quarter (Q3) of 2017 after recording a net profit after tax of $220 million, compared to last year's loss of $116 million - despite spending $218 million more on bunker fuel during the period.

The underlying result was a profit of $211 million - versus a loss of $122 million in Q3 2016.

The Danish shipping firm's total spend on marine fuels jumped 36.9 percent year-on-year (YoY) to $809 million, up from $591 million during the corresponding three-month period in 2016.

In a sequential comparison with Q2, marine fuel expenses were up $29 million, or 3.7 percent.

The average price spent on bunkers by Maersk Line in Q3 was $307 per tonne - a rise of $63, or 25.8 percent, on the previous year, and a fall of $6, or 1.9 percent, sequentially.

The average marine fuel price for the first nine months of 2017, meanwhile, increased YoY by $107, or 51.9 percent, to $313 per tonne.

Maersk Line also noted that its bunker efficiency deteriorated by 11.4 percent to 1,002 kg/FFE, from last year's figure of 900 kg/FFE.

Key results

In addition to posting an increase in Q3 after-tax profit to $220 million, the figure for the first nine months jumped to $493 million - compared to last year's loss of $230 million.

The underlying result for the January-September period was $458 million - an improvement of $687 million on the $229 million loss recorded during the same period in 2016.

Revenue for Q3 increased by $771 million, or 14.4 percent, to $6,130 million, whilst nine-month revenue was up $2,329 million, or 15.1 percent, to $17,723 million.

Maersk Line said the results were driven by higher average freight rates, whilst also pointing out that there was a 2.5 percent decrease in volumes and increased unit cost due to a cyber attack and 26 percent higher bunker price.

As regards overall group performance, A.P. Moller - Maersk recorded a Q3 net loss of $1,539 million, which included discontinued operations of $1,419 million. The group said the figure was negatively impacted by an accounting impairment of $1.75 billion in Maersk Drilling following classification as discontinued operations, and impairments of $374 million in APM Terminals.

The Q3 underlying profit from continuing operations was $248 million compared to a loss of $42 million during the prior-year period.

Revenue in Q3 for A.P. Moller - Maersk increased YoY by $771 million, or 14.4 percent, to $6,130 million.

Guidance for 2017

In its guidance for 2017, A.P. Moller - Maersk said that a $100 change in the price of bunker fuel would lead to the group's underlying result varying by $0.1 billion.

Maersk Line says it now expects an improvement of approximately $1 billion in underlying profit (previously in excess of $1 billion) compared to a loss of $384 million in 2016.