Maersk Ocean profit impacted by higher bunker costs... which surge to almost $1.2bn

Total spend on bunkers jumped YoY by 52.7% following Hamburg Sud takeover, whilst average fuel price was up 19.3%.

Image credit: Kees Torn Flickr CC BY-SA 2.0

Updated on 17 May 2018 09:05 GMT

Maersk's Ocean segment posted an operating profit (EBITDA) of $492 million for the first-quarter (Q1) of 2018, which was a year-on-year (YoY) improvement of 1.7 percent on the $484m figure recorded in Q1 2017.

Maersk said the result was impacted by higher unit costs due to rising bunker prices and adverse developments in exchange rates.

The total spend on marine fuels - following Maersk Line's acquisition of Hamburg Sud in November - jumped YoY by $412m, or 52.7 percent, to $1.194bn.

In a sequential comparison with Q4, marine fuel expenses were up $291m, or 32.2 percent.

The average price spent on bunkers by Ocean in Q1 was $382 per tonne - a rise of $62, or 19.3 percent, on the previous year, and a quarter-on-quarter (QoQ) increase of $42, or 12.4 percent.

The total amount of marine fuel consumed in Q1 increased YoY by 685,000 tonnes, or 28.0 percent, to 3,129,000 tonnes.

The unit cost at fixed bunker price jumped $150, or 8.6 percent, to $1,895 per forty equivalent unit (FFE), including income from vessel sharing agreements (VSAs). Overall unit costs for Ocean were 12 percent higher at 2,072 $/FFE, compared to 1,858 $/FFE the year before.

Providing a breakdown of the reasons for the 8.6 percent rise in the unit cost at fixed bunker price, Maersk explained that 2.5 percent was related to adverse exchange rate developments, 3.4 percent to changes in the portfolio mix following the inclusion of Hamburg Sud, and the remaining 2.7 percent primarily related to higher terminal and feedering costs.

Maersk also noted that Ocean's bunker efficiency deteriorated by 3.4 percent to 972 kg/FFE from last year's figure of 940 kg/FFE. Part of the deterioration, Maersk said, was due to the increased capacity committed to carrying volumes from the slot purchase agreements which are not counted as loaded volume.

The Ocean division achieved a 38 percent increase in revenue to $6.81bn, up from $4.95bn in the prior-year period, or 9 percent excluding the effect from Hamburg Sud.

Maersk's Ocean segment includes the ocean activities of Maersk's Liner Business (Maersk Line, MCC, Seago Line and Sealand) together with Hamburg Sud brands Hamburg Sud and Alianca as well as strategic transshipment hubs under the APM Terminals brand.

A.P. Moller - Maersk results

A.P. Moller - Maersk posted a Q1 underlying loss of $239m, down from the previous year's loss of $139m.

Revenue during the period rose by $2.15bn, or 30.3 percent, to $9.25bn.

Guidance for 2018

In its guidance for 2018, 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 $400m.

Maersk Line says it expects underlying profit in 2018 to be above last year's figure of $356m, and EBITDA to be between $4.0bn and $5.0bn - which would beat 2017's $3.5bn.