Copenhagen: Oil and shipping group A.P. Moller-Maersk swung to a bigger net loss than expected in the first quarter and warned that the full year might end in deficit too.
The owner of the world’s biggest shipping container business posted a net loss of 2.13 billion crowns ($390 million) for the first three months, having made a profit of 5.03 billion crowns in the same period last year, as the dive in global trade and freight rates hit shipping and low oil prices hit its oil business even harder than expected.
The average forecast given by analysts in a Reuters poll had been for a loss of 642 million crowns.
However, after an initial fall of 3% Maersk shares were up 3% at 34,200 crowns by 1307 GMT.
The Danish group, which before 2008 reported results only every half-year, has not reported a net loss at least since World War Two, a spokesman said.
The company, which owns shipper Maersk Line and pumps oil from the North Sea, Qatar, Algeria and Kazakhstan, said it would also make a second-quarter loss.
“The increase in new (ship) tonnage caused the situation to deteriorate and the container activities realised a negative and unsatisfactory result for the first quarter of 2009,” Maersk said.
Besides its core businesses, Maersk also controls a port operator, a retail group, a shipyard and industrial operations.
ING analyst Axel Funhoff said in a note the container shipping unit’s loss of $559 million was larger than expected.
“We had expected a loss of $379 million,” he said. “Also the APM Terminals, Tanker, and Oil & Gas business disappointed.”
Maersk Line transported 14% less containers year-on-year in the quarter, at on average 24% lower freigh rates.
The firm’s volumes on the world’s biggest trade route, between Asia and Europe, were down 8%, with rates down 44%.
Maersk’s chief executive, Nils Smedegaard Andersen, told Reuters he expected overcapacity on the container and tanker shipping markets to last several years.
Analysts have said the container market may start recovering this year, after hitting bottom in the first quarter, due in part to the economic stimulus packages that have been implemented around the world and also to less overcapacity.
Maersk Line last year accounted for 15% of global container shipping. It then made up half of Maersk’s group revenue but only 6% of net profit, while the oil and gas unit accounted for one fifth of sales but two thirds of profits.
Maersk said oil and gas production was up 18% year-on-year, primarily due to a higher share of production in Qatar, but lower crude oil prices had slammed the result for its oil and gas operations in the quarter. Net profit at the division was of $256 million.
Singapore’s Neptune Orient Lines, the world’s seventh biggest container shipper, also reported a worse than expected quarterly loss on Tuesday, amid slumping volumes.
Maersk said the outlook for container freight rates, transported volumes, the dollar exchange rate and oil prices this year was very uncertain and it couldn’t rule out a full-year net loss.
Maersk said crude oil prices would probably be slightly higher in the rest of the year than in the first quarter.
It also expected a less steep decline in container freight volumes to reduce the decline in freight rates.
“These conditions, combined with an increased effect from cost savings, are expected to improve the group’s earnings in the second half of 2009,” the company said.
“The fact that they even talk about a full-year loss is much worse than what I had seen coming,” said Jacob Pedersen, analyst at Sydbank.
Quarterly group sales fell to 63.0 billion crowns from 71.8 billion, versus a forecast 59.5 billion.