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July 8, 2010, 7:00 p.m. EDT

Maersk Lifts Profit View Amid Signs of Shipping Revival

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By Ian Edmondson

In the latest sign of revival in the container-shipping industry, A.P. Moller-Maersk A/S, the world's largest container-shipping company, raised its full-year earnings forecast Thursday, saying it now expects to make a bigger profit than it did two years ago, but it cautioned its guidance still was subject to considerable uncertainty.

"The improvement of especially the container business has since [the last forecast March 4] been greater than envisaged and the company now expects that the profit for 2010 will exceed the [$3.5 billion] profit for 2008, provided that freight rates, oil prices and the USD exchange rate remain stable at current levels," Maersk said.

Copenhagen-based Maersk reported a full-year net loss in 2009 of $1.31 billion.

Maersk shares opened sharply higher on the news and traded up 5.7%, outperforming a 1.7% gain on the OMXC20 Copenhagen index.

Maersk said the revision from March—when it had forecast only "a modest profit"—includes an accounting gain from the sale of shares in the Yantian terminal in China, but excludes a possible gain from the sale of Netto Foodstores because that deal still is subject to approval from U.K. competition authorities.

The improved outlook comes just two days after Germany's TUI /zigman2/quotes/206714402/delayed DE:TUI1 +2.58% AG's raised its guidance for its container-shipping operations, citing a recovery in global container shipping. TUI, a holding company with assets in tourism and shipping, owns 43.3% in container-shipping company Hapag-Lloyd AG. Albert Ballin GmbH &Co. KG owns the remaining 56.7%.

"Transport volumes and in particular freight rates have continually improved over recent months and are considerably up year-on-year," TUI said in a statement Tuesday.

Last week Taiwan's Evergreen Group said it had placed an order for 10 ships capable of carrying 8,000 twenty-foot equivalent units, its first orders for new vessels since 2003.

The order from the parent of Taiwan's largest container shipper by revenue, Evergreen Marine Corp., is another indication the container-shipping industry is recovering. Rebounding global demand and aggressive measures to reduce supply in the industry, including slow-steaming and idling of ships, have helped container lines hike freight rates and recover some of the losses they have incurred since late 2008.

"The turnaround in the container shipping industry has been significant; you can see that by the lack of spare equipment [such as containers] to transport goods," said Henrik Bruenniche Lund at Carnegie in Copenhagen, which rates the stock at "outperform." "Liners are in a very good position."

Maersk reports its half-year earnings on Aug. 18.

Hilde Arends in Frankfurt and Alex Pevzner in Taipei contributed to this article.

Write to Ian Edmondson at ian.edmondson@dowjones.com

/zigman2/quotes/206714402/delayed
DE : Germany: Frankfurt
3.02
+0.08 +2.58%
Volume: 42,044
Sept. 25, 2020 8:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€282,968
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