Higher freight rates to boost Maersk results

10/24/2017

Maersk is forecast to deliver an increased third-quarter post-tax operating profit, driven by higher freight rates boosting performance at Maersk Line, according to analysts at investment bank Jefferies.

Jefferies analyst David Kerstens expects operating profit at the group to rise 29% from the corresponding period last year to $443m, due to operating profit at Maersk Line rising by $502m to $382m. This includes the expected $200m-$300m impact of the NotPetya cyber attack that occurred at the start of the reporting period.

Volumes would be down 3%, representing the 70,000 teu of bookings Maersk lost due to the attack.

But this was offset by a 20% higher freight rate during the quarter.

“For 2017, we are projecting Maersk Line operating profit after tax will recover by $1.4bn to $1bn, based on a 14% higher freight rate at $2,050 per feu,” Mr Kerstens wrote in a note. “For 2018, our estimates assume a stable container freight rate, due to relatively higher expected capacity growth of 5.8% vs. demand growth of 4.8%, likely partly offset by increased idling, accelerated scrapping due to IMO sulphur regulations and deferrals to 2019.”

He added that near-term freight rate volatility would be mitigated by the prospect of a double-digit dividend yield, after Maersk made strong progress separating its energy division.

While Maersk stood to further benefit from the integration of its transport and logistics operations, and the acquisition of Hamburg Süd, the disposal of its energy assets, over-capacity in container shipping and the integration of Hamburg Süd all remained risks, Mr Kersten said.

Maersk will report its third-quarter results on November 7.