AP Moeller Maersk A/S share price down, Q3 profit rises, confirms full-year group earnings projection

The operator of the worlds largest container line – AP Moeller Maersk A/S – reported on Tuesday that its third-quarter profit rose due to reduced expenses and increased box volumes. However, lower earnings in the companys oil unit and a downward revised global shipping demand growth this year weighed on shares.

According to the companys statement, its earnings before interest, taxes, depreciation and amortization rose by 2.8% and reached $3.20 billion. Maersks net profit over the third quarter surged 33% thanks to strong performance at its shipping division Maersk Line. Net profit increased from $1.13 billion posted a year earlier to $1.5 billion, beating analysts projections of $1.36 billion.

“The improvement was achieved through lower costs and supported by an increase in the average freight rate,” Maersk Line said.

Maersk also revealed in its statement that third-quarter revenue rose from $12.08 billion a year earlier to $12.17 billion. The company maintained its full-year underlying profit projection, saying that it is expected to amount to about $4.5 billion, and boosted its full-year earnings projection for Maersk Line by 25%.

It also reaffirmed its expectations for annual group earnings at $4.5 billion, excluding discontinued operations, impairment losses and divestment gains.

The Chief Executive Officer of Maersk – Mr. Nils Smedegaard Andersen wrote on a posting on the companys website: “I am very, very satisfied. We’ve seen an improvement with the result in a situation where rates have been under pressure and the oil price has been down compared to last year.”

Shares of the company plunged as the companys oil unit saw earnings drop 4.6% to $915 million, outweighing the benefits of lower fuel prices for the shipping division. Mr. Andersen said that it would be hard to predict whether the smaller oil drilling unit will achieve its goal of $1 billion in earnings by 2018, given the recent downward pressure on oil prices.

“It’s very hard to predict what will be in 4 years,” Mr. Andersen said. “But it’s clear we now are a bit less bullish on the oil price than we were a couple of year ago.”

AP Møller-Maersk also widened its forecast range for global shipping demand growth this year to 3-5% from the previous estimate of 4-5%.

AP Moeller Maersk A/S fell 3.54% on Tuesday in Copenhagen to close at DKK12 790 and was down 0.63% at DKK12 710 per share at 08:37 GMT on Wednesday, marking a one-year change of +18.90%. The company is valued at DKK289.49 billion. According to the Financial Times, the 24 analysts offering 12-month price targets for AP Moeller – Maersk A/S have a median target of DKK15 850, with a high estimate of DKK20 400 and a low estimate of DKK11 000. The median estimate represents a 23.92% increase from the previous close of DKK12 790.