APM expects a tough second half

IN ITS interim report for the first half of the year, the AP Moller/Maersk group – which includes the former SA flag line, Safmarine – declared a 30% increase in revenue; an operating cash flow increase of 49%; and a 58% increase in profit. A revenue of over US$30.4-billion was recorded; operational cash flow of over US$4.6-bn; and a profit of more than US$2.4-bn. The revenue increase, the report added, was mainly due to significantly higher oil prices and a higher share of oil production – as well as higher freight rates and volumes in the container activities. So the net result for the oil and gas activities of US$1.3- bn was considerably above the US$596-million of the same period of 2007. Meantime, there was also a big change in results for the group’s container activities. They showed a profit of US$73-m – against a loss of US$219-m in the first half of last year. In its outlook for the full year, AP Moller/Maersk is now expecting a revenue of US$65-bn, and a profit in the order of US$4.0-4.6-bn. However, the group warned, the expected revenue and profit is still highly sensitive to changes in container rates, transported volumes, oil prices and the US$ exchange rate. But its previously announced possible sale of non-strategic assets is no longer expected to materialise in 2008 and the group has also announced a conditional public offer for the Swedish shipping company, Broström AB. Comenting on the results, group CEO Nils S. Andersen said he was satisfied with progress made in all major business activities. “Our oil and offshore business in particular has been positively impacted by increasing oil prices and higher share of oil production. “The container business has managed to marginally improve results in difficult market conditions. However, the world’s current economic situation mixed with high bunker prices and new container tonnage is putting severe pressure on our container business profitability and we expect this situation to continue for the rest of the year.”