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Low transport fees and high bunker prices put pressure of profit forecast
Maersk announces profit warning for 2018There is ever-increasing pressure on transportation tariffs and high bunker prices. That has forced the Danish shipping company, A.P. Møller - Maersk A/S, to adjust their profit forecast downward for the year.
The transportation company expects an EBITDA in the region of $3,5 to $4,2 billion, with a positive amount below the line. Earlier they set a forecast of an EBITDA of between $4 and $5 billion. They were also expecting a profit margin above that of 2017 ($356 million). This forecast has, therefore, been adjusted downward.
Transport costs that are under pressure and high bunker prices are to blame for this lower profit projection. Average transportation tariffs were 1,2% lower in the second quarter than in the same period last year. In contrast, the shipping company's fuel costs increased by 28%.
Already at the presentation of their first quarter results, the company pointed out a large number of uncertainties that could influence this year's results. Geopolitical tension and trade conflicts were mentioned as factors with a possible adverse effect. These reasons are in addition to the lower transport fees and high bunker prices.
Maersk reported a $9,5 billion turnover for the second quarter. They also booked an EBITDA of $0,9 billion. For the first half of the year, the figures ended up on $18,8 billion in revenue and a $1,6 billion EBITDA.
"We made good progress in Q2 in sales, volumes, and unit costs. The results improved after a weak first quarter", says CEO, Søren Skou. "Spot transportation tariffs have recovered after a significant drop in Q2. Volumes are also increasing in line with the market. However, bunker prices remain very high. Higher transport fees do not fully compensate for this rise in prices. This has resulted in an adjustment to our 2018 profit forecast."
In March, several large shipping companies introduced an emergency surcharge to cover the spike in oil prices. These companies included Maersk, MSC, CMA CGM, and Hapag Lloyd. According to these companies, the oil price rose so sharply that the usual contract compensation regulations were insufficient. Oil prices have been on the rise since halfway through last year. In recent months, the price for a barrel of crude oil has risen above the $70 level, with outliers at as high as $80 per barrel.
Publication date: 8/8/2018
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