A.P. Moeller-Maersk A/S reported a smaller decline in first-quarter profit than estimated, after stepping up cost cuts at its oil unit.
Net income was $211 million last quarter, compared with $1.54 billion a year earlier, the Copenhagen-based company said in a recent statement. That compares with a median estimate of $38 million in a Bloomberg survey of seven analysts.
“While market conditions remain challenging, we continue to adjust our cost base to the new conditions and maintain a good operational performance across our businesses,” chief executive officer Nils Smedegaard Andersen said in the statement.
Thanks to its cost cuts, Maersk Oil “now expects a break-even result to be reached” with an oil price of $40-$45 per barrel, compared with $45-$55 previously, it said. “Previous guidance was a negative underlying result,” it said.
Maersk Oil reported a net operating loss after tax of $29 million in the quarter, compared with a profit by the same measure of $208 million a year earlier. The loss was smaller than the $58 million predicted in a survey by Ritzau.
The unit, which has cut 1,300 jobs, targets cutting costs by 20 per cent by the end of this year, compared with 2014 levels. It said that operating expenses, excluding exploration costs, fell 21 per cent in the quarter. The unit was helped by higher production, as well as deferred income from UK tax breaks.
Maersk Line, the group’s largest unit and the world’s biggest container company, reported a net operating profit after tax of $37 million, down from $714 million in the first quarter of 2016, as freight rates declined 26 per cent on average.
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