A.P. Moeller-Maersk A/S raised its full-year profit forecast after the company’s container-shipping line, the world’s largest, said earnings are rising because of higher freight volumes and lower costs.
Earnings excluding discontinued operations, impairment losses and divestment gains will total $4.5 billion compared with a previous forecast of $4 billion, Copenhagen-based Maersk said today in a statement. The stock jumped the most in a year after the company also said it’s buying back shares.
Maersk Line, which transports about 15 per cent of the world’s containers, has been battling industry overcapacity after a boom in ship orders coincided with the global recession, triggering the worst slump in prices for carrying cargo since containerisation became global in the 1970s. The unit said today 2014 profits will be “significantly” above last year’s result of $1.5 billion, compared with a previous forecast of a result “above” 2013’s level.
The company will buy back shares for about $1 billion within the next 12 months “due to the current strong financial situation,” chief executive officer Nils Smedegaard Andersen said in the statement.
‘Highly Positive’
“We find it highly positive that they show clear commitment to return on capital and distribution of this to shareholders through share buybacks and dividends,” Frode Moerkedal, an analyst at RS Platou Markets, said in a report to clients, reiterating a buy recommendation on the stock.
Second-quarter earnings before interest, tax, depreciation and amortization rose 9 per cent to $3.09 billion, beating the $3.05 billion median estimate of four analysts surveyed by Bloomberg News. Net operating profit after tax at the Maersk Line container unit jumped 24 per cent to $547 million. Volumes increased 6.6 per cent, while costs declined by 4.4 per cent in the quarter.
Bloomberg News, edited by ESM
