# Maersk concentrate on profits.



## rushie (Jul 5, 2005)

From the Australian - 

_MAERSK Line, the world's largest container carrier, will grow more slowly than the wider container shipping market this year after AP Moller-Maersk, its parent, decided it should focus on profitability rather than market share.
Copenhagen-based AP Moller-Maersk announced the changed strategy following record pre-tax profits of $US6.05 billion ($7.5 billion), up from $US5.54 billion in 2005, on revenues of $US44.5 billion ($US34.8 billion last time) for 2006. The company, which is listed in Copenhagen and controlled by the McKinney-Moller family, has substantial oil and gas production activities and operates tankers, ferries and tugs as well as container ships. It also builds ships and holds stakes in supermarkets and Danske Bank, Denmark's largest banker. 

The profits were helped by an extension of the depreciation period for ships and oil rigs, but post-tax profits were hit by increased taxation on oil and gas revenue. Post-tax profits fell to $US2.72 billion (from $US3.39 billion) after income tax rose to $US3.35 billion (from $US2.22 billion). 

The post-tax figures for the year were also dragged down by post-tax losses of $US568 million (profit of $US1.28 billion) on turnover of $US25.3 billion (from $US21.5 billion) at the container shipping and related activities division. This was despite APM Terminals, the ports business that is part of the division, having made profits of around $US100 million. 

The major contributors to post-tax profits were oil and gas production, which delivered $US1.7 billion (from $US1.18 billion) on $US6.92 billion (from $US4.58 billion) in revenue, and tankers, offshore and other shipping activities, which contributed $US965 million (from $US642 million) on $US3.73 billion (from $US3.1 billion) revenue. 

The container shipping division was hit during the year by problems with rolling out a common information technology system after the 2005 acquisition of P&O Nedlloyd, the former world No3 carrier. There was also a general slump in rates for containerised freight because of nervousness over the delivery of significant numbers of new ships. 

Chief executive Jess Soderberg admitted that during 2006 Maersk had sought to keep customers by offering cheaper rates. "We had capacity we wanted to fill," he said. 

He denied that Maersk had led the worldwide trend towards lower freight rates, but said: "I think everybody expected that our customers were up for grabs, because we were in implementation mode. But this year, we certainly put focus on profitability. Rates were going down last year and that's not sustainable." 

Mr Soderberg said he was certain the company had "hit the bottom" of its problems following the P&O Nedlloyd acquisition. 

"We have already recovered rather substantially," he said. 

The company recently announced plans to cut some routes, including direct services from the US west coast to Europe, via Panama. 

Mr Soderberg declined to say where else it might reshuffle services but accepted that there was healthy demand for the Asia-Europe routes. 

"Certainly, Asia-Europe is strong," he said. 

On some Asia-Europe services, Maersk Line deploys its new E-class container ships, which, at nearly 400m long and 56m wide, are very much the world's largest. The first ship, Emma Maersk, entered service last September and others of the class - which will eventually number eight - are being gradually delivered. 

Some shipping lines and analysts believe that such large ships take too long to load and unload and will clog up ports. But Mr Soderberg said Maersk was "so happy" about the vessels. "They are beautiful ships," he said._

Beautiful ships..?!!!

Rushie.


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