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Maersk recovers to profit in 2018 despite rise in bunker prices

22 Feb 2019

Danish business conglomerate A. P. Moller – Maersk posted positive profit in 2018 due to “significant progress” in implementing its strategy, said its CEO.

Maersk recorded net profit of $3.22 billion in 2018, compared to net loss of $1.16 billion in 2017.

Revenue was $39.01 billion in 2018, 26% more than revenue of $30.95 billion in 2017.

Notably, Maersk Oil Trading saw revenue of $769 million in 2018, compared to $410 million in 2017, due to a higher level of oil/bunker trading with third parties.

“With the expected demerger and listing of Maersk Drilling in April, the separation of our Energy-related businesses will be almost complete,” noted Søren Skou.

“We have successfully integrated Hamburg Süd, accelerated our digital transformation and come together across sales, customer service, delivery and products as one company with customers at the centre of our attention.”

“In 2018, we accelerated our transformation and improved earnings despite lower than expected container volume growth and an increase in bunker fuel prices,” he adds.

The company’s annual report notes the average price of marine fuel was $424 per metric tonne (pmt) in 2018, 32% higher compared to 321 in 2017.

Its bunker consumption was 11,894,000 mt in 2018, 14.4% more than 10,395,000 mt.

Total bunker cost was $5.04 billion in 2018, 51% higher than$3.34 billion in 2017.

“Overall, the higher bunker prices, along with the higher consumption due to the inclusion of Hamburg Süd’s volumes, resulted in a total bunker cost increase of 51% to USD 5.0bn (USD 3.3bn) compared to 2017,” it said.

Moving forward, Maersk says has committed $263 million for investing in scrubbers and retrofitting operations as preparations for IMO 2020.

“Scrubbers form one element of the Maersk 2020 fuel sourcing strategy, while most of the fleet will rely on compliant low sulphur fuels when the regulation starts,” it notes.

“To cover the estimated extra fuel costs, which could exceed USD 2bn per year following the new bunker regulations, a new Bunker Adjustment Factor (BAF) was announced.

“This is designed to balance fluctuations in fuel costs while also enabling customers to predict, plan and track how changes in fuel prices impact their total freight rates.”

Photo credit: A. P. Moller – Maersk
Published: 22 February, 2019

 

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