World Economy

Maersk Profits Sink 90%

Maersk Profits Sink 90%Maersk Profits Sink 90%

Moller-Maersk kept its downbeat 2016 profit forecast on Friday as the Danish shipping and oil giant reported net profit way under expectations as it struggles to cope with a shipping recession and tough oil markets.

The Danish shipping and oil group said net profit fell to $101 million in April-June, lagging a forecast of $196 million. It was also around 90% lower than the $1.069 billion reported for the same period last year, CNBC reported.

The company maintained its outlook for an underlying profit for the full year significantly below last year’s $3.1 billion. Shares of the group were up 5.3% Friday morning.

Trond Westlie, chief financial officer of Maersk Group, told CNBC on Friday that the shipping industry faced turbulent times as a result of the “very difficult” oil market and decline in freight rates.

Low freight rates—largely as a result of overcapacity in the industry—remain a particular challenge for Maersk and other operators, Westlie said.

“If you look at the general market, the rates are at an all-time low so the shipping market is challenged ... but when we look at ourselves, we also have the lowest cost per shipped box that we’ve ever had so we are adapting to these environments. But, in general, shipping markets and specifically container markets are uncertain going forward.” A record number of around 150 container vessels are expected to be scrapped in 2016 but it will not be enough for an industry battling over capacity, low demand and falling rates, consultancy firm Drewry said in July. Imbalance between demand and supply is expected to persist in coming years.