The world’s largest shipping company says it is sending more containers around world, a sign that global trade – and possibly economic growth – is picking up.
On Tuesday, A.P. Moller-Maersk AS, which investors monitor as a bellwether for world trade, increased its earnings outlook on the back of a rise in freight volumes, a promising development at a time when a major economy like China is slowing and much of Europe remains stagnant.
The Danish group said shipping volumes rose 6.6 per cent in the second quarter, one of several factors that caused its profit to more than triple to $2.3-billion (U.S.).
Chief executive officer Nils Andersen noted that the profit was “achieved in challenging markets” and helped by cost cuts and a profit on the sale of a majority stake in the company’s retail business.
But the figures are likely to support expectations of a pickup in trade this year from a weak level in 2013. The World Trade Organization in April forecast that trade will grow by 4.7 per cent, more than double last year’s 2.1 per cent but still short of the 20-year average of 5.3 per cent.
Maersk did not specify in what regions its activity is growing, but the WTO sees trade increasing in the United States, some parts of Europe and many developing countries.
The Copenhagen-based group, which also has operations in the oil and drilling industry, said its overall revenue rose to $12-billion in the three-month period that ended June 30 from $11-billion a year earlier.
As a result, it now expects its profit for 2014 to be “significantly above” the 2013 result of $3.8-billion. When not counting one-time gains or charges, it expects profit to be $4.5-billion, up from expectations of $4-billion.
Despite the improvements, Maersk said it had to keep focusing on cutting costs. The company this year sought to create an alliance of the world’s three biggest container shipping operators. The deal to set up an independently operated network of 255 vessels in late 2014 was scrapped, however, due to opposition by Chinese authorities.
Instead of that deal, Maerks’s shipping division in July entered a 10-year vessel-sharing agreement with the world’s second-largest carrier, Mediterranean Shipping Co., on key routes across the Atlantic, Pacific and between Europe and Asia.
The company on Tuesday also announced that it would launch a structured share buyback program of up to 5.6 billion kroner ($1-billion) to be carried out over a 12-month period. Shares in Maersk jumped 5 per cent in Copenhagen to 14,180 kroner.Report Typo/Error