Maersk Raises 2014 Profit Forecast on Container Increase
Tomohiro Ohsumi/Bloomberg News
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 in a statement.
Maersk Line, which transports about 15% of the world’s containers, has been battling industry overcapacity after a boom in ship orders that coincided with the global recession triggered the worst price slump since containerization became global in the 1970s.
The unit also raised its 2014 forecast, saying net operating profit after tax will “significantly” exceed last year’s $1.5 billion, versus a previous forecast of a figure “above” that level.
“It’s impressive that Maersk Line can continue to lower costs,” said Jesper Langmack, head of investments at Copenhagen-based pension fund PFA, which owns about $450 million of Maersk stock. “It’s certainly positive news that Maersk chooses to launch this share buyback. It’s a good signal that management constantly seeks to create value for shareholders.”
The company will buy back shares for about $1 billion in the next 12 months as Maersk’s capital structure is “almost too strong,” Chief Executive Officer Nils Smedegaard Andersen said in a Bloomberg Television interview. It will be the first “formalized” buyback in the company’s 110-year history, and it won’t reduce dividend payments, he said.
“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.
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