Maersk shipping business helps profit beat forecast

By Ole Mikkelsen

By Ole Mikkelsen

COPENHAGEN (Reuters) - Danish shipping and oil group A.P. Moller-Maersk reported first-quarter net profit above forecasts due to a doubling of profit at container shipping business Maersk Line and raised its outlook for the underlying result in 2014.

The company also said Maersk Line's alliance with two other major container shipping firms would not start operations in the middle of this year, as planned, because they were still waiting for regulators to give the go-ahead.

Net profit rose to $1.207 billion, Maersk said on Wednesday, beating an average forecast of $1.072 billion (634.95 million pounds) in a Reuters poll of analysts.

Maersk Line, which contributes around half of the group's total revenue, reported a 123 percent rise in net profit after it cut costs and shipped more containers.

The shipper is a bellwether for global trade, transporting around 15 percent of the world's containers. Maersk expects global demand for sea-borne containers to increase by 4-5 percent this year.

The container shipping industry has been struggling with overcapacity and too few goods to transport as a result of a weak global economy.

As a result of that, Maersk set up an alliance with Switzerland-based MSC Mediterranean Shipping Company and France's CMA CGM to help cut costs.

The alliance of the world's top three container shipping firms was cleared by U.S. regulators in March.

But the start date will be pushed back from the middle of this year while it waits for approval from several other countries, including China, A.P. Moller-Maersk Chief Executive Nils Smedegaard Andersen said.

A.P. Moller-Maersk reiterated its overall group outlook for the full year to be significantly above the 2013 net profit of $3.8 billion. But the company raised its forecast for profit excluding disposals to around $4 billion from an earlier $3.6 billion.

It raised the outlook for Maersk Line to beat last year's $1.5 billion rather than matching it.

Maersk shares were up 3.1 percent at 0820 GMT compared with a 2.2 rise in the Danish benchmark index.

"The report is a positive signal when it comes from a conservative company after the first quarter," analyst Jesper Christensen from Alm. Brand Markets said.

The improvement is driven by circumstances that Maersk controls and not based on volatile freight markets, he said.

Maersk Line's costs per unit fell by 9 percent and volumes increased to 2.2 million forty-foot containers (FFE) from 2.1 million a year earlier.

(Additional reporting by Stine Buch Jacobsen; Editing by Erica Billingham)