Maersk Line Gunning to Defend Top Market Share

By Ole Mikkelsen

COPENHAGEN, Aug 13 (Reuters) – A.P. Moller-Maersk plans to take motion to defend and doubtlessly increase its main place in container transport, sending a sign to rivals that it’s going to change into a extra aggressive participant out there.

The oil to transport group’s outcomes on Thursday confirmed that container transport division Maersk Line, the corporate’s greatest enterprise, gained market share within the second quarter. In the primary quarter, it had misplaced share when analysts mentioned it didn’t have interaction in a worth conflict.

“We want Maersk Line to grow at least with the market to defend its market-leading position. It is a signal to the industry that we aim to keep our position as industry leader,” Chief Executive Nils Andersen informed reporters.

In the previous, Maersk Line has at all times sought to keep up its market share of round 15 % however now’s trying to increase it, capitalising on its low prices.

Frans Hoyer, analyst at Jyske Markets mentioned: “It’s a new and very strong signal to competitors.”

Maersk Line controls round one-fifth of all containers transported on the world’s busiest routes between Asia and Northern Europe. It was not hit as onerous as rivals by file low spot freight charges for transporting containers from Asia to Europe within the second quarter.

This was as a result of the transport group was capable of scale back its unit prices by 13.1 %, benefiting from decrease gas costs and a weaker US greenback.

“At the end of the day some players have a lower unit costs than others,” analyst Stig Frederiksen from Nordea Markets mentioned, referring to Maersk. He mentioned that enabled Maersk Line to ship return on invested capital (ROIC) of 10.1 %, a end result he mentioned no others had been even near reaching.

In the second quarter, Maersk Line’s core revenue margin was greater than 5 share factors forward of its friends, which it has delivered each quarter because the fourth quarter of 2012.

The container transport trade has a status for aggressive worth slicing. In the primary quarter, analysts mentioned Maersk had stepped again from a worth conflict on the Far East to Europe route and this led to its market share loss.

Maersk Line’s rivals embody family-owned Mediterranean Shipping Company from Switzerland, French family-controlled CMA CGM, Hapag-Lloyd from Germany, Evergreen from Taiwan, Cosco Shipping and CSCL , each from China.

On China, CEO Andersen mentioned the nation’s resolution to devalue the forex this week was excellent news for the group as a result of it will profit Chinese exporters transport items around the globe.

By controlling round 15 % of the worldwide marketplace for container transport, Maersk Line is seen as a bellwether for international commerce. Roughly 90 % of the world’s items are carried by sea with over 70 % in containers.

The group revised its expectations for international demand for sea-borne container transportation to extend by 2-4 % from beforehand by 3-5 %.

The International Monetary Fund (IMF) expects international development to be 3.3 % in 2015 and three.8 % subsequent 12 months.

The firm additionally introduced plans on Thursday for a $1 billion share buy-back, which helped to ship its shares up greater than 8 %.

Group web revenue halved to $1.1 billion within the quarter, however the decline was not as dangerous as forecast due to an enchancment within the oil enterprise and a stronger than anticipated end result from Maersk Line.

The group stored its full-year outlook of underlying web revenue of round $4 billion. It lifted monetary targets for Maersk Line to a return on invested capital of between 8.5 % and 12 % from a earlier 8.5 %.

Two different divisions within the conglomerate, Maersk Oil and Maersk Drilling additionally each delivered outcomes above expectations, largely on account of decrease than anticipated working prices.

(Editing by Jane Merriman and Keith Weir)