By Mette Fraende
COPENHAGEN (Reuters) - A.P. Moller-Maersk
Maersk shares jumped 6 percent to their highest in 1-1/2 years as investors welcomed a near-doubling of second-quarter earnings at container arm Maersk Line, which generates nearly half of group revenue and is helping counter weakness in the company's oil business.
"The biggest swing factor in Maersk's result is always Maersk Line, and the unit's result today nearly knocks you off your chair," said Sydbank analyst Jacob Pedersen.
"The earnings potential of the shipping unit has surprised many investors today and the share jump certainly does not make the investment any less interesting," Pedersen said.
The Danish company's second-quarter group net profit fell 11 percent to $856 million, against a forecast for a 30 percent drop to $667 million in a Reuters poll of analysts.
While advising caution in calling an end to a shipping sector slump that has weighed heavily on the industry since the 2008 financial crisis, Chief Executive Nils Smedegaard Andersen predicted a measure of stability.
"It is currently our expectation that we can maintain freight rates at the level we have reached now, for the rest of the year," Smedegaard said on a conference call.
Demand for containers has grown as the global economy strengthens gradually but, until recently, container price increases were limited by an influx of new and bigger vessels.
Container rates were under pressure both in the first and second quarters. Maersk pushed up rates on the Asia to Europe route, the world's busiest, by 174 percent on June 28, matching similar increases by rivals such as Germany's Hapag-Lloyd
Maersk trimmed its forecast for growth in demand for global seaborne containers this year to 2-3 percent from previously 2-4 percent.
PUSH ON COSTS
Maersk Line, whose vessels make up around 15 percent of the world's container shipping capacity, made a second-quarter net profit of $439 million, significantly exceeding an average analyst forecast of $99 million.
"The very strong cost control program at Maersk Line is helping the company to a large profit and guidance increase," said Alm Brand Markets analyst Jesper Christensen.
Maersk shares traded up 6.3 percent by 0510 ET at 47,560 Danish crowns, against a 0.7 percent increase in the Copenhagen stock exchange's benchmark index <.OMXC20CAP>.
A 15 percent decline in the average bunker fuel price per tonne and lower bunker consumption in the quarter for Maersk Line helped offset a 13 percent decline in the average container freight rate compared with the same quarter last year.
Total costs for a forty-foot equivalent container unit were cut by nearly 13 percent in the period, mainly driven by vessel network efficiencies, the company said.
Results for the container shipping unit are now seen significantly above those in 2012, against a previous forecast for the results to exceed last year's $461 million, Maersk said.
Net profit for Maersk Oil, the company's second-biggest business unit, tumbled by around 50 percent to $249 million, hit by a lower average oil price and lower production.
Maersk Oil expects a result significantly below 2012, when it made a one-off gain of $1.0 billion from an Algerian tax dispute and divestment gains.
Maersk raised its forecast for group net profit excluding impairment losses and divestment gains to around $3.5 billion from a previous forecast of $2.9 billion. Its kept its forecast for net profit unchanged at $3.3 billion, below last year's $4.0 billion.
(Additional reporting by Ole Mikkelsen; editing by Jason Neely and Tom Pfeiffer)