UPDATE 3-Maersk Q1 net profit nearly triples, shares soar
(Adds CEO comments in paragraphs 10 and 11, updates sharese)
COPENHAGEN, May 15 (Reuters) - Danish shipping and oil group A.P. Moller-Maersk (MAERSKb.CO) said its net profit nearly tripled in the first quarter due to higher oil prices and higher container freight rates, boosting its shares by 7 percent.
Net profit rose to $1.1 billion from $390 million in the same period last year, the company said on Thursday. In Danish crowns, the profit was reported as 5.2 billion, 30 percent higher than consensus estimates of 4 billion crowns.
Sales rose 31 percent to $14.4 billion.
"The oil business and sales gains, mainly from sale of vessels, are the main drivers behind the result improvement, and it is encouraging that the container business is increasing volumes and results ... with increasing bunker prices and while carrying out a global restructuring," Maersk Chief Executive Nils Andersen said in a statement.
The conglomerate -- which runs the world's largest container shipping operator, Maersk Line -- maintained its full-year forecast for sales of about $60 billion and net profit of about $3.6 billion to 4.0 billion.
It said it was still considering selling non-strategic assets, which could improve net profit by about $800 million.
Maersk shares traded up 6.9 percent at 57,400 crowns by 1354 GMT, while the Copenhagen exchange top 20 index was up 2.1 percent.
REDUCED CONTAINER LOSSES
The company said oil prices were up 67 percent on average, year-on-year, while its oil and gas production rose 20 percent.
Maersk pumps oil in the North Sea, Qatar, Algeria and Kazakhstan and benefits from higher oil prices over time. However, rising bunker fuel costs that cannot be passed on quickly to customers hurt short-term shipping profits.
So far this year the net effect of higher oil prices was neutral to slightly positive, Andersen told analysts in a teleconference.
"It is early in the year, and the increase in bunker prices will continue to be a significant challenge even if now it is offset by higher oil prices and higher oil production," he said.
Maersk said its container operations saw a 4 percent rise in volume and 5 percent increase in freight rates, excluding the bunker adjustment factor, especially on crucial routes from Asia to Europe.
The container shipping unit nevertheless posted a loss of $47 million due to higher fuel prices and costs related to laying off 3,000 employees. That compared with a loss of $198 million in the first quarter last year.
"For the container unit we had expected a loss of around $200 million, so it's fantastic that it was only a fourth of what we feared," said Rasmus Grann, a trader at Jyske Bank.
Andersen said restoring profitability to Maersk Line remained its top priority and noted an improvement in customer satisfaction in the first quarter.
Maersk's big shipping competitors are Taiwan's Evergreen Marine Corp. (2603.TW), Japan's Mitsui O.S.K Lines Ltd. (9104.T), Korea's Hanjin Shipping (000700.KS), Germany's Hapag Lloyd (TUIGn.DE) and privately owned MSC.
Revenue in APM Terminals increased 27 percent, putting the net profit for the quarter above the first quarter 2007. The company did not give detailed numbers for the unit.
Maersk also has a retail arm, a tanker business and an offshore oil services company. It also owns about 20 percent of Danske Bank (DANSKE.CO).
This is the first time the company has issued a first-quarter report. (Editing by Quentin Bryar)
