* Shares rise 5 pct after improved guidance, better quarter
* Maersk indicates more buybacks after first in its history
* Efficiency, cost savings boost Maersk Line compared to
(Adds analyst comment, detail on Line)
By Ole mikkelsen and Teis Jensen
COPENHAGEN, Aug 19 Denmark's A.P. Moller-Maersk
announced the first share buy-back in its 110-year
history on Tuesday as an overhaul of the sprawling shipping and
oil empire leaves it with more cash than it can usefully invest.
Maersk shares jumped 5 percent after the company reported
better than expected quarterly earnings and raised its 2014
profit guidance, as cost cuts at its container shipping arm help
it navigate weakness in the global economy.
"The share buy-back programme ... further underlines that
the company has increased its focus on shareholders - this is a
great signal," said Sydbank analyst Jacob Pedersen.
Maersk will buy $1 billion of its shares in the 12 months
from Sept. 1 and said it would consider more buybacks later.
The largest container shipping company in the world and
Denmark's second-largest company by market capitalisation
suffered its first ever full-year loss in 2009 as the global
economy slid into recession.
Under pressure to prove its diversified business model can
work for shareholders, it has slashed costs and moved to focus
on four businesses - container shipping, port terminals, oil
exploration and production and oil drilling.
The conglomerate once owned businesses as varied as
supermarkets, a small airline and liquefied natural gas tankers.
"The launch of the share buy-back programme came earlier
than I had expected, but given the company's strong financial
position it makes good sense to start now," said Nykredit
analyst Ricky Rasmussen.
Maersk raised its 2014 earnings guidance for the second time
this year and now sees underlying profit of $4.5 billion,
excluding discontinued operations, impairment losses and
divestment gains, above a previous estimate of $4.0 billion.
Container shipping arm Maersk Line expects to earn profits
"significantly" above those of 2013, it said. The business has
been saving on bunker fuel costs by using its vessels more
"They have optimised their route network earlier than their
competitors and they have been better at slow-steaming. That is
why they have been able to take market share from their
competitors," Nykredit's Rasmussen said.
Many of Maersk's rivals are struggling to improve their
results in the sluggish market. Germany's Hapag-Lloyd
said it expected operating profit to drop this year while
Singapore-based Neptune Orient Lines Ltd posted larger
losses in the second quarter.
Maersk Line is the top operator on the Asia-Europe shipping
routes, the busiest in the world. That sheer size has enabled it
to take advantage of economies of scale and ensure it uses
maximum capacity. It says it has idled some vessels while its
ships use less fuel by not travelling as fast.
In the second quarter, it spent $1.3 billion on bunker fuel,
which was 2.8 percent lower than the same quarter a year ago,
despite increasing the volumes it transported by 6.6 percent.
Bunker fuel prices fell 1.8 percent in that period.
It is also trying to make the most of its vast network of
vessels and routes by sharing vessels, including in the latest
deal with the world's second-largest shipper, privately-owned
MSC Mediterranean Shipping Co.
The two companies hope such an agreement, which would span
major global routes, would further cut costs and fuel use. They
are in the process of submitting the plan to regulators and
expect it to go ahead in the first half of 2015.
Maersk failed to push through a similar concept with MSC and
a third company last year after China blocked the idea, fearing
higher end prices for customers.
Maersk's profit in the second quarter rose to $2.25 billion,
beating the average forecast of $2.21 billion in a Reuters poll
The result reflected a $2.8 billion gain from the sale of
Maersk's majority share in Dansk Supermarked and an impairment
of $1.7 billion on Brazilian oil assets, which had not performed
as well as expected.
Maersk Line earned profits of $547 million, boosted mainly
through a 4.4 percent reduction in unit costs on more efficient
bunker fuel use and also thanks to a 6.6 percent increase in
(Writing by Sabina Zawadzki; Editing by Tom Pfeiffer and