A.P. Moller-Maersk, the world’s largest container shipping group, cut the profit forecast for its core business yesterday after a costly cyberattack and a weaker-than- expected third quarter.
Maersk, which agreed to sell its oil and gas business to Total in a $7.5 billion deal this year, has to prove to investors that the firm’s strategy to focus on transport and logistics is the right one even with oil prices rising again.
Expectations for the container shipping business had been high after chief executive Soren Skou said in August that fundamentals were “at their best since 2010”.
However, Maersk’s freight rates declined 1.1 per cent compared to the second quarter, further signs of the impact of overcapacity that has dogged the industry.
A sweeping consolidation of container lines, which transport everything from televisions to fresh fruit, has helped the industry recover from a severe downturn that culminated in last year’s collapse of South Korea’s Hanjin Shipping.
Maersk shares are up about 25 per cent so far this year, but has slipped since mid-July due to softer growth in freight rates.
The group reported a net loss of $1.4 billion in the third quarter
The group reported a net loss of $1.4 billion in the third quarter after it took a $1.75 billion impairment on its offshore drilling business. Analysts had expected a $383 million profit.
For the container business, Maersk now expects an improvement of around $1 billion in underlying profit versus a previous guidance of above $1 billion due to higher costs related to the June cyberattack and higher bunker fuel costs.
“The third quarter has been more difficult for us and we could have grown more if we hadn’t had this terrible criminal cyber-attack,” Maersk CFO Jakob Stausholm said.
The company put the cost of the cyberattack at $250-300 million after it hit its computers and delayed cargoes.
Stausholm also said that container freight rates had been worse than expected during the quarter but that the market still looked “reasonable”.
For the whole group, Maersk had previously expected an underlying profit for the year above the $711 million from 2016.
Its new guidance is adjusted for the discontinued operations of its energy assets which it said meant the year-ago number for continued operations was a loss of $546 million.
“This is actually a small upward revision... What we’ve said was that we would get a better result than in 2016 and when we reclassify the result last year was actually negative,” Stausholm.
The company’s earnings before interest, tax, depreciation and amortisation (Ebitda) stood at $978 million, below the $1.2 billion average forecast in a poll.