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Lean times ahead for Maersk Line?
16 May 2008
Despite dismissing employees worldwide Maersk Line may face two years of unprofitable trading according to a new report from Copenhagen’s FIH Capital Markets quoted in Lloyd’s List newspaper.
Declining freight rates and rising oil prices could cause problems for the world’s biggest shipping line. According to Danish newspaper, Borsen, analysts predict that the results of the company’s StreamLine cost cutting campaign won’t show in 2008 or 2009.
Henrik Lund, leading analyst at the company Carnegie said: “The container market may be heading towards the biggest fall ever and realistically we must expect to reach 2010, before the results of StreamLine can be seen in the balance sheet.”
Maersk Line needs to raise its earnings by US$2.1 billion in order to make an acceptable profit for the shareholders, Borsen predicted.
StreamLine has caused the dismissals of between 2,000 and 3,000 employees in Maersk Line all over the world.
In 2007, Maersk made a profit of $217 million dollars on container, shipping and related activities after years of investing heavily. So far, the Maersk Group’s expectations for 2008 have been a profit of between $3.7 and $4 billions.
The net result from A.P. Moller-Maersk's container operations was a $47 million loss in the first quarter of 2008.
However, the over-all result for the company showed that net profit nearly tripled due to the company's oil activities.
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