Departing CFO claims Freightos will see profit in 2026 after reporting Q3 loss
UPDATED 28.11.24 TO INCLUDE FREIGHTOS INPUT AND REMOVE REFERENCE TO GUILLAUME HALLEUX Freightos’ share price fell ...
GXO: NO SALE NO MOREGXO: CEO EXITFDX: DOWNGRADEZIM: BEST PERFORMER WTC: INVESTOR DAY AAPL: LEGAL RISKTSLA: UPGRADEXOM: DIVESTMENT TALKAMZN: HOT PROPERTYGM: ASSET SALEHLAG: PROTECTING PROFITSVW: STRIKINGPLD: FAIR VALUE RISKSTLA: CEO OUT
GXO: NO SALE NO MOREGXO: CEO EXITFDX: DOWNGRADEZIM: BEST PERFORMER WTC: INVESTOR DAY AAPL: LEGAL RISKTSLA: UPGRADEXOM: DIVESTMENT TALKAMZN: HOT PROPERTYGM: ASSET SALEHLAG: PROTECTING PROFITSVW: STRIKINGPLD: FAIR VALUE RISKSTLA: CEO OUT
Following Friday’s announcement from Maersk that group-wide profits for 2012 had grown 20% to reach $4bn, today saw the release of its freight forwarding subsidiary Damco’s results for the year, which further demonstrated just how far the performances on forwarding and transport operations appear to have diverged.
The 20% Group-wide net profit increase came with a health warning – much of it was due to one-off items such as the resolution of a tax dispute between its oil division and Algerian tax authorities, and some divestments. Strip those out and underlying profit was $2.9bn, representing a growth on 2011 of 2%.
“The year started with very low rates, and after some growth the market flattened completely and we didn’t see any growth in the second half of the year, which is unusual if seen in a historical perspective,” said Maersk Group chief executive Niels Smedegaard Andersen.
“We are not forecasting any pricing in the container trades – we have learnt through bitter experience that it doesn’t make any sense to do so.
He told analysts during a question and answer session that he was unable to give any guidance on the chances of the forthcoming $650 per teu Asia-Europe general rate increase, which is due to be implemented on 15 March, sticking.
“We hope that the GRO is accepted because the profitability of the industry remains very low. When we see the figures coming out from our competitors from last year you will see most lines didn’t make any money and our return on capital was below the cost of capital.”
A few hours earlier Singapore-headquartered APL’s full year results also came out, posting a loss of $279m, a 37% improvement on the $446m loss in 2011. This came despite substantial cost reductions and a 1% increase in volumes to 6.04m teu. Average freight rates across its trades of $1,250 per teu remained unchanged from the year before, while utilisation was above 90% for the year.
However, a look at how both lines’ logistics divisions performed in comparison to their container shipping cousins goes some way in demonstrating how poor the returns for liner operations currently are.
Maersk’s logistics arm Damco saw revenues increase 19% to just under $3.3bn, while pre-tax profit was $93m. In comparison Maersk Line made a net profit of $461m on revenues of $27bn.
Similarly, APL Logistics recorded a pre-tax profit of $67m on revenues of $1.6bn, which it said was powered by a 15% increase in contract logistics, as well as increased earnings from investments in China, India and the US over the course of last year.
The contrast between logistics and liner shipping in both companies could not be starker.
Damco saw a massive increase in air freight volumes – up by 91% – as it was the first year in which Chinese air freight forwarder NTS, acquired in August 2011, made its presence in the company felt, while sea freight volumes increased by 6%.
In addition to NTS, last October saw Damco buy Australia-based Pacific Network Global Logistics, which partly explained a 4% decrease in pre-tax profits compared to 2011, Mr Andersen said.
“Revenues at Damco increased by 19%, but Damco also had to shoulder some integration costs from the Chinese and Australian businesses, so profitability hasn’t followed the expansion of the business.”
What has become clear, however, is the different approach to market share taken by the different divisions. Damco has been making extremely aggressive inroads into the air freight business with some very competitive pricing offers, while Maersk Line’s stated ambition has simply been to defend existing market share while trying to increase pricing. Mr Andersen said that any improvement in Maersk’s bottom line in 2013 will come about through cost-cutting measures, while its freight rate increases in the second half of last year had led it to lose some market share.
“Our 2012 market share was above 2011, but we have given back some of our market share in the second half of the year to lead the market up in pricing, and we will try to rectify that this year. Our strategy is to maintain our share, not to lift it,” he said.
Overall volumes carried by the line increased by 5% over 2011 to reach 17m teu, but in the second half they decreased 8% year-on-year.
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