EXCHANGE RATE GAINS SOFTEN FALL IN A.P. MOLLER’S HALF-YEAR PROFITS
Denmark’s A.P. Moller group suffered a sharp fall in operating results from its shipping activities in the first half of the year, including a loss on its container shipping business, but exchange rate gains more than compensated for the lower operating results.
For the six-month period ended June 30, A.P. Moller’s shipping activities — consisting of its Svendborg, Af 1912 and the Tankers and Liners in Partnership arms, increased their combined after-tax result to DKK3 billion ($392 million), up from DKK1.1 billion in the first half of 2001. The shipping activities benefited from a large exchange rate gain of DKK2.9 billion ($384 million) in the latest period, as opposed to an exchange rate loss of DKK1.2 billion a year earlier.
However, result from the shipping activities before exchange rate gains, other special items and tax fell by 88 percent, to DKK280 million ($37 million), from DKK2.3 billion a year before. Revenues from shipping decreased by 16 percent during the same period, to DKK34.6 billion ($4.5 billion). Without the exchange rate gain, A.P. Moller would have reported a net loss on its shipping activities.
“As expected, the first half year of 2002 was difficult for the shipping activity and the result before special items was significantly below that of the same period in 2001,” A.P. Moller said. “For the container vessels, the earnings were, as expected, negative compared to a positive result in the first half of 2001,” it added.
Commenting on the activities of its Maersk Sealand arm — which does not publish separate profit results — A.P. Moller reported that average freight rates in the first half of this year were “considerably below the level of the same period last year.”
A.P. Moller’s tanker shipping business was affected by supply and demand imbalances, and posted lower results.
The Danish group’s Tankers and Liners in Partnership arm, which includes some of the activities of Maersk Sealand, incurred a loss before exchange rate gains, other special items and tax in the first half of this year. The deficit amounted to DKK127 million ($17 million), and compares with a profit of DKK1.9 billion ($107 million) in the first half of 2001.
After a substantial exchange rate gain of DKK3 billion ($391 million), the Tankers and Liners in Partnership arm made an after-tax profit of DKK2.9 billion ($382 million), up from a profit of DKK685 million in the same period in 2001.
Revenues at the Tankers and Liners in Partnership unit decreased by 16 percent over the same period, to DKK34.4 billion ($4.5 billion), from DKK40.8 billion.
A.P. Moller expects to lose about DKK1 billion on its shipping activities this year, before special items and tax.