Thursday 27th Oct 2016 - Logistics Manager

Profits slip as Damco gears up for growth

Damco, Maersk’s logistics and forwarding business, saw costs rise higher than expected as it strengthened and prepared the organisation for the future in a number of growth markets.

Sales were up slightly at $1.53m, but underlying EBITDA fell to $24m in the first half of 2013 from $34m last year.

As a result it produced an after tax loss of $2m, compared with a profit of $35m in the first half of 2012.

Year-on-year growth remained healthy with air freight volumes significantly up (+14 per cent), outperforming the market. Supply chain management volumes grew by ten per cent while sea freight volumes contracted slightly (-1 per cent).

“In weak markets we continue to invest in building the future with special focus on expanding our geographical coverage and rolling out our new global freight management system,” said chief executive Rolf Habben-Jansen.

“This is needed to enable future growth and to optimise our cost to serve. We will start seeing the benefits from this later this year and expect to see solid year-on-year improvements in the results from Q4 2013 onwards” he adds.

In the upcoming quarters Damco does not anticipate a major improvement in the market situation. Damco will remain fully focused on further improving and extending the services to customers to enable them to continue to grow further with Damco and on starting to capture the significant planned benefits from the investments made in the last quarters to boost efficiency.

*  Maersk Line, the container giant, made a profit of $439m  in the first half compared with $227m last year.

The group said the improvement in the financial performance was achieved through lower costs.

Volumes increased 2.1 per cent, average freight rate decreased 13.1 per cent and total cost per FFE decreased by 12.7 per cent.

The cost decrease was mainly driven by vessel network efficiencies and lower bunker price. Maersk Line’s total fleet capacity decreased by 0.9 per cent.

As a result, Maersk has revised its expected result from “above 2012”  ($461m) to “significantly above 2012”.

Global demand for seaborne containers is expected to increase 2-3% in 2013, lower on the Asia–Europe trades but supported by higher growth for imports to high growth markets.