Maersk view cut

Collapsing container shipping markets and a falling oil price have led Fearnley Fonds to cut its earnings estimate for AP Moller-Maersk in half.

Nils Andersen, CEO of AP Moller-Maersk.

It now expects the Danish giant to post adjusted profit of $662m in 2009, down from its previous forecast of $1.4bn made only two months ago.

And it has not ruled out the possibility of AP Moller-Maersk posting heavy losses this year.

Rikard Vabo and Lars Erich Nilsen, shipping analysts with the Norwegian finance house, say the adjustment comes after a 25% fall in the price of oil and Asia to Europe container rates dropping to zero.

In a note to investors, the pair said: “We have increased our adjusted net loss for the container segment in 2009 from $-621m to $-1.1bn currently.

“The main reason is a significantly weaker container market than expected only two months ago.

“Spot time charter equivalent container rates on the Asia-Europe route, where Maersk Line has almost 40% exposure, have fallen to zero (customers are only paying for bunkers).”

Further drops in the price of oil since November also led the analysts to cut their projections for AP Moller’s oil and gas unit.

They are now tipping the sector to post a profit of $1.1bn, down for the $1.4bn previously predicted.

Vabo and Nilsen add it is not unlikely AP Moller will record an overall loss in 2009 due to the current weak position in most markets.

An oil price of around $40 per barrel coupled with zero EBITDA from the container line and no income from its holding in Danske Bank could lead it to card a loss of $1bn, they explain.

“Even though this is not our base estimate we do not completely rule out this scenario,” Vabo and Nilsen wrote.

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