Cyber attack could cost Maersk US$300m

Cyber attack could cost Maersk US$300m
Søren Skou, CEO of A.P. Moller – Maersk

Maersk has announced that the June NotPetya cyberattack could cost the company up to US$300m, but remains upbeat after underlying profit nearly tripled year-on-year.

The damage caused by NotPetya is estimated to fall between US$200m and US$300m, the majority of which will come out of Maersk’s third quarter profits due to the delayed impact on volumes and IT.

In its second quarter results the company posted a net loss of US$269m largely due to lower asset valuations in Maersk Tankers, which it plans to sell.

However Maersk remains optimistic due to the growth of the container shipping industry, which is growing at twice the speed of global GDP, noting the growth of underlying profit to US$389m as a positive.

Maersk CEO Soren Skou said: “What we see now is probably the strongest fundamentals for container shipping that we have seen for quite a while, and certainly since 2010 and the financial crisis.

“The rising corporate profitability across the world means a good investment climate and that has rubbed off on container shipping.”

The company announced that freight rates had grown by 22% in this quarter, compared with the same period last year, largely because industry demand has outgrown supply since the third quarter of 2016.

Meanwhile Maersk’s idle fleet percentage fell to 2.5%, following an industry-wide trend.

The company also noted that 1.4% of capacity was scrapped, and that the industry’s order book is now at an all-time low of 13% of existing capacity.

Skou said: “In the coming years of course more ships will be ordered, but all in all we are quite positive.

“Of course it is not a road without bumps but it is a positive outlook.”

Volumes handled by Maersk Line grew by 2%, but revenue shot up sharply by 21% due to the increase in freight rates, with East-West rates growing by 36% and North-South rates growing by 18%. As a result Maersk Line reported a profit of US$339m.

The carrier’s bunker cost increased by US$119 per tonne, while capacity increased by 8.2% due to increased volumes as a result of the agreements signed with Hamburg Sud and Hyundai Merchant Marine (HMM).

The company has stabilised its unit costs, although they did experience a slight increase due to a fall in utilisation.

APM Terminals (APMT) had impairments of US$250m in the second quarter due to a few commercially challenged terminals, causing a loss of US$100m. However the company pointed to an underlying profit of $98m as proof of stabilisation.

Maersk noted two challenges the terminal operator currently faces: a 10% drop in revenue per move due to competition, and a growth in volumes lower than estimated global growth.

APMT’s capital expenditure fell by 60% to just US$70m, and the company expects no new terminals and for more “discipline” in the coming years.