Container Group Lifts Full-Year Guidance After A Sharp Ocean Rebound
A Danish container and logistics group has sharply raised its full-year guidance after its ocean division returned to strong profitability in the second quarter, and is moving towards a full restoration of services through the Red Sea. The company now expects underlying earnings before interest, tax, depreciation and amortisation of between 10.5 and 12.5 billion dollars, up from a previous range of eight to ten billion.
The ocean business delivered operating profit of 935 million dollars in the quarter, against 229 million a year earlier and a 192 million dollar loss in the first three months of the year. Revenue rose 23 per cent year on year to 10.5 billion dollars on higher spot rates and resilient demand, with average loaded freight rates up 22 per cent and loaded volumes up 4.1 per cent on the back of Asian exports. Vessel utilisation held at 96 per cent while unit costs at fixed energy prices edged down slightly.
Group figures improved across the board. Revenue rose 20 per cent to 15.8 billion dollars for the quarter, earnings before interest, tax, depreciation and amortisation increased to three billion from 2.3 billion, and operating profit nearly doubled to 1.6 billion. The logistics division lifted revenue fifteen per cent with operating profit of 217 million, while the terminals business handled 2.2 per cent more volume for broadly flat operating profit of 458 million on eleven per cent higher revenue.
Management attributed the rate environment to a combination of firm demand, increasingly unbalanced trade flows, tight capacity and congestion across Europe, the Middle East, the east coast of South America and West Africa. Disruption to traffic through the Strait of Hormuz also altered cargo flows, with inbound Gulf cargo rerouted through alternative ports and inland networks while capacity was redeployed to other growing lanes. The chief executive said bottlenecks remain deeply entrenched and that continued investment in trade infrastructure is necessary.
On routing, the company said its own analysis together with input from military and intelligence sources indicated current conditions allow safe operation through the strait at the southern end of the Red Sea, with services being reintroduced since the beginning of July and four restored so far, accounting for around a third of the volumes that would normally use the route. The chief executive stressed the assessment is made daily before each transit and that vessels can be diverted around Africa again if conditions deteriorate.
