A.P. Moller-Maersk (AMKBY) , the world's largest container shipping company, posted its first quarterly profit since 2014 and tipped seaborne volumes to increase as much as 4% this year, easing pressure on its beleaguered transport unit.
The Danish-conglomerate posted net income of $245 million, missing analyst expectations of about $275 million as rising fuel prices boosted weighed on its container business, pushing widened to $66 million in the quarter compared with $37 million last year.
Maersk shares traded 4.26% higher at DKK12,220 ($1,765) on Thursday morning, taking their one-year gain to about 35%.
"Macroeconomically, we are actually very pleased to see how the world is developing at the moment," Maersk CFO Jakob Stausholm told Bloomberg Television. "There is quite strong growth in container demand ... so it's an optimistic outlook from where I sit."
The uptick in container volumes will be closely watched by economists as it is a key indicator of global economic growth. That growth can't come soon enough for shipping companies, which have suffered a torrid couple of years as container volumes fell leaving key routes oversupplied and freight rates under pressure.
The number of shipping line operators has fallen to 11 from 20 in 2014 and will be reduced further once Maersk completes an agreed $4 billion deal for the No.7 player Hamburg Sud.
"Whilst we cannot be satisfied with the overall profitability in the first quarter, the result is as expected and we reiterate our guidance for the year for the group," CEO Soren Skou said in a statement. "Maersk Line is on track to deliver a result improvement of above $1 billion for 2017 compared to 2016."
Maersk blamed the widening loss at its transport unit on rising oil prices, which resulted in a $281 increase in its fuel bill and outstripped improved rates for its containers.
The quarter was saved by a $292 million underlying profit at Maersk Oil, the North Sea oil producer that Maersk wants to sell. Maersk Oil made a $29 million loss a year earlier.
Maersk, in February, said it was preparing its oil operations for separation, abandoning a long-held strategy of teaming oil with shipping in the belief that the two sectors were counter-cyclical. That strategy fell apart in 2016 when oil prices and shipping rates both declined, leaving the company nursing huge losses in both divisions.
"The objective of the Energy division is to find structural solutions for the oil and oil related businesses before the end of 2018, ultimately leading to a separation from A.P. Moller-Maersk," said the company.
Maersk stock has received the backing of a handful of analysts this year, including BNP Paribas and Goldman Sachs brokers, both of which tipped the company to return to profit in 2017 on the back of improving shipping rates and cost savings.