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2018/09/17/(Mon)

Maersk to change fuel adjustment surcharge ahead of the 2020 sulphur cap [Shipping Line]

The new BAF surcharge aims at recovering the Maersk Line costs of compliance with the global sulphur cap which enters into force on 1 January 2020. This regulation has been developed and adopted by the International Maritime Organisation (IMO), a specialised agency under the United Nations (UN). Whereas today ships can use fuel with a sulphur content of 3.5%, the new sulphur cap will be 0.5%.

To become compliant shipowners will have to invest in compliant fuels, LNG or scrubber technology. This is expected to lower global shipping's sulphur emissions, a known source for respiratory disease and acid rain, by more than 80%.

"We fully support the new rules. They will be a significant benefit to the environment and to human health", says Vincent Clerc, Chief Commercial Officer, A.P. Moller - Maersk A/S. "The 2020 sulphur cap is a game changer for the shipping industry. Maersk preparations to comply are well underway and so are our customers' efforts to plan ahead. The new BAF is a simple, fair and predictable mechanism that ensures clarity for our customers in planning their supply chains for this significant shift."

The regulation will bring increases and uncertainty to fuel costs for shipping. The BAF surcharge is designed to recover increases in fuel related costs. It will be charged separately from Maersk Line's freight rate.

According to industry estimates, more than 90% of the global vessel fleet will be relying on compliant fuels when the sulphur rules step into force on 1 January 2020. This will also be the case for the Maersk Line fleet, despite a recent investment in a limited number of scrubbers.

Based on expected differences in price between current 3.5% bunker fuel and compliant 0.5% fuel, external sources estimate the additional cost for the global container shipping industry to comply could be up to USD 15 billion. Maersk Line expects its extra fuel costs could exceed USD 2 billion.

Two key elements to give predictability
The BAF replaces Maersk Line's current Standard Bunker Adjustment Factor (SBF) surcharge and consists of two key elements; the fuel price which is calculated as the average fuel price in key bunkering ports around the world, and a trade factor that reflects the average fuel consumption on a given trade lane as a result of variables like transit time, fuel efficiency and trade imbalances between head haul and backhaul legs.

Combining the two factors give customers full predictability of their costs at any given fuel price both before and after 2020.

To allow customers to familiarise with the changed formula, Maersk Line's BAF surcharge will be introduced on 1 January 2019.

Posted at 18:23   パーマリンク

2018/08/18/(Sat)

A.P. Møller - Mærsk A/S delivers revenue growth in a challenged market [Shipping Line]

n the second quarter of 2018, A.P. Møller - Mærsk A/S showed progress in the strategic business transformation, reporting revenue growth at the same time as realising synergies through further business integration.

Revenue grew 24% to USD 9.5bn across segments, 5.7% excluding the effect from Hamburg Süd. Revenue growth was seen in key areas such as Logistics & Services, which among others was positively affected by increase in service of our customers supply chain management and in Gateway & Towage.

At the same time, the company realised synergies from the integration of Hamburg Süd and from the increased collaboration across existing transport, logistics and ports businesses, contributing positively to the profitability.

"With revenue up 24% in Q2, we continued to deliver strong growth. The acquisition of Hamburg Süd of course was a positive contributor to growth in our Ocean segment, and we are pleased with the organic growth in non-Ocean. We expect revenue of around USD 40bn in 2018, up almost 50% since 2016," says Søren Skou, CEO of A.P. Møller - Mærsk A/S and continues:

"We also delivered a sharp improvement in unit cost in Ocean, after a Q1 that was negatively impacted by inflow of capacity from the acquisition of Hamburg-Süd and network issues. Profitability was significantly impacted by higher bunker prices in Q2 and remained at unsatisfactory levels. For the rest of the year we expect improvements in our profitability driven by lower unit cost and higher freight rates."

Lower unit costs were mainly driven by a reduction in network costs in Ocean, comprising network changes and increase in loaded volume.

Furthermore, in Q2 the revenue in Ocean grew 25% to USD 7bn, 0.6% excluding Hamburg Süd, and volumes grew 26%, 4.3% excluding Hamburg Süd, which is in line with estimated market growth of around 4%.

Guidance for 2018 including sensitivities

As reported on 7 August 2018, the underlying profit after financial items and tax amounted to earnings before interests, tax, depreciations and amortisations (EBITDA) in A.P. Møller - Mærsk A/S of USD 883m was negatively impacted by increased bunker costs in Ocean. Combined with the development in freight rates and uncertainties related to trade tensions it led to an adjustment in the expectation for EBITDA for the full-year 2018 to reach in the range of USD 3.5 - 4.2bn.

The organic volume growth in Ocean for the full year is still expected slightly below the estimated average market growth of 2-4% for 2018. Further, guidance is maintained on gross capital expenditures (capex) around USD 3bn and a high cash conversion (cash flow from operations compared with EBITDA).



The guidance continues to be subject to uncertainties due to the current risk of further restrictions on global trade and other factors impacting container freight rates, bunker prices and rate of exchange

Posted at 19:18   パーマリンク

A.P. Møller - Mærsk A/S to pursue a separate listing of Maersk Drilling [Shipping Line]

A.P. Møller - Mærsk A/S (A.P. Moller - Maersk) has decided to pursue a separate listing of Maersk Drilling Holding A/S (Maersk Drilling) on Nasdaq Copenhagen A/S in 2019.

Having evaluated the different options for Maersk Drilling, A.P. Moller - Maersk has concluded that listing Maersk Drilling as a standalone company presents the most optimal and long-term prospects for its shareholders, offering them the possibility to participate in the value creation opportunity of a globally leading pure play offshore drilling company with long-term development prospects.

The process has been initiated to ensure that Maersk Drilling is operationally and organisationally ready for a listing in 2019. As part of the preparation, debt financing of USD 1.5bn from a consortium of international banks has been secured for Maersk Drilling to ensure a strong capital structure after a listing. Further details for a listing will be announced at a later stage.

Separation of the oil & oil related businesses

The decision on the future of Maersk Drilling marks a milestone in the business transformation of A.P. Moller - Maersk towards becoming an integrated transport & logistics company as announced on 22 September 2016.

The target was set to find new viable solutions for the oil and oil related businesses within 24 months. During the past two years solutions for Maersk Oil and Maersk Tankers have been found and today the plan to list Maersk Drilling is announced.

For Maersk Supply Service, the pursuit of a solution will continue. However due to challenging markets, the timing for defining a solution is difficult to predict.

Chairman of the A.P. Moller - Maersk Board of Directors, Jim Hagemann Snabe says:

"The Maersk Drilling team has done a remarkable job operating the business at a time of high uncertainty and is well positioned to become a successful company on Nasdaq Copenhagen. The announcement of the intention to list Maersk Drilling completes the decision process on the structural solutions for the major oil and oil related businesses. Yet another important step in delivering on the strategy."

Capital structure and proceeds from the oil & oil related businesses

A.P. Moller - Maersk remains committed to maintaining its investment grade rating which is demonstrated by increased capital discipline over the last two years combined with maintaining a high financial flexibility.

Net cash proceeds to A.P. Moller-Maersk from separation of Maersk Oil, Maersk Tankers and now expected Maersk Drilling is around USD 5bn. Maersk Drilling's separate financing is expected to release cash proceeds of around USD 1.2bn to A.P. Moller - Maersk.

In addition, A.P. Moller-Maersk sold Total S.A. shares for an aggregated amount of around USD 1.2bn during July 2018. This represents the increase in value since signing of the sale of Maersk Oil in August 2017. A.P. Moller - Maersk retains 78.3 million shares in Total S.A. with a current aggregated value of around USD 5bn.

Subject to maintaining investment grade rating it is now expected that:

Maersk Drilling will be demerged via a listing in 2019 with distribution of Maersk Drilling shares to A.P. Moller - Maersk's shareholders
Following the demerger of Maersk Drilling a material part of the remaining Total S.A. shares will be distributed to A.P. Moller - Maersk's shareholders in cash dividends, share buy-backs or as a distribution of the Total S.A shares directly


Growing, digitizing and integrating across transport and logistics

The overall transport and logistics business has grown significantly over the last two years - both organically and inorganically through the acquisition of Hamburg Süd. A turnover close to USD 40bn is expected for 2018, equaling an increase of almost 50 percent since 2016. The non-Ocean business is as planned growing organically at a higher pace than the Ocean business.

Synergies are being realised as expected and the business is on track to deliver around USD 1bn by end 2019 from integration of Hamburg Süd and increased collaboration across the transport and logistics business.

"With the decision made on Maersk Drilling, A.P. Moller - Maersk can stay focused on transitioning into an integrated transport and logistics company and developing solutions to meet our customers end-to-end supply chain management needs. New value adding services as well as customer experience are improving continuously based on digital solutions. We will continue to grow revenue with a specific focus on non-Ocean revenue and at the same time improve our current unsatisfactory level of profitability," says CEO of A.P. Moller - Maersk, Søren Skou.

Chairman of the A.P. Moller - Maersk Board of Directors, Jim Hagemann Snabe continues:

"The Board initiated the fundamental business transformation of A.P. Moller - Maersk almost two years ago. This is a massive undertaking touching all parts of our company globally and I would like to thank the management for progressing on many strategic efforts in parallel."

Posted at 19:17   パーマリンク

2018/05/17/(Thu)

A.P. Møller - Mærsk A/S begins 2018 with strong revenue growth however unsatisfactory earnings [Shipping Line]

In Q1 2018, A.P. Moller - Maersk had a revenue growth of 30% to USD 9.3bn, 10% excluding Hamburg Süd, with growth in all business segments and a strategic transformation well underway. A.P. Moller - Maersk reiterates its expectations for 2018 of an underlying profit above 2017 (USD 356m), however noting increased uncertainties due to geopolitical risks, trade tensions and other factors impacting freight rates, bunker prices and rate of exchange.

"In the first quarter of 2018, we reported a 30% revenue growth and the integration of the business is well underway with a successful start to the Hamburg Süd integration and the closing of Maersk Oil transaction in March with an accounting gain of USD 2.6bn. At the same time, on the short-term performance, our result especially in the ocean related part of the business was unsatisfactory. In response to the current challenging market conditions we are implementing a number of short-term initiatives to improve profitability and we reiterate our guidance for 2018," says Søren Skou, CEO of A.P. Moller - Maersk.

Reporting in new segments

A new financial reporting structure is implemented from Q1 2018 to support the strategic direction towards becoming the global integrator of container logistics. The four new business segments (Ocean, Logistics & Services, Terminals & Towage and Manufacturing & Others) are aligned with the strategic focus on growing the non-ocean part of the business disproportionally to the ocean.

Søren Skou, CEO of A.P. Moller - Maersk explains:

"The new format reflects that we are an integrated global container transport and logistics business focusing on our customers' value chains, and it allows us to follow our progress, particularly in those parts of the business which are not purely ocean freight, which we need to grow in order to minimise the cyclical part of our business."

A.P. Moller - Maersk increased its revenue to USD 9.3bn with volume growth in Ocean - excluding Hamburg Süd - at 2.2%, as expected slightly below estimated global demand growth of 3-4%. The non-Ocean businesses reports a revenue growth with 6% in Logistics & Services and 11% in Terminals & Towage, reflecting strong growth in volumes mainly driven by commercial wins and new terminals and services. Further, synergies have been realised from increasing collaboration especially between Ocean and gateway terminals, leading to volume growth significantly above the market growth.

Earnings before interests, tax, depreciation and amortization (EBITDA) increased by 5% to USD 669m, negatively impacted by adverse rate of exchange development compared to same period last year of around net USD 100m. Earnings in Ocean of USD 492m was impacted by higher unit costs among others due to adverse developments in bunker price and rate of exchange. For the non-Ocean businesses, the higher volumes in Terminals & Towage led to an improvement in EBITDA from USD 139m to USD 196m, while Logistics & Services reported slightly lower EBITDA of USD 23m from USD 32m.

The underlying result after financial items and tax of negative USD 239m was unsatisfactory. A number of short-term initiatives are being implemented to improve profitability.

Posted at 23:32   パーマリンク

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