A.P. Møller - Mærsk A/S has published its Annual Report 2016 [Shipping Line]
2016 was a difficult year, with headwinds in all our markets. It was also a year when we decided to substantially transform A.P. Moller - Maersk to become a focused container shipping, logistics and ports company with a growing revenue.
A.P. Moller - Maersk delivered an underlying profit of USD 711m in 2016, which was in line with our guidance.
A.P. Moller - Maersk reported a loss of USD 1.9bn negatively impacted by impairments in 2016 of USD 2.7bn in Maersk Supply Service and in Maersk Drilling as a consequence of an expected weaker outlook.
Our priorities for 2017 remain on integrating our Transport & Logistics businesses as well as progressing the work on finding structural solutions for each of our oil and oil-related businesses.
For 2017, we expect A.P. Moller - Maersk to deliver an underlying profit above 2016, with an improvement in underlying profit in excess of USD 1bn in Maersk Line compared to 2016.
A.P. Moller - Maersk delivered an unsatisfactory loss of USD 1.9bn (profit of USD 925m) negatively impacted by post-tax impairments of USD 2.8bn (USD 2.6bn) primarily relating to Maersk Drilling of USD 1.4bn (USD 27m) and Maersk Supply Service of USD 1.2bn (USD 0m). In line with the latest guidance provided in November, the underlying profit came at USD 711m (USD 3.1bn). The return on invested capital (ROIC) was negative 2.7% (positive 2.9%). The free cash flow was negative USD 29m (positive USD 6.6bn including the sale of shares in Danske Bank of USD 4.9bn).
“2016 was a difficult year financially, with headwinds in all of our markets. However, it was also a year when we decided to substantially transform A.P. Moller - Maersk for the future. We have set a new course that over the next few years will lead A.P. Moller - Maersk to become a focused container shipping, logistics and ports company with the aim of growing revenue again.
We delivered an underlying profit of USD 711m, in line with guidance but clearly unsatisfactory. The main driver of the underlying result was a loss in Maersk Line. A.P. Moller - Maersk reported a net loss for the year of USD 1.9bn impacted by impairments totalling USD 2.7bn in Maersk Drilling and Maersk Supply Service as a consequence of significant over-supply and reduced long-term demand expectations.
As communicated at our Capital Markets Day in December, our top priorities for 2017 remain integrating our Transport & Logistics businesses, taking out cost in APM Terminals and Damco, closing the Hamburg-Süd acquisition, as well as progressing the work on finding structural solutions for each of our oil and oil-related businesses.
For 2017, we expect A.P. Moller - Maersk to deliver an underlying profit above 2016, mainly driven by an improvement in underlying profit in excess of USD 1bn in Maersk Line compared to 2016,” says Maersk Group CEO Søren Skou.
The demand for transportation of goods grew below expectations in the first half of the year, leading to a significant downward pressure on freight rates. In the second half of the year and especially in Q4, demand increased while deliveries of new capacity were reduced, which led to a gradual improvement of freight rates. The difficult business environment during the year enabled industry consolidation and a major container carrier went out of business, while Maersk Line continued its cost leadership strategy and gained significant market shares. The consolidation in the container shipping industry as well as the challenging oil price environment had a negative impact on earnings in APM Terminals, who over the past years has been significantly expanding its terminal network, particularly in emerging and oil dependent economies.
Oil prices reached their lowest level at the beginning of the year and have since then increased significantly, albeit from a very low level. Maersk Oil adjusted to market conditions by successfully accelerating cost reduction programmes beyond original targets, while at the same time improving production efficiency and progressing on major projects.
Despite significant cost optimisation initiatives, Maersk Drilling and Maersk Supply Service were severely impacted by continued large scale cost reductions and project cancellations in the oil industry and the large inflow of new capacity over the last years. Based on the challenging market conditions, significant impairments were recognised in Maersk Drilling (USD 1.5bn pre-tax or 18% of invested capital and a newbuilding contract) and Maersk Supply Service (USD 1.2bn pre-tax or 44% of invested capital and newbuilding contracts). Maersk Tankers improved their commercial performance, contract coverage and cost savings, partly offsetting the negative impact from declining rates. In line with the new strategy, all oil and oil related businesses initiated processes to prepare for separation from A.P. Moller - Maersk.
A.P. Moller - Maersk recorded a loss of USD 1.9bn (profit of USD 925m) and a ROIC of negative 2.7% (positive 2.9%) in 2016, negatively impacted by post-tax impairments of USD 2.8bn (USD 2.6bn) and a significantly lower underlying result of USD 711m (USD 3.1bn) severely impacted by price pressure and low market growth in all industries.
The underlying profit of USD 711m was within the guidance of below USD 1.0bn. Compared to last year, the reduction in the underlying result was due to losses in Maersk Line and Maersk Supply Service and with lower underlying results in APM Terminals, Maersk Tankers and Svitzer, while Maersk Oil, Maersk Drilling and Damco recorded increased underlying profits.
Revenue decreased to USD 35.5bn (USD 40.3bn) across all eight businesses, predominantly due to lower average container freight rates and lower oil price. Operating expenses decreased by USD 2.6bn mainly due to lower bunker prices and focus on cost efficiency across all businesses.
A.P. Moller - Maersk’s cash flow from operating activities was USD 4.3bn (USD 8.0bn) impacted by the lower profit, higher net working capital and a one-off dispute settlement in Maersk Oil. Net cash flow used for capital expenditure was USD 4.4bn (USD 6.3bn excluding the sale of shares in Danske Bank of USD 4.9bn). Gross cash flow used for capital expenditure was USD 5.0bn, USD 1.0bn lower than latest guidance, mainly due to timing of payments in APM Terminals and Maersk Drilling.
Net interest-bearing debt increased to USD 10.7bn (USD 7.8bn) mainly due to share buy-back of USD 475m, dividends of USD 1.0bn, new finance leases of USD 947m and net interest-bearing debt of USD 0.4bn acquired through the Grup Marítim TCB transaction partly offset by proceeds from sale of Danske Bank shares of USD 482m.
With an equity ratio of 52.5% (57.3%) and a liquidity reserve of USD 11.8bn (USD 12.4bn), A.P. Moller - Maersk maintains its strong financial position.
Maersk Line recorded a loss of USD 376m (profit of USD 1.3bn) and a ROIC of negative 1.9% (positive 6.5%). The underlying result was a loss of USD 384m (profit of USD 1.3bn) due to poor market conditions leading to sustained lower freight rates partly offset by higher volumes and lower unit costs related to lower bunker price, higher utilisation and cost efficiencies.
Maersk Line reached an agreement on 1 December 2016 to acquire Hamburg Süd, the German container shipping line. Hamburg Süd is the world’s seventh largest container shipping line and a leader in the North-South trades. The acquisition is subject to final agreement expected early in Q2 2017 and to regulatory approvals expected end 2017. The transaction is expected to be completed by end 2017.
APM Terminals reported a profit of USD 438m (USD 654m) and a ROIC of 5.7% (10.9%). The underlying profit was USD 433m (USD 626m). Lower profit in commercially challenged terminals in Latin America, North-West Europe and Africa as a consequence of liner network changes and weak underlying markets was only partly offset by cost saving initiatives.
Damco reported a profit of USD 31m (USD 19m) and a ROIC of 14.6% (7.1%), while Svitzer recorded a profit of USD 91m (USD 120m) and a ROIC of 7.5% (10.9%).
Maersk Oil recorded a profit of USD 477m (loss of USD 2.1bn) with a positive ROIC of 11.4% (negative 38.6%) against an average oil price of USD 44 per barrel in 2016 versus USD 52 per barrel in 2015. The underlying profit was USD 497m (USD 435m), positively impacted by operating cost reductions of 36%, ahead of the targeted 20% for the period 2014-2016, lower exploration costs, higher production efficiency and reduction of abandonment provision of USD 93m. This was partly offset by the effect of the lower average oil price.
Maersk Drilling reported a loss of USD 694m (profit of USD 751m) negatively impacted by post-tax impairments of USD 1.4bn (USD 27m) giving a ROIC of negative 9.0% (positive 9.3%). The underlying profit of USD 743m (USD 732m) was positively impacted by termination fees of approximately USD 150m moved from 2017 to 2016, high operational uptime and savings on operating costs offset by ten rigs being idle or partly idle versus three rigs last year. The financial effect from the increased number of rigs without contract reduced the result in Q4 significantly.
Maersk Supply Service reported a loss of USD 1.2bn (profit of USD 147m) and a ROIC of negative 76.7% (positive 8.5%) impacted by impairments of USD 1.2bn (USD 0m), lower rates and utilisation as well as fewer vessel days available for trading due to divestments and lay-ups. The underlying loss was USD 44m (profit of USD 117m).
Maersk Tankers recorded a profit of USD 62m (USD 160m) and a ROIC of 3.7% (9.9%), negatively impacted by declining rates, partly offset by improved commercial performance, contract coverage and cost savings.
Other businesses reported a loss of USD 117m (profit of USD 316m) mainly driven by an impairment of USD 131m in the RORO business. The result for 2015 included gains from sale of shares in Danske Bank of USD 223m and sale of Esvagt of USD 76m.
GUIDANCE FOR 2017
A.P. Moller - Maersk expects an underlying profit above 2016 (USD 711m). Gross capital expenditure for 2017 is expected to be USD 5.5-6.5bn (USD 5.0bn).
The Transport & Logistics division expects an underlying profit above USD 1bn.
Due to gradual improvements in container rates Maersk Line expects an improvement in excess of USD 1bn in underlying profit compared to 2016 (loss of USD 384m).
Global demand for seaborne container transportation is expected to increase 2-4%.
The remaining businesses (APM Terminals, Damco, Svitzer and Maersk Container Industry) in the Transport & Logistics division expect an underlying profit around 2016 (USD 500m).
The Energy division expects an underlying profit around USD 0.5bn, with Maersk Oil being the main contributor.
The entitlement production is expected at a level of 215,000-225,000 boepd (313,000 boepd) for the full-year and around 150,000-160,000 boepd for the second half of the year after exit from Qatar mid-July. Exploration costs in Maersk Oil are expected to be around the 2016 level (USD 223m).
Net financial expenses for A.P. Moller - Maersk are expected around USD 0.5bn.
The guidance for 2017 excludes the acquisition of Hamburg Süd.
Posted at 21:41 パーマリンク
Maersk Line to acquire Hamburg Süd [Shipping Line]
Maersk Line and the Oetker Group have reached an agreement for Maersk Line to acquire Hamburg Süd, the German container shipping line. The acquisition is subject to final agreement and regulatory approvals.
Hamburg Süd is the world’s seventh largest container shipping line and a leader in the North–South trades. The company operates 130 container vessels with a container capacity of 625,000 TEU (twenty-foot equivalent). It has 5,960 employees in more than 250 offices across the world and market its services through the Hamburg Süd, CCNI (based in Chile) and Aliança (based in Brazil) brands. In 2015, Hamburg Süd had a turnover of USD 6,726 million of which USD 6,261 million stems from its container line activities.
“Today is a new milestone in Maersk Line’s history. I am very pleased that we have reached an agreement with the Oetker Group to acquire Hamburg Süd. Hamburg Süd is a very well-run and highly respected company with strong brands, dedicated employees and loyal customers. Hamburg Süd complements Maersk Line and together we can offer our customers the best of two worlds, first of all in the North - South trades,” says Søren Skou, CEO of Maersk Line and the Maersk Group.
“We are proud to join the global market leader Maersk Line. While gaining access to a superior network and systems we will continue the Hamburg Süd brand and business model offering personalized solutions to our shippers and consignees. By joining forces both Maersk and Hamburg Süd will strengthen their product portfolio and cost position to the benefit of their customers,” says Dr. Ottmar Gast, Chairman of the Executive Board of the Hamburg Süd Group.
“Giving up our engagement in shipping after an 80 year-long ownership in Hamburg Süd was not an easy decision for my family. We are very confident, though, to have chosen the best of all possible partners. Maersk will preserve and grow Hamburg Süd and what the brand and the whole organization and a highly dedicated workforce stand for: reliable and high quality logistical services to our customers,” says Dr. August Oetker, Chairman of the Advisory Board of Dr. August Oetker KG, the management holding company of the Oetker Group.
On 22 September 2016, Maersk Line announced that it would grow market share organically and through acquisitions.
“The acquisition of Hamburg Süd is in line with our growth strategy and will increase the volumes of both Maersk Line and APM Terminals,” says Søren Skou.
Hamburg Süd and Aliança will continue as separate brands and continue to serve customers through their local offices.
“Hamburg Süd and Aliança have competitive and attractive customer value propositions, which we want to preserve and protect. We wish to maintain the personal touch and engagement they offer their customers. In short, Hamburg Süd and Aliança customers will also be Hamburg Süd and Aliança customers in the future,” says Søren Skou.
In the combined network, Hamburg Süd and Maersk Line’s customers will have access to the dedicated end-to-end services provided by Hamburg Süd in the North–South trades as well as the flexibility and reach provided in Maersk Line’s global network. Furthermore, the combined network will enable Maersk Line to develop new products with more direct port calls and shorter transit times.
“Our combined network will provide exciting opportunities to develop new products and exploit operational synergies. Hamburg Süd and Maersk Line customers will benefit from more choice and better products,” concludes Søren Skou.
The acquisition is subject to a satisfactory due diligence, final agreement and subject to regulatory approval in amongst others China, Korea, Australia, Brazil, the United States and the EU. Maersk Line will work closely with the authorities. Maersk Line expects the regulatory process to last until the end of 2017. Until then, Hamburg Süd and Maersk Line will continue business as usual.
With the acquisition, Maersk Line will have container capacity of around 3.8 million TEU (3.1 million TEU) and an 18.6% (15.7%) global capacity share. The combined fleet will consist of 741 container vessels with an average age of 8.7 years (9.2 years).
The agreement with Hamburg Süd has no financial impact in 2016.
Maersk Line expects to communicate further details following the approval of the sales and purchase agreement expected early in the second quarter of 2017. Maersk Line expects to close the transaction end 2017.
Posted at 21:37 パーマリンク
OPC, CHEC ink deal for Puerto Cortes expansion [Shipping Line]
Operadura Portuaria Centroamericana SA de CV (OPC) has signed a contract with China Harbour Engineering Company (CHEC) for the first phase of the expansion of the Specialized Container and Cargo Terminal in Puerto Cortes, Honduras.
The first phase covers the construction of a 350-meter long berth with a controlling depth of 15.5 meters, two trestles that will be connected to the existing yard, and dredging of the bay up to 14 meters deep. The new berth will be equipped with two super post-Panamax quay cranes, bringing OPC’s total number of quay cranes to six.
Scheduled for completion by mid-2018, the terminal expansion will position Puerto Cortes as the most competitive port in the Caribbean. The port, located north and along the Atlantic coast of Honduras, is the country’s center of transportation and commerce. Considered to be one of the most important ports in Central America, it handles 85 percent of shipment to Honduras, 10 percent to El Salvador and five percent to Nicaragua.
In 2013, ICTSI was awarded a 30-year concession for the design, financing, construction, maintenance, operation and exploration of the Specialized Container and Cargo Terminal in Honduras.
Operadura Portuaria Centroamericana SA de CV (OPC) is a subsidiary of International Container Terminal Services, Inc.
Posted at 19:04 パーマリンク
Notice of Agreement to the Integration of Container Shipping Businesses [Shipping Line]
Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines Ltd., and Nippon Yusen Kabushiki Kaisha have
agreed, after the resolution by the board of directors of each company held today, and subject to
regulatory approval from the authorities, to establish a new joint-venture company to integrate
the container shipping businesses (including worldwide terminal operating businesses excluding
Japan) of all three companies and to sign a business integration contract and a shareholders
Although growing modestly, the container shipping industry has struggled in recent years due to
a decline in the container growth rate and the rapid influx of newly built vessels. These two
factors have contributed to an imbalance of supply and demand which has destabilized the
industry and has created an environment that is adverse to container line profitability. In order to
combat these factors, industry participants have sought to gain scale merit through mergers and
acquisitions and consequently the structure of the industry is changing through consolidation.
Under these circumstances, three companies have now decided to integrate their respective
container shipping on an equal footing to ensure future stable, efficient and competitive business
The new joint-venture company is expected to create a synergy effect by utilizing the best
practices of the three companies. And by taking advantage of scale merit of its vessel fleet
totaling 1.4 million TEUs, realize integration effect of approximately 110 billion Japanese Yen
annually and seek swiftly financial performance stabilization.
By strengthening the global organization and enhancing the liner network, the new joint-venture
company aims to provide higher quality and more competitive services in order to exceed our
2. Overview of the new joint-venture company
Kawasaki Kisen Kaisha, Ltd. 31%
Mitsui O.S.K. Lines, Ltd. 31%
Nippon Yusen Kabushiki Kaisha 38%
Approx. 300 Billion JPY
(Including fleets, share of terminals as investment in kind)
Business Domain Container Shipping Business
(Including terminal operating business excluding Japan)
Fleet Size Approx. 1.4 Million TEU*, 6th in the market with approx. 7% of global
Notes1) Figures are as of October, 2016 excluding order book
Notes2) Source: Alphaliner
*TEU: Twenty-foot Equivalent Unit
Agreement date: October 31st, 2016
Establishment of the new joint-venture company: July 1st, 2017 (planned)
Business commencement: April 1st, 2018 (planned)
Posted at 17:19 パーマリンク
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