Shipping and oil conglomerate A.P. Moller-Maersk recorded a loss of US$1.9 billion in 2016 from a profit of $925 million in 2015, saying its operations were negatively impacted by post-tax impairments of $2.8 billion.
It delivered a significantly lower underlying result of $711 million in 2016 from the year-ago result of $3.1 billion, severely impacted by price pressure and low market growth in all industries.
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, said the group in an emailed statement on February 8.
Revenue decreased to $35.5 billion last year from $40.3 billion in 2015 across all eight businesses, predominantly due to lower average container freight rates and lower oil price.
“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,” said group CEO Soren Skou.
Container shipping division Maersk Line recorded a loss of $376 million in 2016, down from a profit of $1.3 billion the preceding year. “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,” said the report.
For 2017, A.P. Moller-Maersk expects an underlying profit above 2016 results of $711 million.
Due to gradual improvements in container rates, Maersk Line expects an improvement in excess of $1 billion in underlying profit compared to 2016, which registered a loss of $384 million.
Global demand for seaborne container transportation is expected to increase by 2% to 4%.
The remaining businesses (APM Terminals, Damco, Svitzer, and Maersk Container Industry) in the transport & logistics division expect an underlying profit of around $500 million, similar to 2016.
The energy division expects an underlying profit of about $500 million, with Maersk Oil being the main contributor.
The guidance for 2017 excludes the acquisition of Hamburg Sud.
Maersk Line reached an agreement on December 1, 2016 to acquire the German container carrier, the world’s seventh largest 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,” said the report.
“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,” it said.
Photo: Hans Andersen
