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
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
A.P. Møller - Mærsk A/S has tcompleted the sale of Maersk Oil to Total [Shipping Line]
A.P. Møller - Mærsk A/S [A.P. Moller - Maersk] has received all regulatory approvals and has today completed the sale of Mærsk Olie og Gas A/S [Maersk Oil] to Total S.A. [Total], which was announced on 21 August 2017.
A.P. Moller - Maersk has transferred its shares in Maersk Oil to Total and as consideration received 97.5 million Total shares equalling USD 5.6bn as of 7 March 2018. In addition to the shares, Total has assumed a short-term debt of USD 2.5bn via a debt push down from A.P. Moller - Maersk into Maersk Oil, which will be repaid to A.P. Moller - Maersk shortly after closing. The proceeds will after customary closing adjustments be used to reduce debt in A.P. Moller - Maersk.
The accounting gain for A.P. Moller - Maersk amounts to USD 2.6bn. This reflects a locked box interest and the positive development of the Total S.A. share price up to 7 March 2018 and is reduced by Maersk Oil's net profit realized in the period from 1 July 2017 until closing.
As announced in August, A.P. Moller - Maersk plans, subject to meeting its investment grade objective, to return a material portion of the value of the received Total shares to its shareholders during 2018/2019 in the form of extraordinary dividend, share buyback and/or distribution of Total shares.
"I would like to express our appreciation for the commitment demonstrated by Maersk Oil over the past 18 months to uphold a safe and solid performance, while at the same time successfully progressing on major development projects in the North Sea. The focus and results achieved during the time of transition is a testament to the capabilities and professionalism of Maersk Oil's people," says Søren Skou, CEO of A.P. Moller - Maersk and continues:
"With the completion of the Maersk Oil transaction, we have taken a significant step in our strategy to focus A.P. Moller - Maersk on container shipping, ports and logistics".
Denmark will become a new regional anchor point for Total with strong Copenhagen and Esbjerg bases, which will supervise all of Total's operations in Denmark, Norway and the Netherlands. Moreover, the Copenhagen office will host the Senior Vice President of Total's North Sea and Russia Business Unit. A new Technical centre is to be established in Copenhagen, supplementing Total's existing centres in Paris and Pau. Planned development schedules and investments in strategic and sanctioned projects will be upheld.
"We have today secured a financially strong and focused owner of Maersk Oil with a long-term investment interest in the industry. We are very pleased to see Total's plans to deliver growth, value creation and career opportunities for Maersk Oil's employees, as well as upholding the long-term investment plans, especially in the Danish part of the North Sea. Based on Maersk Oil's leading technology position, and its track record as a lean, efficient and trusted partner, Total has made Denmark a regional anchor point for its North Sea business, hereby ensuring a continued Danish stronghold in the North Sea, close to technology and innovation partners at the Danish technical institutions and in the oil and gas service industry," says Claus V. Hemmingsen, Vice CEO of A.P. Moller - Maersk and CEO of the Energy division.
It is an integral part of A.P. Moller - Maersk's purpose to safeguard the long-term viability of its companies by investing in and building value-creating businesses that have a positive impact on society. This is also a guiding principle in the work to define viable solutions for the oil and oil-related businesses.
"By selling Maersk Oil to Total, a leading global oil major, we have ensured the best possible foundation for the continued development of the people, capabilities and assets, on which Maersk Oil has prospered, creating value to the benefit of both A.P. Moller - Maersk and Denmark," says Jim Hageman Snabe, Chairman of the Board of A.P. Moller - Maersk and continues:
"On behalf of A.P. Moller - Maersk, I would like to extend my sincere gratitude to all employees in Maersk Oil for the passion, efforts and devotion to Maersk Oil and A.P. Moller - Maersk displayed by all through the years."
As part of the transaction Total will take over all decommissioning liabilities. The Danish Energy Agency's approval of the transfer conditions that A.P. Moller - Maersk assumes secondary liability for the decommissioning costs related to existing Danish offshore facilities corresponding to Maersk Oil's 31.2 % interest in the Danish Underground Consortium, should Total be unable to cover such costs. Maersk Oil's current provision for these decommissioning costs amounts to USD 1.2bn. A.P. Moller - Maersk's secondary liability will be reduced as part of the redevelopment of the Tyra project as well as future decommissioning of other existing facilities.
Maersk Drilling and Maersk Supply Service remain to have viable solutions established. Improved market conditions in the offshore drilling industry, as well as strategic progress in both businesses has raised A.P. Moller - Maersk's confidence in finding structural solutions for both before the end of 2018, why they have been reclassified as discontinued operations.
Posted at 20:54 パーマリンク
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