FEBRUARY 25, 2015 — Helped by a higher than expected Maersk Line profit of $2.3 billion, A.P. Møller - Mærsk A/S today reported a 2014 profit of $5.2 billion (compared with $3.8 billion in the prior year). The result was the group's highest ever, but still slightly below market expectations.
Underlying profit increased by 33% to $4.5 billion ($3.4 billion) and the return on invested capital (ROIC) was 11.0% (8.2%).
The reported result was positively impacted by a $2.8 billion gain from the sale of the majority share of Dansk Supermarked Group and other divestment gains of $600 million ($145 million) partly offset by net impairments of $3.0 billion ($220 million), including $1.7 billion on Brazilian oil assets. Another major divestment is in the works: the would group plans to sell its 20.05% stake in Danske Bank A/S for $5.5 billion and return the money raised to shareholders.
"We are very satisfied with the result for 2014 where we achieved the highest ever profit of $5.2 billion," said Group CEO Nils S. Andersen. "Despite challenging market conditions we saw good progress in underlying performance across the Group. Maersk Line maintained its lead on the rest of the industry and APM Terminals delivered significant improvements. Maersk Drilling executed on fleet renewal program according to plan, while Maersk Oil increased entitlement production in line with expectations. APM Shipping Services' underlying result came in lower than expected, primarily due to the result in Damco. With our competitive businesses and healthy balance sheet the Group is well positioned to take advantage of opportunities materializing in a volatile macroeconomic environment. In the continuing efforts to focus our portfolio and share value creation with our shareholders, it has been decided to divest our Danske Bank shares."
Cash flow from operating activities continued at a high level of $8.8 billion ($8.9 billion) and net cash flow used for capital expenditure increased to $6.2 billion ($4.9 billion) mainly due to deliveries of newbuildings in Maersk Drilling and Maersk Line as well as increased oil field developments in Maersk Oil.
During 2014, the Group divested its majority shareholding in Dansk Supermarked
Group resulting in a gain of $ 2.8 billion. It says it will offer its shares in Danske Bank to its shareholders, and once completed the sale of shares in the Dansk Supermarked Group and Danske Bank will have significantly contributed to focusing the Group's portfolio.
With an equity ratio of 61.3% (57.1%) and a liquidity reserve of $11.6 billion , the
Group says it is "well prepared and determined to execute on its long term growth
Maersk Line delivered a higher than expected profit of $2.3 billion ($1.5 billion) due to stronger than expected volumes as well as lower unit costs from continued optimisation and lower bunker prices partly countered by lower freight rates. The underlying profit was also higher than expected and came at $ 2.2 billion ($ 1.5 billion). ROIC was 11.6% (7.4%).
Maersk Oil delivered a loss of $861 million (profit of $1.0 billion) but with an underlying profit of $1.0 billion ($1.1 billion) that was in line with expectations despite the sharp decline in oil prices during the fourth quarter. Maersk Oil's entitlement production increased by 7% over 2013 to 251,000 barrels per day as a result of improved operational performance, production from new projects as well as a higher share of production from Qatar due to the lower oil price. The result was furthermore improved by lower exploration costs. Maersk Oil reduced its valuation of Brazilian assets by $1.7 billion due to disappointing exploration and appraisal results and rising project costs. Updated oil price assumptions lead to impairments on some of Maersk Oil's U.K. assets. ROIC was negative 15.2% (positive 16.2%).
APM Terminals delivered a profit of $900 million ($770 million), positively impacted by volume and margin growth as well as divestment gains, mainly relating to the port in Virginia, U.S.A. The result was negatively impacted by impairments related to activities in joint ventures. The underlying profit of $849 million ($709 million) was a significant improvement and in line with expectations. ROIC was 14.7% (13.5%).
Maersk Drilling delivered a profit of $478 million ($528 million), positively impacted by high operational uptimes as well as gain relating to the divestment of the Venezuelan activities, negatively impacted by impairments of $85 million. As expected the high number of planned rig yard stay days and start-up costs contributed negatively to the result. The underlying profit of $471 million ($524 million) was in line with expectations. ROIC was 7.1% (10.8%).
APM Shipping Services delivered a loss of $230 million (loss of $85 million) negatively impacted by a goodwill impairment of $ 357 million related to the Adsteam acquisition in Australia. Svitzer's Australian operations are negatively impacted by industry overcapacity, a high industry cost structure and a general slowdown of bulk activities. The result was also impacted by significant non-trading costs in Damco related to impairments, restructuring and other adjustments. The underlying result in APM Shipping Services came in lower than expected, though higher than the prior year, with an underlying profit of $185 million ($ 37 million) mainly due to Maersk Tankers being impacted by positive $87 million (negative $ 144 million) relating to provision for onerous contracts.
Guidance for 2015
The Group expects an underlying result slightly below $4 billion ($4.1 billion) excluding Danske Bank. Gross cash flow used for capital expenditure is expected to be around $9 billion in 2015 ($8.7 billion), while cash flow from operating activities is expected to develop in line with the result.
Maersk Line expects a higher underlying result than for 2014 ($2.2 billion). Maersk Line aims to improve its competitiveness through unit cost reductions and implementation of the new 2M alliance. Global demand for seaborne container transportation is expected to increase by 3-5% and Maersk Line aims to grow with the market.
Maersk Oil expects a significantly lower underlying result for 2015 than for 2014 ($1.0 billion) as break even is reached with oil prices in the range $55-60 per barrel. Maersk Oil's entitlement production is expected to be around 265,000 boepd (251,000 boepd). Exploration expenses are expected to be around $ 0.7 billion ($765 million) for the year.
APM Terminals expects an underlying result similar to that in 2014 ($849 million) and to grow in line with the market.
Maersk Drilling expects a higher underlying result than in 2014 ($471 million) due to more rigs in operation, good forward contract coverage as well as the cost reduction and efficiency enhancement program.
APM Shipping Services expects the underlying result for 2015 to be above the 2014 result ($185 million).