Maersk Group sees another tough year head

Group CEO Nils S. Andersen: It is impossible for the lines to make any money at present freight rates

FEBRUARY 10, 2016 — The Maersk Group has published its 2015 Annual Report. With a loss-making fourth quarter, the group delivered a profit of $925 million, compared to the prior year’s $5.2 billion, and an underlying profit of $3.1billion ($4.5 billion).

After a first half year that saw a ROIC of 10.2%, Maersk Group reports it was hit by a widening supply-demand gap across most of its businesses, leading to significant oil price and freight rate reductions. ROIC for the second half of the year was a negative 6.3%, impacted by impairments of $2.5 billion after tax in Maersk Oil and in the fourth there was an underlying loss of $9 million, compared with the prior year’s profit of $1.0 billion).

“We are satisfied with the good operational performance across our businesses in 2015. Despite the very challenging market conditions in our industries, all business units delivered positive underlying profits and the Maersk Group achieved an underlying result of $3.1 billion,” says Group CEO Nils S. Andersen. “Given our expectation that the oil price will remain at a low level for a longer period, we have impaired the value of a number of Maersk Oil’s assets by $2.6 billion after tax. We will continue to strengthen the Group’s position through strong operational performance and growth investments.”

In its Guidance for 2016, the Maersk Group says it expects an underlying result significantly below last year’s $3.1 billion. Gross cash flow used for capital expenditure is expected to be around $7 billion in 2016 ($7.1 billion).

Maersk Line expects an underlying result significantly below last year’s $1.3 billion as a consequence of the significantly lower freight rates going into 2016 and the continued low growth with expected global demand for seaborne container transportation to increase by 1-3%.

Maersk Oil expects a negative underlying result. Break even is reached with oil prices in the range $45-55 per barrel. Maersk Oil’s entitlement production is expected to be around 315,000 boepd (312,000 boepd). Exploration costs are expected to be in line with 2015 ($423 million).

APM Terminals expects an underlying result around the 2015 level ($626 million).
Maersk Drilling expects an underlying result significantly below last year ($732 million) mainly due to lower dayrates and more idle days.
APM Shipping Services expects the underlying result to be significantly below the 2015 result ($404 million) predominantly due to significantly lower rates and activity in Maersk Supply Service.

Read the Annual Report HERE