Maersk posts heavy 2016 loss as chairman resigns

Danish shipping and oil conglomerate A.P. Moller-Maersk registered a heavy loss in 2016 due to write-downs in its oil services division, the company said, as it announced the chairman would step down.

Maersk posts heavy 2016 loss as chairman resigns
Maersk CEO Søren Skou and outgoing chairman Michael Pram Rasmussen. Photo: Søren Bidstrup/Scanpix
Maersk booked $2.7 billion (18.8 billion kroner, €2.5 billion) of write-downs in the fourth quarter for its subsidiaries Maersk Supply Service and Maersk Drilling “as a consequence of an expected weaker outlook.”
The group's strategy has long been to have a balance between shipping, which benefits from low oil prices, and oil production, which is profitable when oil prices are high. But the business model has been battered in recent years, as both oil and shipping prices have been low.
“2016 was a difficult year, with headwinds in all our markets,” it said in a statement.
The net loss amounted to $1.94 billion, compared to a profit of $791 million in 2015. Sales fell by 12 percent to $35.46 billion.
On the Copenhagen Stock Exchange the Maersk share took a beating, shedding 3.52 percent at 0925 GMT on a relatively flat market.
Chairman of the board Michael Pram Rasmussen, who has held the job for 14 years, announced his resignation effective March 28.
Rasmussen will be succeeded by Danish businessman Jim Hagemann Snabe, formerly the chief executive of German software manufacturer SAP. He has yet to be elected by shareholders.
In June, Maersk replaced its chief executive Nils Smedegaard Andersen, in charge since 2007, with Søren Skou, head of Maersk Line, the world's leading container shipping company.
Skou has decided to refocus Maersk on shipping even though it is currently suffering from global overcapacity, and to divest businesses linked to oil.


Maersk profits up as global supply chain disrupted

Danish shipping giant, AP Møller-Maersk, said Tuesday that profits were up sixfold in the third quarter as the coronavirus pandemic and global supply chain problems caused container prices to soar. 

Maersk headquarters in Copenhagen. The Danish shipping company posted hefty profits in the third quarter of 2021.
Maersk headquarters in Copenhagen. The Danish shipping company posted hefty profits in the third quarter of 2021. Photo: Niels Christian Vilmann/Ritzau Scanpix

“Maersk delivered record earnings” in the third quarter, chief executive Soren Skou said.

“In the ongoing exceptional market situation, with high demand in the US and global disruptions to the supply chains, we continued to increase capacity and expand our offerings to keep cargo moving for our customers.” 

Maersk said that its bottom-line net profit amounted to $5.438 billion in the period from July to September, compared with $947 million a year earlier.

Underlying, or operating, profit increased nearly fivefold to $5.859 billion and revenues jumped by 67 percent to $16.612 billion.

“Results in Q3 were driven by high freight rates in an exceptional market situation,” the group said.

Looking ahead, Maersk said it is sticking to its full year forecast for operating profit of 18-19 billion dollars. 

However, the ocean shipping division “is now expected to grow below” projected global container demand of between seven and nine percent this year, “subject to high uncertainties related to the current congestion and network disruption,” Maersk said.

“The current trading conditions are still subject to a higher-than-normal uncertainty due to the temporary nature of current demand patterns, disruptions in the supply chains,” it cautioned.

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