Maersk revenue up 14pc in Q3
13 November 2017
A.P. Moller - Maersk executed on the strategy to separate out its energy businesses in Q3 and entered into an agreement for Total S.A. to acquire Maersk Oil for US$7,450.0 million in a combined share and debt transaction and A.P. Møller Holding to acquire Maersk Tankers for US$1,171.0 million in an all-cash transaction. Further, a structural solution for Maersk Drilling is expected within 12 months.
Revenue increased by US$973.0 million to US$8.0 billion with a US$771.0 million or 14.0% increase in Maersk Line mainly due to higher freight rates. A.P. Moller - Maersk reported an underlying Profit from continuing operations of US$248.0 million (loss of US$42.0 million) with an improvement of US$290.0 million in Transport & Logistics and a decline of US$15.0 million in Energy.
The underlying profit was positively impacted by the increased freight rates in Maersk Line compared to Q3 2016, however with a 2.5% decrease in volumes and increasing unit cost due to the cyber-attack and 26.0% higher bunker price. The lower result in Energy compared to the same quarter last year was related to Maersk Supply Service.
Transport & Logistics reported a consolidated revenue of US$8.0 billion (US$7.0 billion), an increase of 14.0% compared to Q3 2016. The increased underlying profit of US$372.0 million (US$82.0 million) was largely driven by improving container freight rates. Transport & Logistics generated a free cash flow of negative US$295.0 million (positive US$285.0 million) with a higher level of investments related to vessel deliveries for Maersk Line and development projects in APM Terminals.
The effect on profitability from the June cyber-attack was US$250-300.0 million, with the vast majority of the impact related to Maersk Line in Q3. No further impact is expected in Q4. Maersk Line reported a profit of US$220.0 million (loss of US$116.0 million) with a positive ROIC of 4.3% (negative 2.3%). The underlying result was a profit of US$211.0 million (loss of US$122.0 million).
Market demand growth remained solid at 5.0% compared to the same period last year while nominal supply grew 3.0%. The development in market fundamentals are reflected in the freight rate which increased 14.0% compared to Q3 2016, however decreased by 1.1% compared to Q2 2017. The freight rate increase compared to Q3 2016 was driven by increases on East-West by 20.0%, on North-South by 14.0% and on Intra-regional by 7.0%. Transported volumes decreased by 2.5% compared to Q3 2016, negatively impacted by the cyber-attack. Volume grew by 0.6% on headhaul, however more than offset by an 8.8% decrease on backhaul.
The acquisition of Hamburg Sud is progressing as planned with expected closing in Q4 2017. Maersk Line has a binding offer to divest Mercosul Line and has received unrestricted approval from the Brazilian regulators to acquire Hamburg Sud.
APM Terminals reported an underlying profit of US$110.0 million (US$126.0 million), negatively impacted by the challenging market conditions with overcapacity in the industry leading to pressure on profit and margins, and additional costs related to the cyber-attack. The reported loss of US$267.0 million (profit of US$131.0 million) and negative ROIC of 13.3% (positive 6.6%) was impacted by impairments of US$374.0 million related to terminals in markets with challenging commercial conditions.
Damco reported a loss of US$6.0m (profit of US$15.0m) with a negative ROIC of 9.4% (positive
29.7%). The result was negatively impacted by the cyber-attack as well as increased product investments and lower ocean margins, positively offset mainly by supply chain management volume growth and air freight margin improvements.
Svitzer reported a profit of US$35.0 million (US$22.0 million) and a ROIC of 10.6% (6.9%) positively impacted by higher volumes from increased towage activities in Australia and Americas, ongoing portfolio and fleet optimisation, and reduction of operating and administration costs.
Maersk Container Industry reported a profit of US$8.0 million (loss of US$7.0 million) and a positive ROIC of 11.4% (negative 6.2%), positively impacted by higher volumes in dry and reefer, increased efficiencies and higher market prices of dry containers.
Kindly supplied by Multimodal
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