Maersk hit by energy assets' write-downs

Maersk, which has a fleet of more than 600 ships, says it plans to beef up its transport and logistics operations while creating a separate energy division.
Maersk, which has a fleet of more than 600 ships, says it plans to beef up its transport and logistics operations while creating a separate energy division.PHOTO: REUTERS

$2.75b setback in 2016 is only its 2nd annual loss since WWII

COPENHAGEN • AP Moller-Maersk unexpectedly lost money last year as Denmark's biggest company wrote down the value of some of the energy assets it plans to split off.

Maersk shares fell by as much as 7.1 per cent as the conglomerate reported a 2016 net loss of  US$1.94 billion (S$2.75 billion).

The company, which has now reported only two annual losses since World War II, wrote down US$2.7 billion in its Maersk Drilling and Maersk Supply Service units.

Maersk also said its chairman Michael Pram Rasmussen is stepping down after almost 18 years on the board. He will be replaced by Mr Jim Hagemann Snabe, who is also the chairman of Siemens.

Mr Snabe, together with Mr Soren Skou, who was promoted to chief executive last year, will oversee Maersk's plans to separate out its four energy units, which also include its North Sea petroleum producer Maersk Oil, as the company focuses on its transport operations.

"The impairments can also likely be seen as a 'cleanup' in connection with the ongoing strategic initiatives," Nordea credit analyst Oyvind Hagen said in a note.

Maersk, with a fleet of more than 600 ships, has said it will focus on building its transport and logistics operations, while creating a separate energy division combining Maersk Oil and three related companies.

For 2017, Maersk said it expects higher underlying net profit and 2 to 4 per cent growth in global demand for seaborne container transportation.

"It was a bad and unsatisfying year," Mr Skou told journalists, adding that the result was especially hurt by weak performance at container shipping business Maersk Line.

Maersk Line won market share last year as it transported 9.4 per cent more containers amid demand growth of 2 to 3 per cent, the company said. Freight rates fell an average 19 per cent last year, Maersk Line said.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on February 09, 2017, with the headline 'Maersk hit by energy assets' write-downs'. Print Edition | Subscribe