A.P. Møller – Mærsk A/S publishes Interim Report Q2 2014
A.P. Møller – Mæ rsk A/S has published its Interim Report Q2 2014, the company said in its press release. Unless otherwise stated, all figures in parenthesis refer to the corresponding figures for the same period prior year. The Group delivered a profit of USD 2.3bn (USD 856m) and a return on invested capital (ROIC) of 18.6% (7.4%) for Q2 2014.
“ The Group achieved a very satisfactory result for first half of 2014 with underlying profit increasing 42% to USD 2.4bn, mainly driven by Maersk Line, APM Terminals and Maersk Oil. As result of the good progress in delivering on our Group priorities and the solid financial performance across the Group, which has been achieved in challenging markets, we upgrade the outlook for the Group resu lt to be around USD 4.5bn for 2014. Due to the current strong financial situation, the Board has decided to buy back shares of USD 1bn within the coming 12 months, ” says Group CEO Nils S. Andersen.
The result for Q2 was positively impacted by the USD 2.8bn gain from the sale of the majority share of Dansk Supermarked Group partly offset by impairments of USD 1.7bn on Brazilian oil assets due to disappointing exploration and appraisal results together with increasing project costs. The impairment announced in July has reduced Maersk Oil’s valuation of Brazilian assets to USD 0.6bn from USD 2.3bn. The underlying profit for the Group was USD 1.3bn (USD 1.0bn) when excluding discontinued operations, impairment losses and divestment gains. In creased underlying profits were in particular achieved for Maersk Line, APM Terminals and Maersk Oil. The Group’s revenue increased by 2.3% in part impacted by higher container volumes, higher oil entitlement production at a higher average oil price partl y offset by lower average container freight rates. Cash flow from continuing operating activities was USD 1.7bn (USD 2.1bn) negatively impacted by increased working capital. Cash flow used for capital expenditure was USD 1.9bn (USD 1.3bn) and net of sales proceeds USD 1.4bn (USD 1.1bn). The Group’s free cash flow was USD 348m (USD 995m). Net interest - bearing debt decreased compared to year - end by USD 2.1bn to USD 9.5bn (USD 11.6bn at 31 December 2013) positively impacted by receipt of USD 2.8bn net procee ds from the sale of Dansk Supermarked Group.
The financial items were negative by USD 185m (negative by USD 191m); a positive development of USD 6m primarily due to lower net interest costs reflecting less debt, lower interest rates and higher capitalised borrowing cost related to the newbuilding programmes, partly offset by currency adjustments. Maersk Line made a profit of USD 547m (USD 439m) and a ROIC of 10.8% (8.5%). The improvements, despite 2.7% lower total revenue per FFE, were achieved through 4. 4% lower unit costs supported by higher bunker efficiency and a volume increase of 6.6% to 2,396k FFE. Cash flow from operating activities was USD 870m (USD 790m) and cash flow used for capital expenditure was USD 488m (USD 311m). Maersk Oil made a loss of USD 1.4bn (profit of USD 249m) due to impairments on Brazilian assets. However, the underlying result excluding impairments and one - offs was USD 431m (USD 140m) positively impacted by higher average oil price of USD 110 per barrel (USD 102 per barrel), increased entitlement production in line with earlier guidance, to 235,000 boepd (226,000 boepd) and lower exploration costs. The continued maturation of major projects was a focus for Q2.
Johan Sverdrup in Norway is progressing as planned and the develop ment concept for the Culzean project in the UK was selected. In Angola tender bids were received in Q2 for the major construction parts of the Chissonga project and are currently being evaluated. Exploration costs were USD 172m (USD 380m) with the complet ion of three exploration wells. The two wells in Iraq (Kurdistan) did not contain hydrocarbons in commercial volumes and the third, in the UK, is currently being assessed. Cash flow from operating activities was USD 718m (USD 713m) and cash flow used for capital expenditure was USD 546m (USD 455m). APM Terminals made a profit of USD 223m (USD 179m) and a ROIC of 14.2% (12.8%). Volumes increased by 8% to 9.8m TEU supported by terminals becoming fully operational and new terminals added to the portfolio. An agreement was reached for divesting the APM Terminals Virginia, Portsmouth, USA, with an expected completion during Q3. Cash flow from operating activities was USD 192m (USD 241m) and cash flow used for capital expenditure was USD 215m (USD 212m).
Maersk Drilling made a profit of USD 117m (USD 150m) impacted by three rigs on planned yard stays and start - up costs for new rigs entering the fleet. ROIC was 7.2% (12.6%). Delivery was taken of the second newbuild drillship, Maersk Valiant, which is expe cted to start operating in August 2014. Cash flow from operating activities was USD 173m (USD 227m) and cash flow used for capital expenditure was USD 478m (USD 153m). Services & Other Shipping made a profit of USD 30m (loss of USD 200m) and a positive RO IC of 2.1% (negative 11.5%). The improvement came predominantly from Maersk Tankers with a loss of USD 2m (loss of USD 274m due to VLCC impairments and provisions of USD 280m) however offset by a lower profit in Maersk Supply.