A.P. Møller - Mærsk A/S publishes its Interim Report Q3 2016
A.P. Møller - Mærsk A/S has published its Interim Report Q3 2016 today, 2 November 2016.
The Maersk Group delivered an underlying profit of USD 426m in the third quarter of 2016.
All business units generated free cash flows of a total of USD 736m and the Group maintains a strong financial position with a liquidity reserve of USD 11.8 bn.
The result was positively impacted by continued strong operational performance and cost reductions in both Maersk Oil and Maersk Drilling.
Maersk Oil increased underlying profit through continued operational efficiency increases and cost reductions and break-even is now reduced to below USD 40 per barrel for 2016.
Maersk Line gained market share with a volume growth of 11%, while continuing to improve network utilisation and maintaining unit costs below 2,000 USD/FFE.
APM Terminals lifted Q3 performance from previous quarters due to stronger performance in key gateway terminals and cost saving initiatives.
The Group still expects a result significantly below last year (USD 3.1bn) and specifies an expected underlying result below USD 1.0bn.
The Group continued to be significantly impacted by market imbalances, leading to sustained low container freight rates and a low oil price environment.
The Group delivered a profit of USD 438m (USD 778m) negatively impacted by lower container freight rates partly offset by positive impact of termination fees in Maersk Drilling. The return on invested capital (ROIC) was 4.9% (7.6%). The free cash flow was USD 736m (USD 904m).
The underlying profit for the Group of USD 426m (USD 662m) was significantly lower than for same period last year, predominantly driven by a loss in Maersk Line and with lower underlying results in APM Shipping Services and APM Terminals. Maersk Drilling and Maersk Oil recorded increased underlying profits.
The Group continues to focus on cost efficiency as well as maximising synergies between our business units to improve operational performance and remain top tier performer.
“The Maersk Group delivered an underlying profit of USD 426m in the third quarter of 2016. The result is unsatisfactory, but driven by low prices. We generally perform strongly on cost and volume across businesses. Maersk Line for the second quarter in a row reported a loss due to continued low freight rates, down 16% y-o-y. Freight rates were however up 5.5% q-o-q, for the first time since Q3 2014. Maersk Line performed strongly on volume and unit cost. APM Terminals delivered a result below last year, as we continued to be challenged by low volume growth on a like–for-like basis. For the second quarter in a row Maersk Oil delivered a positive result driven by strong cost performance and production efficiency. Also Maersk Drilling delivered strong profits, driven by termination fees and good cost performance. The implementation of the new strategic direction and the restructuring of the Group is progressing, and we look forward to sharing further details at the Capital Markets Day on 13th of December,” says Maersk Group CEO Søren Skou.
The Group’s revenue decreased by USD 933m or 9.2% compared to Q3 2015, predominantly related to Maersk Line with a decrease of USD 659m due to 16% lower average container freight rates, Maersk Oil with a decrease of USD 95m due to 8.0% lower oil prices and decreased rates in Damco and Maersk Tankers. This was partly offset by 11% higher container volumes in Maersk Line and 7.0% higher volumes in APM Terminals.
Operating expenses decreased by USD 573m or 7.3% mainly due to lower bunker prices and cost saving initiatives.
The Group’s cash flow from operating activities was USD 1.7bn (USD 2.2bn). Net cash flow used for capital expenditure was USD 935m (USD 1.3bn) with investments predominantly related to developments of the Culzean oil field in the UK and Johan Sverdrup in Norway.
With an equity ratio of 55.5% (57.3% at 31 December 2015) and a liquidity reserve of USD 11.8 bn (USD 12.4bn at 31 December 2015) the Group maintains a strong financial position.