Maersk Product Tankers 2018 Annual Report published
Despite outperforming the market on time charter equivalent earnings and costs, 2018 was a financially challenging year for Maersk Product Tankers, facing the lowest spot market rates seen in a decade., the company said in its release.
While revenue in 2018 increased to USD 647.0 million (USD 621.1 million), the company recorded a loss before tax of USD 35.0 million and a negative free cash flow of USD 27.7 million. The results were affected by the low spot market rates, but the company outperformed the market quarter on quarter, realising a decline in time charter equivalent of 2.7% from 2017 compared to a decline in the market of 14.5%.
Maersk Product Tankers invested significantly in optimising the fleet during the year, ensuring a competitive fleet that is sufficiently flexible to meet customers’ trading needs. In 2018, the company took delivery of four MR newbuildings, bringing the total fleet to 81 vessels.
In a market where prices were at a low point in their cycle, capital commitments reached USD 384.4 million. In 2018 alone, the company invested USD 146.7 million. Taking advantage of a market with attractive asset prices, the Board of Directors approved the order of six LR2 newbuildings. Maersk Product Tankers continues to have an option to order four more LR2 vessels; the decision on which will be made in 2019.
Maersk Product Tankers remains positive about the mid- and long-term prospects for the tanker industry, and is well positioned to exploit the opportunities that will emerge.
On the demand side, trade is expected to increase sharply, driven by the advent of the new IMO 2020 sulphur regulations. With slowing vessel supply growth and vessel demand expected to rise, product tanker freight rates are projected to increase, starting at the end of 2019. Maersk Product Tankers’ result for 2019 is expected to improve due to higher freight rates and lower vessel operating costs.
About Maersk Product Tankers
Maersk Product Tankers is a leading player in the product tanker industry, owning more than 80 vessels, which are carrying refined oil products worldwide for customers. The company is owned by A.P. Møller Holding A/S and Mitsui & Co. Ltd., and has its headquarters in Copenhagen, Denmark. Founded in 1928, the company was part of A. P. Møller – Mærsk A/S until being established as an independent company in 2017 following A.P. Møller Holding A/S’s acquisition of Maersk Tankers A/S through its subsidiary APMH Invest A/S. In connection with the acquisition, A.P. Møller Holding A/S announced it was entering into an ownership consortium for the Maersk Tankers fleet with Mitsui & Co Ltd., leading to a restructuring of Maersk Tankers A/S. As part of the restructuring, Maersk Product Tankers was formed through contribution (spin-off) of Maersk Tankers A/S’ vessel-related activities for owned vessels.