AP Moller – Maersk reports increase in Transport and Logistics Q2 revenue

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August 17, 2017: Denmark's AP Moller - Maersk has reported strong numbers in the second quarter of 2017 but expects a recent cyber-attack to impact its third quarter results negatively by USD 200-300m.

The company’s revenue grew by 8.4 percent to USD 9.6 billion year on year, mainly due to higher freight rates in Maersk Line. The underlying profit in Q2 improved from USD 134m to USD 389m with Maersk Line contributing with an underlying profit of USD 327m.

“Maersk Line is again profitable delivering in line with guidance, with revenue growing by USD 1bn year-on-year in the second quarter. The profit was USD 490m higher than the same quarter last year, based on higher rates,” says Søren Skou, CEO of AP Moller - Maersk.

Transport & Logistics reported a consolidated revenue of USD 7.7 billion, which was an increase of 15 percent compared to same quarter last year, and an underlying profit of USD 442m which was improved significantly, in large part driven by higher container freight rates.

“Focus for the oil and gas related businesses in Energy remain on optimising performance and exploring new business models to strengthen resilience under the current market conditions,” Søren Skou emphasizes.

In the end of June, AP Moller - Maersk was hit by the malware “Not Petya” where system shutdowns resulted in significant business impact especially within the container business. Søren Skou elaborates, “In the last week of the quarter we were hit by a cyber-attack, which mainly impacted Maersk Line, APM Terminals and Damco. Business volumes were negatively affected for a couple of weeks in July and as a consequence, our Q3 results will be impacted. We expect the cyber-attack will impact results negatively by USD 200-300m.”

Transport & Logistics is progressing towards operating as one integrated division, and delivering the expected synergies estimated to create a ROIC improvement of two percentage points by the end of 2019. Maersk Line's volume growth of approximately 7–8 percent (equity weighted) at APM Terminals and the stronger results reported by Maersk Container Industry are examples of those synergies.

The announced acquisition of Hamburg Süd is progressing as planned. The transaction remains subject to regulatory approval, with an expected closing in Q4 2017.

The announced agreement to divest Mercosul Line will facilitate the authority approval process in Brazil.

Maersk Line reported a profit of USD 339m (loss of USD 151m) with a positive ROIC of 6.7 percent (negative 3.0 percent). The underlying result was a profit of USD 327m (loss of USD 139m). Market fundamentals continued to improve in Q2 as demand growth of 4 percent outgrew nominal supply growth of 1.4 percent. The improvement in market fundamentals in past quarters has started to reflect in the freight rate, which increased 22 percent compared to Q2 2016 and 7.6 percent compared to Q1 2017. Freight rates increased by 36 percent on East-West trades and 17 percent on North-South trades. Transported volumes increased by 1.7 percent compared to Q2 2016. Volume grew on headhaul by 5.2 percent, however, offset by a decrease on backhaul by 5.6 percent as backhaul cargo was less attractive on some trades.

APM Terminals reported a loss of USD 100m (profit of USD 112m). The result was impacted by impairments of USD 250m (USD 8m) in a few commercially challenged terminals, partially offset by divestment gain of USD 34m. The underlying profit of USD 98m (USD 109m) was negatively impacted by exchange rates and lower rates.

Damco reported a break-even result (profit of USD 10m) with a ROIC of 1.0 percent (18.5 percent). The underlying result was at break-even (profit of USD 10m), negatively impacted by increased product investments and lower ocean margins, positively offset mainly by supply chain management margins, air freight volumes growth and productivity improvements.

Svitzer reported a profit of USD 19m (USD 24m) and a ROIC of 5.8 percent (7.8 percent), impacted by USD 12m impairment on 11 idle vessels marketed for sale due to fleet optimisation and by USD 6m impairment on investment in Ardent, the 50 percent owned salvage company. The underlying profit amounted to USD 33m (USD 23m), due to a USD 10m increase in deferred tax asset.

Maersk Container Industry reported a profit of USD 15m (loss of USD 21m) and a positive ROIC of 18.0 percent (negative 19.6 percent). The underlying profit was USD 15m (loss of USD 21m), positively impacted by higher volumes, increased efficiencies and higher market prices for dry containers.

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