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Maersk Group 2015 profit falls by 82% hit by low oil price and box rates

Maersk Group 2015 profit falls by 82% hit by low oil price and box rates
Maersk Group reported an 82% drop in profit in 2015, hit impairments of its oil business due to low prices, and the dramatic fall in container freight rates.

The Danish giant reported a net profit of $925m for 2015, compared to $519bn in the previous year. In the fourth quarter of 2015 it sank to a $2.51bn loss against a $189m profit the previous year.

“The oil price and container freight rates deteriorated much faster than expected,” Maersk ceo Nils Andersen said in a conference call.

The group’s results were hit hard by a $2.6bn impairment on its Maersk Oil business which has been hit by the low oil price.

“The result was negatively affected by net impairments after tax of $2.6bn due to the low oil price expectations. The impairments were primarily related to production assets with short lifetime such as Kazakhstan, Kurdistan and the UK as well as our deepwater development assets in Angola and Brazil, where the current conditions do not allow for viable projects,” Maersk said.

Excluding impairments Maersk Oil lost $32m in Q4 2015, however, once the impairments were included this figure plunged to a $2.52bn loss.

Container shipping also sank into the red in the fourth quarter as freight hit an all time low – read full story here.

Container terminals arm APM Terminals faired better although still full year profits reduced $654m in 2015 compared to $900m a year earlier. Worldwide volumes dropped to 36m teu from 38.6m teu in 2014.

Throughput declined by 5.9% mainly due to divestments and less import volumes into West Africa, Russia and Brazil. Like for like throughput declined by 0.5%,” Maersk commented.

The surprising result for the group was rig owner and contractor Maersk Drilling which saw profits rise to $751m in 2015, up from $478m a year earlier. “Although at significantly lower day rates, Maersk Drilling secured in total twelve contracts and added $2bn to the revenue backlog in 2015. The total revenue backlog amounted to $5.4bn,” it said.

APM Shipping Services was the turnaround story with a $446m profit for 2015 compared to a $230m loss a year earlier, bolstered by it tanker business.

Looking ahead to 2016 Maersk said it expected its underlying full year result (excluding impairments) to be significantly under the $3.1bn in 2015.