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AP Moller - Maersk talks 'accelerated transformation', remains in the red in 2018

AP Moller - Maersk talks 'accelerated transformation', remains in the red in 2018
Owner of the world’s largest container line AP Moller – Maersk released its annual results on Thursday talking about an accelerated transformation, however, more than two years into a huge restructuring exercise the group remained in the red for 2018.

AP Moller – Maersk reported impressive top line growth with revenues of $39bn in 2018 compared to $30.9bn a year earlier mainly buoyed by the inclusion of Hamburg Sud in its ocean business (container line) which saw revenues increase to $28.4bn last year compared to $22bn a year earlier.

Growth in EBITDA, Maersk’s choice figure when talking about profitability, was somewhat less impressive at 8% year-on-year at $3.8bn last year compared to $3.5bn. The company noted that the inclusion of Hamburg Sud had a positive impact of EBITDA although this had been partially offset by a 32% average increase in bunker fuel costs that had not been fully recovered from freight rates.

AP Moller – Maersk ceo Soren Skou sounded reasonably upbeat: "In 2018, we made significant progress in implementing our strategy. With the expected demerger and listing of Maersk Drilling in April, the separation of our Energy-related businesses will be almost complete.”

With the con-current announcement that it was to demerge and separately list Maersk Drilling, just offshore supply vessel company Maersk Supply Services remains part of the public-listed AP Moller – Maersk.

Read more: Maersk Drilling to be demerged from AP Moller - Maersk, listed on Nasdaq Copenhagen

“We have successfully integrated Hamburg Süd, accelerated our digital transformation and come together across sales, customer service, delivery and products as one company with customers at the centre of our attention. We are starting to see growth both in ocean and non-ocean segments."

However, a look at bottom line numbers reveals a less rosy picture. Underlying profit from continued business contracted in 2018 to $220m from $356m a year earlier, and the actual result for continuing business was a loss of $148m last year, a small improvement on a loss of $194m in 2017.

Skou noted that profitability needed to improve and said: "Although we had a challenging start to 2018, looking at our financial performance, we increased earnings despite significantly higher bunker fuel prices and lower than expected container volume growth in the second half of 2018. However, profitability needs to improve."

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In terms of the outlook Maersk is expecting container shipping volumes to grow in line with the market at 1 – 3% in 2019. It is forecasting an EBITDA of around $5bn including effects from IFRS 16, and around $4bn excluding effects from IFRS 16. The company is applying IFRS 16 from 2019 onwards.

“Maersk’s guidance for 2019 is subject to considerable uncertainties due to the current risk of further restrictions on global trade and other factors impacting container freight rates, bunker prices and foreign rate of exchange,” stated.

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