Last updated: February 10, 2016 7:04 pm

Maersk warns business conditions worse than during 2008 crisis

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AP Møller-Maersk warned that it was facing conditions significantly worse than the financial crisis after it plunged to a large net loss as global trade growth ground to a halt last year. 

The Danish shipping-to-oil conglomerate has been hit by the slump in both petroleum prices and container freight rates in what its chief executive described as a “massive deterioration” in its business. 

Nils Andersen told the Financial Times: “It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse but we are better prepared.” 

Maersk’s shares, which have nearly halved in the past 10 months, fell another 8 per cent on Wednesday morning to DKr7495. 

Maersk owns the world’s largest container shipping company and is seen as a bellwether for global trade, which it estimated grew just 0-1 per cent last year against double-digit growth before the financial crisis. It forecast an increase of 1-3 per cent this year, still below its post-crisis estimate of 4-5 per cent growth. 

Despite this, capacity in the container shipping industry increased 8 per cent in 2015 and Maersk, which still has 27 new ships on order, has cancelled its options to buy any more. 

Mr Andersen said global trade conditions had been “abnormal” last year with imports to Europe, Brazil, Russia and west Africa all falling — the latter due to the slump in oil prices. 

Lex

Maersk: freight night

epa05152303 (FILE) A file photo dated 18 August 2013 showing the world's biggest container vessel Mærsk Mc-Kinney Moeller arriving at the container terminal during its maiden voyage in Bremerhaven, Germany. Danish shipping and oil group AP Moller-Maersk said 10 February 2016 its full-year 2015 net profit plunged 82 per cent due to lower freight rates and oil prices and writedowns of oil assets. The net profit of 925 million dollars compared with 5.2 billion dollars in 2014. The 2014 results were affected by gains from sales of stakes in a supermarket group and other assets. Turnover in 2015 declined 7.4 billion dollars year-on-year to 40.3 billion dollars. The group that operates Maersk Line, the world's biggest container shipper, said average freight rates dropped during the year. Weaker demand affected transportation to emerging markets as well as imports to Europe and Latin America, it said. EPA/INGO WAGNER

Danish shipping conglomerate’s results last year were hardly acceptable

Maersk posted a net loss of $2.5bn in the fourth quarter as it wrote down the value of its oil assets in Kazakhstan, Kurdistan, the UK, Angola and Brazil by the same amount. Analysts had expected a profit of about $300m. 

Its underlying profit for 2015 was $3.1bn, down from $4.5bn a year earlier, and the Danish group warned this year’s result would be “significantly below” that. Maersk Oil will make a loss this year as its break-even price for oil is $45-$55 per barrel, compared with the current price of Brent crude of $31. Maersk Line, its container shipping business, will post an underlying result significantly below last year’s $1.3bn. 

But Mr Andersen tried to strike an upbeat note, arguing that Maersk had cut costs and lowered debt since the financial crisis, meaning it was in much better shape

“We are very strongly placed not only to get through this period but benefit from it. We are quite enthusiastic about it,” he said, adding that the company would invest in growth and customers to “thereby steal a few steps on the competition”. 

He said Maersk remained on the lookout for acquisitions in its oil, shipping and port terminals businesses but expected more in the way of bolt-on deals than blockbuster purchases. “You shouldn’t expect us to go in and say we will buy something for $15bn,” he added.

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