Maersk swings to $1.9bn loss on shipping woes and oil impairments

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AP Moller-Maersk slumped to a big loss last year, weighed down by the weak performance of the world’s largest container shipping line and massive impairments in its oil rig and supply services businesses.

The Danish conglomerate reported a net loss of $1.9bn for 2016 compared with a profit of $925m a year earlier.

Maersk Line, which is defending its leading position in container shipping by buying Germany’s Hamburg Sud, slipped to a loss of $376m from a profit of $1.3bn a year earlier due to record low freight rates.

But the biggest contributors to the group loss were two divisions that Maersk is looking to divest as part of breaking itself up: a $1.5bn writedown in Maersk Drilling and a $1.2bn impairment in Maersk Supply Service.

Maersk said it expected a modest revival in fortunes this year with its underlying profits – $711m in 2016 versus $3.1bn the year earlier – being above that of last year. Maersk Line is expected to improve its result by $1bn while global container trade should increase by 2-4 per cent, well below the double-digit increases before the financial crisis.

Soren Skou, chief executive, said:

2016 was a difficult year financially, with headwinds in all of our markets. However, it was also a year when we decided to substantially transform AP Moller-Maersk for the future. We have set a new course that over the next few years will lead AP Moller-Maersk to become a focused container shipping, logistics and ports company with the aim of growing revenue again.

Maersk will also change chairman with Michael Pram Rasmussen, who has been in the role for 14 years, to be replaced by Jim Hagemann Snabe. Mr Snabe is the former chief executive of SAP and is tipped to soon become chairman of Siemens, the German conglomerate, as well.

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