Maersk Group posts rare loss in 2016

Maersk Line

A.P. Moller-Maersk A/S unexpectedly lost money in 2016 as Denmark’s biggest company wrote down the value of some of the energy assets it plans to split off.

Maersk shares fell as much as 7.1 percent as the Copenhagen-based conglomerate reported a 2016 net loss of $1.94 billion. Analysts had expected a $963 million profit. The company, which has now only reported two annual losses since World War II, wrote down $2.7 billion in its Maersk Drilling and Maersk Supply Service units.

Maersk also said its chairman, Michael Pram Rasmussen, is stepping down after almost 18 years on the board. He will be replaced by Jim Hagemann Snabe, who is also the chairman of Siemens.

Snabe, together with Soren Skou, who was promoted to chief executive officer last year, will oversee Maersk’s plans to separate out its four energy units, which also include its North Sea petroleum producer, Maersk Oil, as the company focuses on its transport operations.

“The impairments can also likely be seen as a ‘clean up’ in connection with the ongoing strategic initiatives,” Oyvind Hagen, a credit analyst at Nordea, said in a note.

Maersk shares declined 4 percent to 11,180 kroner as of 10:35 a.m. in Copenhagen. The stock has now lost 0.8 percent in 2017, valuing the company at 228 billion kroner ($32.6 billion). Maersk last reported a net annual loss in 2009, when the global financial crisis crippled trade.

Meanwhile, the company’s container line is set to do better this year. Maersk Line’s underlying result will be more than $1 billion above the $384 million loss it booked in 2016, it said.

“The guidance for 2017 looks in our view a bit soft for Maersk Line, with implied $600 million net profit which is well below consensus at $1 billion,” Frode Morkedal, managing director for equity research at Clarksons Platou Securities, said in a note.

Maersk expects the global container market to grow 2-4 percent in 2017. The forecast comes amid a consolidation wave, with the global shipping industry struggling for the better part of a decade to adapt to excess capacity and sluggish trade growth.

Maersk Line won market share last year as its transported 9.4 percent more containers amid demand growth of 2 to 3 percent, the company said. Freight rates fell on average 19 percent last year, Maersk Line said.

“It’s a significantly higher growth than the market and we’re very satisfied with that,” CEO Skou said in a phone interview. “We have used our strong competitive position to come out strengthened from the price war among container lines that ended in the third quarter of 2016.” 

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