Maersk Group’s full year profit down 82%

Danish shipping and energy conglomerate Maersk Group delivered a profit of USD925million for the full year ending December 31st 2015, against USD 5.2billion reported in 2014, a drop of 82%.

Maersk’s underlying profit for full year reached USD3.1billion, also down from 2014 results when Maersk reported USD 4.5billion in underlying profit.

Compared to last year, profits were lower in Maersk Line, Maersk Oil and APM Terminals and higher in Maersk Drilling and APM Shipping Services.

After a satisfactory result in the first half of the year with a return on invested capital (ROIC) of 10.2%, Maersk Group was severely impacted by a widening supply-demand gap across most of its businesses, leading to significant oil price and freight rate reductions.

ROIC for the second half of the year was negative 6.3%, impacted by impairments of USD 2.5billion after tax in Maersk Oil and for Q4 there was an underlying loss of USD9million as against Q4 2014 profit of USD 1.0billion.

The group said that it delivered a strong cash flow from operating activities of USD8billion (USD8.8billion) for the year and USD 2.0billion (USD 2.4billion) in Q4, despite a significant decline in container freight rates and oil prices.

“We are satisfied with the good operational performance across our businesses in 2015. Despite the very challenging market conditions in our industries, all business units delivered positive underlying profits and the Maersk Group achieved an underlying result of USD 3.1bn. Given our expectation that the oil price will remain at a low level for a longer period, we have impaired the value of a number of Maersk Oil’s assets by USD 2.6bn after tax. We will continue to strengthen the group’s position through strong operational performance and growth investments,” says Group CEO Nils S. Andersen.

Maersk Line made a profit of USD 1.3billion (USD 2.3billion) and a ROIC of 6.5% (11.6%) due to poor market conditions, leading to significantly lower freight rates, in particular in the second half of the year.

Results across the group were as follows:

  • ¥              APM Terminals made a profit of USD654million (USD900million)
  • ¥              Maersk Drilling made a profit of USD751million (USD 478million)
  • ¥              Maersk Oil made a loss of USD2.1billion (loss of USD861million) and
  • ¥              APM Shipping Services made a profit of USD446million (loss of USD230million) .

The Maersk Group expects an underlying result significantly below last year’s USD3.1billion across its branches.

Gross cash flow used for capital expenditure is expected to be around USD7billion in 2016.

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