We will invest $3bn in Maersk Line over the next 5 years – Andersen

On Wednesday 25th February 2015, the A.P. Moller-Maersk Group announced that in 2014 it achieved its highest ever profit of USD5.2 billion, with USD47.6 billion in revenues. The company also announced the divestment of its 20% stake in Danske, Denmark’s biggest bank, to focus on its core shipping and oil and gas divisions, a sale that would mean $6.6 in dividends for Maersk shareholders.

In this interview, the APMM Group CEO, Mr. Nils Smedegaard Andersen explains what drove the Group’s record profit in 2014, elaborates on the impact of a lower oil price environment and emphasizes investment plans for the energy and shipping businesses in the coming years.

 

 

The group has published its annual report for 2014. Are you satisfied with the result?

Well I am very happy with the results. We have a result of USD5.2billion, which is the highest in the group’s history, and the underlining performance of all the businesses is up 33 percent compared to last year and a result of USD4.5billion, so I am very, very satisfied and I really hope our employees around the world will be proud as well. This is a great result.

 

The group is divesting its 20 percent ownership stake in Danske bank. Can you tell us why you are doing this and what will happen with the gain?

Well, we are divesting Danske Bank following the divestment from Danske supermarket in order to concentrate on our core businesses, which is shipping and oil and oil-related services. And having divested Danske Bank now, we are focused on that. So everything we do is within those industry areas. In addition to that, the divestment is also a long standing wish from our minority shareholders who I am sure will be very happy with it because we are distributing the whole proceeds  from the sale as a very, very large dividend for them. So I think it will be well received in the market as well.

 

Can you tell us about the oil price? What impact has that had on the group?

Well I think it is very important to underline that we are taking a different approach to the oil market at the moment than most of our competitors. We want to move forward and invest and you will see that we just approved the investment in Johan Sverdrup in Norway with USD1.8billion. We do expect also to approve the investment in the Culzean field in the North Sea, which is a giant gas field, and we will invest probably around USD3billion in that and that will also be approved in the first half of this year. So we are moving forward on the oil side. Having said that of course we need to also make sure we are competitive, so we are also looking at the cost of our oil businesses, our oil services businesses but our way is forward. If you look at the short-term effect on the group, we actually were not that affected because yes we make a little less money on the oil we sell but we also save money on the fuel in the shipping businesses.

 

About the low oil price in the environment, why are you still investing in the energy side, shouldn’t you maybe invest in the shipping side?

Well, we believe that the oil industry is attractive as an investment opportunity going forward but I think it is very important to realize that our main investment this year will also be in the shipping part. We will invest over the next five years in the area of USD3billion a year in Maersk Line and we have also allocated a couple of billions a year to APM Terminals, so we are quite aggressive in the transportation area as well.

 

Maersk Line has increased its profit by 50 percent since 2013. Can you tell us how they did that and can we expect it to happen again?

The really, really strong result in Maersk Line this year came on the back of also a very strong performance last year, compared to the rest of the industry and the way they do it is they continue to focus on cost. They continue to focus on having a capacity set up but that is not too large. So we basically just make sure that we have the capacity to grow in line with the market and making sure that cost fits to that. And I think that is in short the success recipe but it’s a lot of work, it is tough to reduce cost every year. Every quarter, they have done it and one of the most significant areas that we have focused on have of course been the fuel consumption which gives the added benefit that we also emit much less CO2 and also being successful also on the environmental front, so it is great work.



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