Maersk Group lost $1.5 billion in the third quarter
2017-11-08 09:00
On November 7, Maersk Group released its 2017 third-quarter financial report. Data shows that positively impacted by the increase in Maersk Line's freight rates, the Group's continuing operations revenue increased by 14% year-on-year in the third quarter, with an actual profit of US\$248 million. The performance of the Maersk Ocean and Logistics business unit improved by US\$290 million, but the energy business unit's profit declined by US\$15 million. Including discontinued operations, the net loss for the third quarter was US\$1.5 billion, mainly due to a US\$1.75 billion impairment loss on Maersk Oil drilling accounting and a US\$374 million impairment loss on Maersk Terminal assets.
Maersk expects to achieve profitability for the full year (compared to a loss of US\$546 million in 2016). The ocean and logistics business unit is expected to achieve an actual profit of around US\$1 billion, with Maersk Line's performance improving by approximately US\$1 billion compared to a loss of US\$384 million in 2016.
For Maersk, the third quarter of 2017 was a quarter of significant changes, including finding strong and viable solutions for Maersk Oil and Maersk Tankers. In addition, Maersk announced today that the Salling Group will acquire the remaining 19% stake in the Danish supermarket group held by Maersk.
Søren Skou, CEO of Maersk Group, said: “I am pleased that we reached agreements in the third quarter to sell Maersk Oil to Total and Maersk Tankers to A.P. Møller Holding, signifying solid progress in divesting the energy business. Although solutions for Maersk Oil Drilling and Maersk Supply Service are still pending before the end of 2018, Maersk's future will further leverage its leading position in the ocean and logistics business.”
Revenue in Maersk's ocean and logistics business unit increased by 14% to US\$8 billion. In June this year, Maersk Group suffered a cyberattack that caused economic losses of US\$250 million to US\$300 million, challenging its performance. The cyberattack mainly affected July and August, and the majority of the impact was related to Maersk Line, resulting in an actual profit of US\$211 million for Maersk Line and a return on invested capital of 4.3%.
Søren Skou said: “The 14% revenue growth in the ocean and logistics business unit is mainly due to the growth in Maersk Line's revenue. Market fundamentals remain relatively positive, with global container volume growth of 5% year-on-year and rated capacity growth of 3% year-on-year in the third quarter. However, due to the emergency measures taken to restore business after the cyberattack, Maersk Line's volume decreased by 2.5%, and the cost per container increased by 3.9% on a fixed fuel price basis.” 
The ocean and logistics business unit continues to focus on developing new digital services to provide better and simpler products and services for customers' entire supply chain. In September, Maersk Line launched Remote Container Management (RCM) for customers, providing real-time monitoring of refrigerated container transportation, giving customers unprecedented control and understanding of their supply chain.
In addition, Maersk Group reiterated that it currently has no plans to order new vessels. Data shows that in the third quarter, Maersk Line scrapped 3 vessels and delivered 2 3E-class vessels and 3 15,200 TEU vessels. As of the end of the third quarter, Maersk Line had 20 vessels and 261,000 TEU on order, expected to be delivered in 2017 and 2018. This includes 7 20,000 TEU vessels, 6 15,200 TEU vessels, and 7 3,600 TEU vessels. The current order backlog represents 7.4% of the current fleet.
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