AP Moller-Maersk Earnings Hit by Perfect Storm
10 February 2016 - 07:30PM
Dow Jones News
Danish conglomerate AP Moller-Maersk A/S swung to a hefty
fourth-quarter net loss after battling a perfect storm, as a sharp
decline in freight rates hit its key shipping business and its oil
business came under pressure from the multiyear lows of crude oil
prices and a $2.5 billion impairment.
Its net loss for the quarter ended Dec. 31 was $2.51 billion
compared with a profit of $189 million a year earlier, with
analysts polled by FactSet expecting a profit of $305 million.
Full-year underlying profit was $3.1 billion, shy of previous
company guidance of $3.4 billion.
Freight rates hit all-time lows in the quarter and declined
across all trade routes, especially its key European and Latin
American lines, it said. Its Maersk Oil unit took a $2.5 billion
impairment charge, primarily related to production assets in
Kazakhstan, Kurdistan and the U.K. as well as deep water assets in
Angola and Brazil.
Maersk Line, the world's largest container operator by capacity
and the company's biggest earner, weighed on fourth-quarter
earnings after posting a $182 million loss, having contributed $655
million in the year-earlier quarter. Maersk Oil reported net losses
of $2.52 billion in the quarter, compared with a loss of $32
million. Group revenue fell 22% to $9.13 billion.
Maersk Line expects a 2016 underlying result significantly below
last year as a consequence of the significantly lower freight rates
going into 2016 and continued low growth with expected global
demand for seaborne container transportation to increase by just
1%-3%.
Maersk Oil expects a negative underlying result in 2016, with
the unit needing oil prices to hit $45-$55 a barrel to
break-even.
The group maintained its full-year dividend at 300 Danish kroner
($45.34) a share.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
February 10, 2016 03:15 ET (08:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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