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Research Tree provides access to ongoing research coverage, media content and regulatory news on AP MOELLER-MAERSK A S-B. We currently have 12 research reports from 1 professional analysts.
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AP MOELLER-MAERSK A S-B
AP MOELLER-MAERSK A S-B
09 Feb 17
In Q4 16, AP Moller-Maersk posted significant net losses ($-2.7bn) due to impairment losses at Maersk Drilling and Maersk Supply Service for a total of $-2.6bn. The underlying result was slightly negative at $-63m (vs $-9m in Q4 15). The proposed dividend was cut to DKK150/share (-50%). Q4 16 figures: Revenue was down 2.6% to $8,887m. EBITDA decreased to $1,504m (-8%) due to lower contributions from Maersk Line (-3% to $349m) and Maersk Drilling (-53% to $152m) principally. Low freight rates and higher bunker costs weighed on Maersk Line’s performance, while Maersk Drilling was impacted by the collapse of revenue (-44%) due to early terminations and a higher number of idle rigs. Conversely, Maersk Oil had higher EBITDA (+8% to $723m) thanks to the higher oil price and still cost savings. Underlying result was negative at $-63m (vs $-9m in Q4 15). Reported loss was $-2,677m (vs $-2,511m in Q4 15) due to impairment losses at Maersk Drilling ($-1.5bn) and Maersk Supply Service ($-1.1bn), reflecting overcapacity in the market and lower demand expectation. FY2016 figures: Revenue was down 12% at $35,464m. EBITDA dropped to $6,767m (-25%) due to lower contributions from Maersk Line (-54% to $1,525m), APM Terminals (-10% to $764m), Svitzer (-13% to $166m), Maersk Oil (-5% to $2,600m), Maersk Supply Service (-61% to $104m) and Maersk Tankers (-33% to $199m). Underlying result collapsed to $711m (vs $3,0371m in 2015). Reported loss was $-1,897m (vs net profit of $925m in 2015). The cash flow from operations dropped to $4,326m (-46%) including a one-off dispute settlement in Maersk Oil, net capex was reduced to $3,879m (-41%) and free cash flow was $447m below net investment in shares of $694m (including the acquisition of TCB) in 2016. Other cash out-flows included the payment of the dividend ($953m), the purchase of owned shares ($475m), and the repayment of borrowings ($1,608m). Net borrowings surged to $11,178m (+40%) at year-end 2016 and represented 36% of shareholders’ equity (vs 23% in 2015). Considering the target of an investment grade rating, the proposed dividend was cut to DKK150/share (-50%).
AP Moller-Maersk heads in a new direction
13 Dec 16
The new group’s strategy consists of focusing on container shipping, logistics and port activities (75% of total revenue and 67% of the invested capital in 2015) as mentioned in September 2016. The separation of the oil and oil-related businesses leads to the loss of 25% of total revenue which should be replaced by organic revenue growth and external growth in Transport & logistics. The acquisition of Hamburg Süd (2015 revenue of $6.7bn), which is subject to the regulatory approvals, will contribute c.15% of revenue. The problem that has to be solved in Transport & logistics is how to generate revenue growth over a cycle, contrary to the stagnation seen in 2010-15 (revenue of $32bn in 2015 vs $33bn in 2010 with peaks of $36bn in 2012 and 2014) and a volatile ROIC that led to 7% on average over 2010-15, below the target of 8.5%+ assigned for the future. Regarding the Energy activities (revenue of $9.8bn, underlying profit of $1.4bn in 2015), the priority is to maximise value until the separation, which should take the form of listings, mergers and/or joint ventures. In this value context, capital allocation will be mainly in favour of Maersk Oil (57% of the Energy division’s revenue) while limited investments are forecast at Maersk Drilling, Maersk Supply Service and Maersk Tankers in order to maintain their market positions. The mid-term financial goals are summarised in two key ratios (equity/adjusted total assets >30%; adjusted FFO/adjusted net debt >30% – restated from the operating lease debt equivalent) and measures to keep an investment grade rating, including the reduction in capex and commitments (lower investment needed in Transport & logistics, strict capital allocation in Energy), divestments from Energy depending on credit metrics and outlook. Finally, the maintenance of the dividend policy which consists of increasing the dividend/share supported by underlying earnings growth.
Maersk Line's offensive
01 Dec 16
Maersk Line has reached an agreement with the Oetker Group related to the acquisition of the container shipping company Hamburg Süd. The acquisition price is undisclosed, nor are the financial data. Hamburg Süd is ranked n°7 in the container shipping market with a market share of 2.9%, while Maersk Line is the market leader with a market share of 15.7% (pre-acquisition). The company had revenue of $6.7bn in 2015 (o/w $6.3bn in container shipping) and employs 5,960 people in the world, o/w 1,440 people at sea. The company operates under three brands, Hamburg Süd, CCNI based in Chile, and Aliança based in Brazil. In 2015, Maersk Line’s revenue was $23.7bn. The operation is subject to the final agreement and regulatory approvals in China, Korea, Australia, Brazil, the US and the EU, amongst others. The operation is expected to be completed at the end of the year 2017.
Speculations in oil & gas
30 Nov 16
According to the new strategy, AP Moller-Maersk is now split into two divisions: Transport & logistics and Energy. In the Energy division, which includes Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers, the final goal is to separate these businesses from AP Moller-Maersk through a merger, a joint-venture and/or a listing. There are currently rumours of talks between AP Moller-Maersk and Dong Energy to merge Maersk Oil (2015 revenue of $5.6bn, production of 312,000 boepd) and the Dong Energy’s oil & gas activities (2015 revenue of $1.9bn, production of 115,000boepd). Established in 2006 by the merger of six Danish energy companies, Dong Energy (2015 total revenue of $10.5bn – c.$11bn under IFRS standards) is involved in the production of oil & gas, renewables and power distribution. Dong Energy was listed at DKK235/share (market capitalisation of DKK98.2bn) on Nasdaq Copenhagen on 9 June 2016. The Kingdom of Denmark remains the main shareholder with 50.4% of the shares, ahead of New Energy Investment with 17.4%.
Poor 2016 confirmed, lack of visibility for 2017.
02 Nov 16
AP Moller-Maersk delivered a poor set of results in a depressed environment in both transport and energy. Nevertheless, there were some positive achievements in Q3 16 such as a further gain in market share at Maersk Line and breakeven now below $40/bl (vs $40-45/bl) at Maersk Oil. Maersk Drilling had an exceptional and non-recurring performance due to strong termination fees. Q3 16 results: Based on revenue of $9,177m (-9%), impacted by a lower average container freight rate (-16% to $1,811/FFE) and the oil price (-8% to $46/bl), EBITDA was down to $1,887m (-16%), EBIT collapsed to $805m (-33%) including a lower gain on the sale of assets ($9m vs $118m in Q3 15). Group net profit was $429m (-43%). Restated for the gain on the sale of assets and impairment losses, the underlying net result dropped to $426m (-36%) due to lower contributions from Maersk Line which was loss-making ($-122m vs $243m in Q3 15), APM Terminals which was impacted by tough trading conditions in Latin America, North-West Europe and some oil-related countries in Africa (-28% to $126m), and APM Shipping Services ($25m vs $150m in Q3 15) which suffered losses at Maersk Tankers ($-1m vs $58m in Q3 15) and Maersk Supply Service ($-11m vs $44m in Q3 15). 9m figures: AP Moller-Maersk posted revenue of $26,577m (-15%), EBITDA of $5,263m (-29%), EBIT of $1,951m (-57%) after a lower gain on the sale of assets ($131m vs $461m in Q3 15) and share of profit of joint ventures and associated companies (a total of $167m vs $221m in Q3 15). Group net profit was $741m (vs $3,363m in Q3 15). Operating cash flow decreased to $2,861m (-52%) due to lower EBITDA and was close to capital expenditure of $2,936m net of the sale of assets. Other outflows included principally acquisitions ($694m), the payment of the ordinary dividend to shareholders ($953m) and the purchase of own shares ($-475m). Net debt increased to $11.3bn and gearing remained reasonable at 32% as of 30 September 2016.
From a diversified group to a transport & logistics company
29 Sep 16
On 22 September 2016, AP Moller-Maersk released an update on its new strategic issues. The group’s activities will be split into two divisions: Transport & logistics and Energy. The Transport & logistics division includes Maersk Line, APM Terminals, Svitzer, Damco and Maersk Container Industry and is targeting an increase of up to 2pts of the ROIC in three years thanks to synergies between the entities which operate standalone currently and not as an integrated company. The Energy division includes Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers. The final goal is the separation of these businesses from AP Moller-Maersk within 24 months. Management is exploring various solutions for each entities such as a merger, a joint-venture and/or a listing. Translated into financial goals, AP Moller-Maersk is targeting growth, an improvement in profitability and a disciplined capital allocation that will enable an investment grade rating.
Emerging from the clouds
16 Feb 17
Rolls-Royce’s underlying performance in FY16 was ahead of both its own and market expectations. Media focus on the non-cash £4.4bn headline FX loss is missing what looks to be the basis for optimism. As the civil model starts to move from investment in engines for the A350 and A330neo into the aftermarket delivery phase over the remainder of the decade, we think cash flow is likely to improve, particularly if supported by an eventual recovery in Marine.
15 Feb 17
At the current market capitalisation of £29m, we believe the shares are significantly undervalued. We estimate that the highly profitable Maritime business is alone worth at least £40m. With net cash of £9m at end-2016, this implies that the market is currently ascribing a combined negative value of £17m to the rest of the group, which together account for c.54% of group revenues. This is very harsh given the management actions to transform TP Group to a profit-driven Tier 2 specialist services and engineering company are bearing fruits across the divisions. TPG Managed Solutions is expected to more than double its profits in 2017, while TPG Engineering and Design & Technology are on course to deliver sustainable profits from 2019. Even if we ascribe zero value to Engineering, Design & Technology and Managed Solutions, the shares are worth 9.5p a share, a 38% upside from the current share price. BUY.
Taking the bull by the horns
15 Feb 17
Avon Rubber announced this morning that CEO Rob Rennie has left and been replaced with Paul McDonald, formerly managing director of Avon’s Dairy division. This news comes as a surprise and is likely to raise some questions over the CEO and CFO transition, with the CEO only being in post for just over a year. However, the group has appointed an executive already known to many who have followed the business, and as such should be seen as a good appointment with a track record of decisiveness and getting things done.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Share & share alike
14 Feb 17
The rally in the last fortnight, highlighted in the table, reflects a continued flow of positive updates and economic news. The FTSE 250, Small cap and Fledgling indices have reached record highs. We are in the lull ahead of results for those companies with a December year end, a welter of economic data regarding the UK economy, the State of the Union address in the US on 28 February and the UK Budget on Wednesday 8 March. We will learn at that stage the latest forecasts from the Office of Budget Responsibility. As highlighted previously, the reaction to corporate updates will continue to set the tone.