Maersk Profit Plunges as Oil, Container Units Both Sufferby
A.P. Moeller-Maersk A/S reported an 84 percent plunge in 2015 profit after its oil unit was hit by lower energy prices and its container division got squeezed between sluggish trade growth and overcapacity. The shares fell the most in almost a year.
Maersk said net income was $791 million last year compared with $5.02 billion in 2014. That compares with a median estimate of $3.7 billion in a Bloomberg survey of 16 analysts. The result includes a writedown in the value of Maersk’s oil assets by $2.6 billion, the Copenhagen-based company said.
“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,” Chief Executive Officer Nils Smedegaard Andersen said in the statement. “We will continue to strengthen the Group’s position through strong operational performance and growth investments.”
Maersk shares dropped as much as 9.4 percent, the most since March 31. The stock traded 8.2 percent lower to 7,495 kroner as of 9:14 am in Copenhagen, bringing this year’s drop to 16 percent.
In October, Maersk started cost cut programs for both of its two biggest units to address what analysts have described as a perfect storm for the conglomerate, which historically has found support from positive market conditions for at least one the two divisions.
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If the Chrysler Building could float, its size would rival that of the Morten Maersk, one of the largest cargo ships ever built.
Maersk said Wednesday that 2016’s underlying profit will be “significantly below” last year’s $3.1 billion. That guidance is “weak,” Alexander Koefoed, a credit analyst at Nordea, said in a note.
The Maersk Line unit’s profit will also be “significantly below” 2015’s level, which was $1.3 billion, the company said. Maersk Oil will report a loss this year. The unit currently breaks even when oil prices are in a range of $45 to $55 a barrel, Maersk said.