MAERSK:PRESS RELEASE INTERIM REPORT 2nd Quarter 2012

Highlights for the Group for the 2nd quarter 2012 “We deliver a fairly satisfactory result for the second quarter, and we are on the right track. Container rates have been improved, Maersk Line is back in black figures and our other core growth businesses are executing well on strategy. We can still improve and will continue our strong focus on profitability to deliver a satisfactory full-year result. We also maintain our investments in long-term growth, not least in developing our many oil discoveries towards production,” says Group CEO Nils S. Andersen.
The Group delivered a profit of USD 1.0bn (USD 1.6bn) and a return on invested capital (ROIC) of 8.8% (14.0%) for Q2. Cash flow from operating activities was USD 1.6bn (USD 1.8bn) and cash flow used for capital expenditure was USD 2.1bn (USD 1.6bn). The Group’s equity ratio was 50.4% (53.7%) and net interest-bearing debt was USD 16.6bn (USD 11.7bn).
Maersk Line’s profit for the period was USD 227m (loss of USD 95m). Maersk Line’s volumes increased by 11% to 2.2m FFE and the average freight rate
increased by 4.2% to 3,014 USD/FFE. Maersk Line implemented further rate increases on most trades during the quarter backed by capacity reduction. A 10% increase in the bunker price was partly offset by an 8% reduction in bunker consumption per FFE. A restructuring of Maersk Line’s Head Quarter function was conducted in order to strengthen Maersk Line’s focus on customers and markets. The restructuring will reduce headcount by approximately 400 employees.
Maersk Oil’s profit for the period was USD 468m (USD 694m). The result was negatively affected by a 17% decline in share of production to 287,000 barrels of oil equivalent per day (boepd) compared to 346,000 boepd in Q2 2011. Maersk Oil completed five exploration/appraisal wells compared to one in Q2 2011 and exploration costs were USD 199m (USD 214m). The average oil price was USD 108 per barrel (USD 117 per barrel). Maersk Oil entered into an agreement to acquire the remaining 30% of the Dumbarton and Lochranza fields, UK, with expected completion in the second half of 2012.
APM Terminals’ profit for the period was USD 160m (USD 162m). Throughput increased by 7% and by 5% on a likefor-like basis to 9.1m teu (8.4m teu). The West Africa region and some terminals in Asia saw double digit growth rates, whereas most European terminals experienced declining throughput in Q2. Operations in terminals affected by local political unrest or labour issues improved during the quarter. APM Terminals took further initiatives to expand the portfolio with terminals and projects in China and Mexico. An unsolicited proposal to operate all Port of Virginia’s facilities in Hampton Roads, US, was submitted.
Maersk Drilling’s profit for the period was USD 101m (USD 99m). The result was positively impacted by reversal of impairments of USD 30m and negatively impacted by two rigs requiring extensive maintenance and upgrade before start-up of operations. As a consequence of the required maintenance rig operational uptime declined to 86% (97%). A jack-up rig was ordered for USD 650m on the back of a USD 620m four year contract and a USD 610m three-year contract was awarded to a drillship currently under construction. Maersk Drilling has contract coverage of 94% of the available rig days for the remainder of 2012 and 86% for 2013.
An agreement was signed to divest the FPSO Maersk Peregrino resulting in a gain of USD 0.2bn expected to be recognised in Q3 2012.
Revenue decreased slightly to USD 29.7bn (USD 29.9bn), primarily due to lower entitlement production and lower average freight rates partly offset by higher container volumes. Profit was 22% lower at USD 2.1bn (USD 2.7bn), negatively affected by higher bunker costs and lower divestment gains, that in 2011 included divestment gains from Netto Foodstores Limited, UK, of USD 0.7bn, partly being offset by the settlement of an Algerian tax dispute of USD 0.9bn and divestment gain for Maersk LNG in Q1 2012. The Group’s ROIC was 9.5% (12.8%).
Cash flow from operating activities was USD 2.8bn (USD 4.1bn) while cash flow used for capital expenditure was USD 3.0bn (USD 2.9bn). Net interest-bearing debt increased with USD 1.3bn to USD 16.6bn (USD 15.3bn at 31 December 2011). Total equity was USD 37.0bn (USD 36.2bn at 31 December 2011), positively affected by the profit of USD 2.1bn. Dividend paid was USD 0.9bn (USD 0.9bn).
Maersk Line made a loss of USD 0.4bn (profit of USD 0.3bn). The volume increased by 15% to 4.4m FFE and average freight rates, including bunker surcharges, were 2% lower. Maersk Line implemented rate increases on most trades and a restructuring of the Maersk Line headquarter was initiated. Cash flow from operating activities was negative USD 0.1bn (positive USD 0.9bn) and cash flow used for capital expenditure was USD 2.3bn (USD 1.1bn).
Maersk Oil’s profit for the first six months was USD 1.8bn (USD 1.2bn) positively affected by the one-off tax income of USD 0.9bn from the settlement of an Algerian tax dispute and a gain from a partial divestment of interests in Brazil. This was partly offset by a decline in the Group’s share of oil and gas production of 21% to 269,000 boepd in the first half of 2012 (342,000 boepd), primarily due to a lower share of production in Qatar, Denmark and the UK. Maersk Oil completed ten (four) exploration/appraisal wells and exploration costs were USD 498m (USD 355m). Maersk Oil entered into agreement to acquire a 30% interest in the Dumbarton and Lochranza fields, UK, with expected completion in second half of 2012. Cash flow from operating activities was USD 2.2bn (USD 2.7bn) and cash flow used for capital expenditure was USD 1.1bn (USD 0.6bn).
APM Terminals made a profit of USD 395m (USD 303m) including divestment gains of USD 116m (USD 7m) before tax. Container throughput increased by 9% compared to the same period 2011, and 5% on a like-for-like basis, primarily driven by high growth rates in West Africa. APM Terminals took control of a terminal in Gothenburg, Sweden and took further initiatives to expand the portfolio with terminals and projects in China and Mexico. Cash flow from operating activities was USD 0.5bn (USD 0.4bn) and cash flow used for capital expenditure was USD 0.1bn (USD 0.4bn).
Maersk Drilling realised a profit of USD 226m (USD 221m). Extensive maintenance and upgrade of two rigs were offset by reversal of impairment of USD 30m. Several contracts were signed, giving good revenue visibility for 2012 and 2013. Cash flow from operating activities was USD 0.4bn (USD 0.4bn) and cash flow used for capital expenditure was USD 0.3bn (USD 0.3bn).
Source: Maersk