A.P. Moller – Maersk, considered the world’s largest ocean cargo carrier, delivered a loss of $1.9 billion in the year ended Dec. 31 compared to a profit of $925 million in 2015, the company said Wednesday.
At the same time, Maersk chairman Michael Pram Rasmussen said he would step down effective March 28. Coinciding with the company’s annual meeting. The Maersk board said it intends to elect Jim Hagemann Snabe to succeed Rasmussen. Hagemann joined the company’s board last year.
Revenue at Maersk Group decreased 13.5 percent to $35.5 billion from $40.3 billion a year earlier, mainly due to lower average container freight rates and lower oil prices.
Maersk Group chief executive officer Søren Skou said 2016 was a difficult year financially, with headwinds in all markets.
“However, it was also a year when we decided to substantially transform A.P. Moller – Maersk for the future,” Skou said. “We have set a new course that over the next few years will lead A.P. Moller – Maersk to become a focused container shipping, logistics and ports company with the aim of growing revenue again.”
Skou attributed the loss to its Maersk Line, Maersk Drilling and Maersk Supply Service units that resulted from significant oversupply and reduced long-term demand expectations.
“Our top priorities for 2017 remain integrating our Transport & Logistics businesses, taking out cost in APM Terminals and Damco, closing the Hamburg Süd acquisition, as well as progressing the work on finding structural solutions for each of our oil and oil-related businesses,” he said. “For 2017, we expect A.P. Moller – Maersk to deliver an underlying profit above 2016, mainly driven by an improvement in underlying profit in excess of $1 billion in Maersk Line compared to 2016.”
Skou said the demand for transportation of goods grew below expectations in the first half of the year, leading to significant downward pressure on freight rates. In the second half of the year and especially in the fourth quarter, demand increased while deliveries of new capacity were reduced, which led to a gradual improvement of freight rates.
“The difficult business environment during the year enabled industry consolidation and a major container carrier went out of business, while Maersk Line continued its cost leadership strategy and gained significant market shares,” Skou added. “The consolidation in the container shipping industry, as well as the challenging oil price environment had a negative impact on earnings in APM Terminals, who over the past years has been significantly expanding its terminal network, particularly in emerging and oil-dependent economies.”
Maersk Line recorded a loss of $376 million compared to a profit of $1.3 billion in 2015. Maersk Line reached an agreement on Dec. 1 to acquire Hamburg Süd, the German container shipping line. Hamburg Süd is the world’s seventh-largest container shipping line and a leader in the North-South trades.