A.P. Moller - Maersk improved its revenue by 13% to US$30.9 billion and posted an underlying profit of US$356 million for 2017, according to the company’s annual report.
The performance was primarily driven by Maersk Line, and was a sharp contrast to the loss of US$496 million in 2016. However, the company was also the victim of a cyberattack in June 2017, which put a US$250-300 million dent in third-quarter profitability.
“The past year was unusual for A.P. Moller - Maersk, characterized by a cyberattack and operational challenges in a few hubs,” said Søren Skou, CEO of A.P. Moller - Maersk. “We succeeded in growing the revenue by 13%, improving cash flow and increasing underlying profits from a low 2016 base. However, the financial result shows that significant improvements are still needed. On the other hand, when we look at the strategic business transformation, progress throughout the year has indeed been satisfactory. We have taken the first steps towards the integration of our container shipping, ports and logistics businesses and our digital transformation is taking shape. At the same time, we have found new owners for part of the energy-related business units.”
Maersk Line increased its revenue by 14.9% to US$23.8 billion, driven by an 11.7% rise in the average freight rate to US$2,005/FEU. The shipping line transported 10,731,000 FEUs, 3% more than in 2016.
During the year, the company conducted US$14 billion worth of M&A transactions, including the acquisition of Hamburg Süd, an agreement to sell Maersk Oil, the sale of Maersk Tankers and the sale of Brazilian container line Mercosul.
“After a successful acquisition of Hamburg Süd, the integration is off to a good start, with both carriers growing volumes during the first months,” said Skou. “A smooth integration of Hamburg Süd remains a top priority for 2018.”
Together, the two lines have a global capacity market share of around 19%, with a total of 786 vessels and more than 4 million TEUs of container capacity. The German carrier will remain an independent brand, with only operational aspects merging with Maersk Line. Cost synergies from the merger are expected to be US$350-400 million by 2019, primarily from integrating and optimizing the networks as well as standardized procurement.
In terms of digitalization, Maersk launched several initiatives to transform its business, including Damco’s new digital freight forwarder Twill, remote container management allowing customers to monitor reefer conditions, a partnership with Microsoft for cloud computing and digital product development, and a joint venture with IBM to digitize the exchange of trade information.
To execute its vision of becoming a global integrator of container logistics, A.P. Moller - Maersk aims to focus on three elements: providing simple end-to-end solutions to meet customers’ needs, elevating the customer experience through digital innovation, and extending the company’s global presence organically and through acquisitions.