Liner overcapacity, murky outlook press Maersk

A.P. Møller - Mærsk Group (OMX: MAERSK A, OMX: MAERSK B) released its Q4 2011 and annual report this morning. The Danish business conglomerate’s yearly revenue was 322.5 billion Danish kroner (~ 45 billion Euros or 60 billion USD), which was 2% more than in 2010. EBITDA and EBIT were both down round about 10% to 78.5 and 50 billion. Net profit was just 18 million. Q4 numbers in USD were as follows: revenue was just below 15 billion, EBITDA 3.07 billion, EBIT 1.68 billion and net profit 273 million

Maersk Line posted an annual loss of 0.6 billion USD primarily resulting from low rates on the Asia-Europe route. It did however manage to gain market share and has recently told of measures to address the situation. Overall freight rates were 8% lower where as bunker prices (ship fuel) were up 35%. The expected result of 2012 is negative on excess capacity that is expected to increase a further 4-6% in 2012.

Maersk Oil made a profit of 2.1 billion USD in 2011 with a 330 000 boepd produced at an average price of 111 USD per barrel. Maersk bases its Maersk Oil result prognosis on an oil price of 105 USD per barrel. The result is expected to weaken clearly in 2012 based on a 20% decline in the share of oil and gas production to around 265,000 boepd.

APM Terminals, Maersk Drilling and Maersk Supply Service profits were up to 649, 495 and 210 million USD respectively. Maersk Tankers had a difficult year with a 151 million loss. Maersk Retail ( such as Dansk Supermarked Group) had a profit of 5.3 billion DKK (nearly 1 billion USD) with most of it coming from a 3.8 billion gain from the divestment of Netto Foodstores Limited, UK.

Svitzer’s profits grew slightly to 133 million SD where as Maersk FPSOs and Maersk LNG’s results were near break-even. Maersk LNG 1.4 billion USD divestment is expected to be completed in Q1 2012. Damco continues to grow its offering within the airfreight market and have a profit of 65 million USD.

The group considers the overall result acceptable considering the shipping rates decline during the year. The outlook for 2012 is once again challenging with significant uncertainty. The result should be positive but lower than in 2011, while cash flow generation should be in line with 2011. Sensitivities tables are available within the annual releases. The stock has lost 3.5% to trade below 44 000 DKK.