AP Moller-Maersk Earnings Hit by Perfect Storm

Danish conglomerate AP Moller-Maersk A/S swung to a hefty fourth-quarter net loss after battling a perfect storm, as a sharp decline in freight rates hit its key shipping business and its oil business came under pressure from the multiyear lows of crude oil prices and a $2.5 billion impairment.

Its net loss for the quarter ended Dec. 31 was $2.51 billion compared with a profit of $189 million a year earlier, with analysts polled by FactSet expecting a profit of $305 million. Full-year underlying profit was $3.1 billion, shy of previous company guidance of $3.4 billion.

Freight rates hit all-time lows in the quarter and declined across all trade routes, especially its key European and Latin American lines, it said. Its Maersk Oil unit took a $2.5 billion impairment charge, primarily related to production assets in Kazakhstan, Kurdistan and the U.K. as well as deep water assets in Angola and Brazil.

Maersk Line, the world's largest container operator by capacity and the company's biggest earner, weighed on fourth-quarter earnings after posting a $182 million loss, having contributed $655 million in the year-earlier quarter. Maersk Oil reported net losses of $2.52 billion in the quarter, compared with a loss of $32 million. Group revenue fell 22% to $9.13 billion.

Maersk Line expects a 2016 underlying result significantly below last year as a consequence of the significantly lower freight rates going into 2016 and continued low growth with expected global demand for seaborne container transportation to increase by just 1%-3%.

Maersk Oil expects a negative underlying result in 2016, with the unit needing oil prices to hit $45-$55 a barrel to break-even.

The group maintained its full-year dividend at 300 Danish kroner ($45.34) a share.

Write to Dominic Chopping at [e-mail]

(END) Dow Jones Newswires

February 10, 2016 03:15 ET (08:15 GMT)

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