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Maersk profits fall due to "challenging market"

COPENHAGEN: February 10, 2016. The Maersk Group has reported an underlying profit* of US$3.1 billion in 2015 on a 15 percent drop in revenue to US$40.3 billion. Pre-tax profit for the year fell 73 percent to US$1.44 billion and net profit fell 83 percent year-on-year to US$925 million.

Maersk Line saw its underlying profit decline to US$1.3 billion from US$2.2 billion in the prior year due to “significantly lower freight rates, in particular in the second half of the year, only partially offset by lower bunker prices, U.S. dollar appreciation and cost efficiencies”.

Maersk ship recyclingDuring the year, the company placed orders for 27 newbuilds with a total capacity of 367,000 TEU; postponed further investments due to weak market conditions; and completed its East-West network sharing agreement with the Mediterranean Shipping Company with the phase-in of 193 vessels.

APM Terminals reported a drop in underlying profit to US$626 million from US$849 million due to lower volumes particularly in West Africa, Russia and Brazil that were partly compensated by revenue improvement and cost saving initiatives.

Damco, part of APM Shipping Services, turned around an underlying loss of US$225 million in 2014 on revenue of US$3.2 billion to an underlying profit of US$15 million last year on a drop in revenue to US$2.7 billion - largely caused by exchange rate movements.

The company saw margin gains in both air and ocean business segments while ocean freight volumes dropped 9.0 percent year-on-year and airfreight fell 4.0 percent in the same period. Damco’s supply chain management volumes rose 5.0 percent compared to 2014 as the company continued to benefit from a two-year program of restructuring.

Maersk Group CEO Nils Andersen expressed satisfaction with the group's overall result last year despite what he described as challenging market conditions: “Given our expectation that the oil price will remain at a low level for a longer period, we have impaired the value of a number of Maersk Oil’s assets by US$2.6 billion after tax. We will continue to strengthen the group’s position through strong operational performance and growth investments,” he added.

Andersen said the group’s 2016 performance is subject to considerable uncertainty, not least due to developments in the global economy, container freight rates and the price of oil. As a result he expects the underlying result to be “significantly below last year”.

*A term used to describe the actual reflection of a company's profit and not the required accounting profit that is recorded on financial statements.

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