Maersk profit plunges as oil, container units both suffer

FEB 10, 20163:38 PM

[COPENHAGEN] AP Moeller-Maersk A/S reported an 84 per cent plunge in 2015 profit after its oil unit was hit by lower energy prices and its container division got squeezed between sluggish trade growth and overcapacity.

Maersk said net income was US$791 million last year compared with US$5.02 billion in 2014. That compares with a median estimate of US$3.7 billion in a Bloomberg survey of 16 analysts.

The result includes a writedown in the value of Maersk's oil assets by US$2.6 billion, the Copenhagen-based company said.

"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," chief executive officer Nils Smedegaard Andersen said in the statement.

"We will continue to strengthen the Group's position through strong operational performance and growth investments."

In October, Maersk started cost cut programs for both of its two biggest units to address what analysts have described as a perfect storm for the conglomerate, which historically has found support from positive market conditions for at least one the two divisions.

Maersk said Wednesday that 2016's underlying profit will be "significantly below" last year's US$3.1 billion.

The Maersk Line unit's profit will also be "significantly below" 2015's level, which was US$1.3 billion. Maersk Oil will report a loss this year, it said.

The unit currently breaks even when oil prices are in a range of US$45 to US$55 a barrel, the company said.

BLOOMBERG