A topsy-turvy 2017 saw Maersk deliver an underlying profit for its continuing operations of US$356m, compared to a loss of US$496m the previous year, although this fell significantly below expectations.
An underlying profit of US$425.4m had been forecast while operating profit reached US$641m, far below the estimate of US$1.03bn.
Søren Skou, CEO of A.P. Moller – Maersk, stated: “The past year was unusual for A.P. Moller – Maersk, characterized by a cyber-attack and operational challenges in a few hubs.
“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.”
Maersk Line and Damco were severely impacted by a cyber-attack in the third quarter of 2017 although the shipping line recovered quickly with strong volume growth and near all-time low unit costs toward the end of the year.
During the year, the conglomerate took multiple steps towards integrating its container shipping, ports and logistics businesses while it sold off several energy-related business units.
The company recorded US$14bn worth of transactions including the acquisition of Hamburg Süd and the sale of Brazilian cabotage carrier Mercosul Line.
Stronger cooperation between Maersk Line and APM Terminals generated the first integration synergies of around US$100m despite negative impact from the cyber-attack and operational challenges in key hubs.
Cost synergies from the Hamburg Süd deal are expected to be between US$350-400 m by 2019, primarily from integrating and optimising the networks as well as standardised procurement.
Together the two carriers have around 19% of global capacity market share – more than 4m teu. The Germany-based carrier will remain an independent brand, with only operational aspects merging with Maersk Line.
Skou added: “The integration is off to a good start, with both carriers growing volumes during the first months. A smooth integration of Hamburg Süd remains a top priority for 2018.”
Last year, a series of digital initiatives were launched during the year to accelerate the transformation of the industry from legacy paper-based, to digital customer-centric processes and services, enabling new product offerings.
These include the launch of Twill, a digital freight forwarder and Remote Container Management (RCM) for reefer customers; a partnership with Microsoft for cloud computing and digital product development; and a blockchain-based joint-venture with IBM to digitise the exchange of trade-related information.