Maersk shares sink as profits take a hit from impairment charges
Shares in Maersk sank in morning trading after the company reported a huge loss in 2016 due to impairment charges caused by oversupply and low demand.
The figures
AP Moller-Maersk fell to the bottom of the Stoxx 600 index this morning after reporting an annual loss of $1.9bn (£1.5bn) compared with a profit of $925m the previous year.
The Danish shipping and oil group's profits were hit by post-tax impairment charges of $1.5bn at Maersk drilling and $1.1bn at Maersk Supply Service.
Shares fell as much as six per cent in morning trading.
Earnings before interest, tax, depreciation and amortisation of $1.5bn fell short of analysts' expectations of $2.01bn, according to Reuters, and revenue of $8.89bn was also below targets of $9.54bn.
However, the group said it expects its net profit for this year to be higher as global demand for seaborne container transportation is set to grow by two to four per cent in 2017.
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Why it's interesting
Maersk announced a major restructuring plan last September to combat oversupply and low prices in the oil and freight industries.
For 2017, we expect AP Moller-Maersk to deliver an underlying profit above 2016
Chief executive Soren Skou said headwinds in "all of our markets" made for a difficult year financially, however he said the company is working to "substantially" transform Maersk and grow revenue. Skou, former boss of Maersk Line, was promoted to the group's helm in June.
Maersk will focus on building up its transport and logistics operations while creating a separate energy division to combine Maersk Oil and three related companies.
The company also announced that chairman of the board Michael Pram Rasmussen will step down at the end of March, after 14 years in the position, to be replaced by Jim Hagemann Snabe.
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What Maersk said
Chief executive Soren Skou said: "Our top priorities for 2017 remain integrating our transport and logistics businesses, taking out cost in APM Terminals and Damco, closing the Hamburg-Süd acquisition, as well as progressing the work on finding structural solutions for each of our oil and oil-related businesses.
"For 2017, we expect AP Moller-Maersk to deliver an underlying profit above 2016, mainly driven by an improvement in underlying profit in excess of $1bn in Maersk Line compared to 2016."
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