The Danish conglomerate said one division will focus on transport and logistics, while the other division will focus on energy.
The Danish conglomerate A.P. Møller – Maersk A.S said Thursday its business will be split into two independent divisions, one focusing on transport and logistics, and the other focusing on energy.
A.P. Møller – Maersk said it will become “an integrated transport and logistics company with digitalized and individualized customer solutions” that will include the world’s largest container shipping company Maersk Line, APM Terminals, the forwarding and logistics business Damco, the towing and salvage company Svitzer, and the container manufacturer Maersk Container Industry.”
Maersk Oil, it said, “will require different solutions for future
development, including separation of entities individually or in
combination from A.P. Møller – Maersk A/S in the form of joint-ventures,
mergers or listing. Depending on market development and structural
opportunities, the objective is to find solutions for the oil and oil
related businesses within 24 months.”
The decision came after a June 23 announcement that the board of directors had named Søren Skou as chief executive officer, replacing Nils S. Andersen, who had led the company for eight years.
The company said Skou will continue as group CEO of A.P. Møller – Maersk A/S and CEO of the transport and logistics division.
Speaking to investment analysts today, Skou said Maersk plans to grow the market share of its shipping business, saying that the company has evolved over the past five years from saying it was going to grow at the same rate as the market.
“Last year, we upgraded so to speak to growing at least in line with the market and now we are saying we want to grow market share.”
He said the company will grow organically and also consider acquisitions if the right opportunities develop.
Maersk is the leading container carrier in both market share and in terms of profitability. Skou said, “we have, over the last five years, built a license to grow.”
He also noted there is a wave of consolidation going on in container shipping with CMA CGM’s acquisition of NOL/APL, Hapag-Lloyd’s acquisition of UASC, the merger of COSCO and China Shipping, and Hanjin filing for receivership Aug. 31.
“We want to make sure we maintain our leading position in the industry,” Skou explained.
He said the group intends to create cost synergies by combining functions that are handled separately by different business units today, using digital solutions that will allow customers to increasingly “self serve,” creating cost savings using the so-called “toolbox” Maersk Line has developed, and improving unit costs by increasing utilization of assets.
Skou said that within the next few years, Maersk will be investing massively in digitization of its businesses.
He said there is a significant opportunity not just to reduce costs, but to “provide a much better customer experience and enable us to build a platform for hopefully new revenue streams on maerskline.com in the coming years.”
In terms of revenues, A.P. Møller –
Maersk is the largest public company in Denmark with revenues of $40 billion and the only Danish company on the Global 500 of Fortune magazine, taking the 240th slot.
In June, the board asked management to look at options for “generating growth, increasing agilities and synergies, and
unlocking and maximizing shareholder value with the long-term view,” culminating in today’s announcement.
“The industries in which we are operating are very different, and
both face very different underlying fundamentals and competitive
environments,” Michael Pram Rasmussen, the chairman of the board of A.P. Møller – Maersk said today. “Separating our transport and logistics businesses, and our
oil and oil related businesses into two independent divisions will
enable both to focus on their respective markets. This will increase the
strategic flexibility by enhancing synergies between businesses in transport and logistics, while ensuring the agility to pursue
individual strategic solutions for the oil and oil related businesses.”
The company noted that since 2008, A.P. Møller – Maersk has “focused on building a lean transparent
global conglomerate with each business unit operating on arm’s-length
principles.”
But in today’s announcement, it said “managing and operating the business activities in transport
and logistics in a more integrated manner will enable profitable
growth through stronger collaboration and disciplined capital
allocation.”
In its transport and logistics business, the conglomerate said, “commercial as well as cost synergies will be unlocked by better
utilization of existing assets and by the development of new digital
solutions. We expect to deliver revenue growth, cost efficiency and
margin improvements. The estimated synergies are expected to generate up
to two percentage points ROIC improvement over a period of three years.
No material synergies are expected in 2016.”
The new energy division will include Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers.
Maersk said, “long term growth in energy demand and sharp reductions in investments
in the global E&P exploration and production industry in recent years, leading to an expected
reduction in oil supply in the coming years, provide opportunities to
grow Maersk Oil based on the company’s key technical competencies.
Maersk Oil will adjust its current strategy to focus its portfolio in
fewer geographies to gain scale in basins, particularly in the North
Sea, where it can leverage its strong capabilities within subsurface
modeling, well technology and efficient operations. Maersk Oil will aim
to strengthen its portfolio through acquisitions or mergers.”
The company has also announced a management shake-up with several of its most senior executives leaving.
Within the next few months:
• Claus V. Hemmingsen will be appointed group vice CEO of A.P. Møller – Maersk A/S and CEO for the energy division Oct. 1;
• Jakob Stausholm will be appointed Group CFO of A.P. Møller – Maersk A/S Dec. 1;
• Group CFO Trond Westlie will step down Dec. 1 as member of the registered management and leave the group;
• Jakob Thomasen will step down as member of the registered management and CEO of Maersk Oil Oct. 1 and will leave the group Nov. 1;
• Kim Fejfer will step down as member of the registered management Oct. 1 and as CEO of APM Terminals Nov. 1 when he will also leave the group;
• And the new CEO of APM Terminals will be Morten Engelstoft Nov. 1, who is currently CEO of APM Shipping Services and CEO of Maersk Tankers.
