maersk’s strategy and performance group cfo trond...
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Finansforeningens Virksomhedsdag 2015
Maersk’s strategy and performance
Group CFO Trond Westlie
Forward-looking Statements
Virksomhedsdagen 2015
This presentation contains forward-looking statements. Such statements are subject to risks and uncertainties as various factors, many of which are beyond A.P. Møller - Mærsk A/S’ control, may cause actual development and results to differ materially from the expectations contained in the presentation.
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The Maersk Group Revenue, NOPAT and Invested capital split
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Note 1: Excluding one-offs, unallocated, eliminations and discontinued operations
Residual explained by Other businesses
56% 18% 9% 4% 12%
NOPAT1, FY2014 (%)
Revenue, FY2014 (%)
42% 20% 16% 9% 4%
INVESTED CAPITAL, FY2014 (%)
40% 11% 12% 15% 9%
MAERSK LINE MAERSK OIL MAERSK DRILLING APM TERMINALS APM SHIPPING SERVICES
Virksomhedsdagen 2015
Ambitions
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• The Group will create value through profitable
growth and by creating winning businesses
• The Group seeks to improve the Return on
Invested Capital by;
• Focused and disciplined capex allocation
• Portfolio optimisation
• Performance management
• The Group intends to share the value creation
by growing dividends in nominal terms and
have bought back shares
Virksomhedsdagen 2015
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Value creation - Financial performance recent 5 years
• The Group has increased the underlying
profit by 55% to USD 4.5bn (USD 4.1bn
excluding Danske Bank) since 2011 mainly
driven by improved profitability in Maersk
Line
• ROIC has gradually improved above the
target of ROIC > 10%
ROIC
Group underlying profit*
USDm
%
2,918 2,915 3,409
4,532 ~4,000
0
1,000
2,000
3,000
4,000
5,000
2011 2012 2013 2014 2015e
8.3% 8.9% 8.2%
11.0%
13.8%
0%
5%
10%
15%
2011 2012 2013 2014 Q1 2015
*Continuing business excluding net impact from divestments and impairments
Virksomhedsdagen 2015
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The Group has the ambition to deliver a ROIC > 10%
Optimising our invested capital base
Business Invested
capital (USDm)
ROIC % Q1 2015*
ROIC % Q1 2014*
ROIC % FY 2014
Group 44,580 13.8% 10.0% 11.0%
Maersk Line 19,839 14.3% 9.0% 11.6%
Maersk Oil 5,956 14.8% 21.2% -15.2%
APM Terminals 5,821 12.9% 14.0% 14.7%
Maersk Drilling 8,220 8.5% 8.1% 7.1%
APM Shipping Services
4,635 8.1% 5.2% -4.2%
Maersk Supply Service
1,691 8.8% 5.7% 11.9%
Maersk Tankers 1,582 9.0% 4.9% 6.8%
Damco 296 -11.2% -9.3% -63.2%
SVITZER 1,066 11.0% 9.4% -19.2%
Other Businesses 5,983 15.5% 6.4% 6.1%
*ROIC annualised Note. The dividend payable of USD 6.1bn is included in unallocated activities and causes a decrease in the total invested capital for the Group
Development in invested capital since Q2 2012
*ESVAGT moved from Maersk Supply Service to Other businesses **Includes receivables from the sale of Danske Bank shares
-100%
-60%
-33%
-33%
-22%
-16%
-15%
-9%
-3%
33%
109%
-100% -50% 0% 50% 100% 150%
Dansk Supermarked
Maersk Tankers
SVITZER
Damco
Maersk Supply*
Maersk Oil
Group
Other businesses**
Maersk Line
APM Terminals
Maersk Drilling
Virksomhedsdagen 2015
Investing in growth - Capital commitments
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0
1
2
3
4
5
6
7
8
9
10
2015 2016 2017-2020 2020+ Total
67% of all outstanding capital commitments by end Q1 2015 are dedicated to growth in Maersk Oil, APM Terminals and Maersk Drilling
APM Shipping Services
Maersk Line Maersk Oil APM Terminals
Maersk Drilling
USDbn
Investment in growth
USDbn
3.9
9.6
6.7 7.0
8.9 8.8
2.0
7.7
5.1
10.8
9.1
6.3
8.7
2.0
0
2
4
6
8
10
12
2009 2010 2011 2012 2013 2014 Q1 2015
Cash flow from operating activities
Cash flow for capital expenditure, gross
Capital commitments
Virksomhedsdagen 2015
Active portfolio management
Cash flow from divestments Divestment gains (pre-tax)
(USDbn)
Cash flow from divestments has been USD 11.6bn with divestment gains of USD 5.5bn pre-tax since 2009
Rosti Loksa
Sigma Baltia
Netto, UK FPSO Ngujima-Yin
Maersk LNG FPSO Peregrino US Chassis Dania Trucking
DFDS stake US BTT ERS Railways VLGC’s Handygas FPSO Curlew
Dansk Supermarked majority share 15 Owned VLCCs APM Terminals Virginia
Danske Bank stake
Selected divestments
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0.5
1.2
0.5
3.3
1.4
4.4
0.3 0.2 0.7
0.2 0.6
0.1
3.4
0.3
0.0
1.0
2.0
3.0
4.0
5.0
2009 2010 2011 2012 2013 2014 Q1 2015
Virksomhedsdagen 2015
Strategic focus on creating winning businesses
Return BELOW WACC in FY 2014 Return ABOVE WACC in FY 2014
Industry Top quartile performance in FY 2014
NOT Top quartile performance in FY 2014
BU outperform industry – but below WACC return BU outperform industry – and above WACC return
BU underperform industry and below WACC return BU underperform industry – but above WACC return
Source: Industry peer reports, Maersk Group financial reports, like-for-like with peer return calculation. Note: Industry ‘average’ and ‘top-quartile’ returns are weighted after business unit invested capital Relevant peer data for Svitzer not available due to industry consolidation
Excl. Brazilian impairment
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Virksomhedsdagen 2015
Share the value creation
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(DKKm)
0
10,000
20,000
30,000
40,000
50,000
2010 2011 2012 2013 2014 2015
Ordinary dividend Extraordinary dividend
The Group intends to share the value creation by grow dividends in nominal terms and have bought back shares
Note1: Dividend, extraordinary dividend, and share buyback in the paid year
Virksomhedsdagen 2015
Pay-out
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Maersk Line
page 11
Virksomhedsdagen 2015
Liner market environment
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• We expect industry demand growth of 3-
5% per year in 2015-2016
• We expect nominal supply to increase 5-7% p.a. during 2015-2016
• Excess capacity seem permanent
• Expect downward pressure on container freight rates where Maersk Line’s average rate has declined by 1.9% annually since 2004
Virksomhedsdagen 2015
Maersk Line’s business model is to be the cost leader
Note: Unit cost excluding gain/loss, restructuring, share of profit/loss from associated companies and including VSA income. Unit cost at fixed bunker price calculated based on 400 USD/Ton all years. Source: Maersk Line
We continue to take out costs…
2,300
2,500
2,700
2,900
3,100
3,300
Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15
Unit cost, (USD/FFE)
CAGR -7.5%
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Virksomhedsdagen 2015
Maersk Line has a vast toolbox for cost cutting…
page 14
Source: Maersk Line
Network rationalisation
Speed equalisation & Slow steaming
Improve utilisation
Container efficiency
Maersk Line-MSC VSA
Improve procurement
Inland optimisation
Deployment of larger vessels
Retrofits
Virksomhedsdagen 2015
50% 9% 41%
Maersk Line capacity (TEU)
North-South East-West Intra Capacity market share no. Market position
Intra Asia
Pacific Atlantic Asia-Europe Pacific
Latin America
Africa West- Central Asia
Oceania
Intra Europe
no.3 no.2
no.2 no.1 no.1
no.1
no.1
no.3
no.3
28%
23% 5%
17% 19% 15%
7%
14%
no.4
no.3
8%
Note: West-Central Asia is defined as import and export to and from Middle East and India Source: Alphaliner as of 2014 FY (end period), Maersk Line
Maersk Line Capacity market share by trade
page 15
Virksomhedsdagen 2015
page 16
Source: Maersk Line
page 16
Profitability is increasing
-12.7
4.6
9.7
6.5
4.0
8.5
10.9
6.2
9.0
10.8
13.5 13.0
14.3
-16%
-12%
-8%
-4%
0%
4%
8%
12%
16%
Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15
Quarterly LTM
ROIC, (%)
Virksomhedsdagen 2015
Maersk Line
APL
CSCL
CMA
Hanjin
COSCO
Hapaq Lloyd Hyundai
MOL
NYK
K Line
OOCL
ZIM
Evergreen
Yang Ming
Wan Hai
SITC
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
0 500 1,000 1,500 2,000 2,500 3,000
Average capacity 2012-2014, (‘000 TEU)
Economy of scale is a driver of liner profitability
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Note1: EBIT-margin excludes gains/losses, restructuring costs, share of profit/loss from JV Note2: MSC and Hamburg Süd EBIT margin are unknown, UASC’s FY14 financials are not available Note3: FY2012-2014 average numbers Note4: Hapag Lloyd’s FY14 EBIT margin includes 1 month of CSAV data as the integration was completed in Dec 2014. Capacity includes CSAV’s capacity. Source: Company Reports, Alphaliner
Average EBIT-margin 2012-2014, (%)
Regional focus Global scale leaders
Virksomhedsdagen 2015
Maersk Oil
page 18
Virksomhedsdagen 2015
Maersk Oil Entitlement Production, 2014
Hydrocarbon type (%)
Location (%)
Operatorship (%)
OECD/non-OECD (%)
0
20
40
60
80
100
2014
0%
20%
40%
60%
80%
100%
2014
0%
20%
40%
60%
80%
100%
2014
0
20
40
60
80
100
2014
Oil Gas
Shallow water
Onshore Operated Operated by others
OECD Non-OECD
page 19
Deepwater
Virksomhedsdagen 2015
Maersk Oil’s exploration costs* (USDm)
Maersk Oil’s share of production (‘000 boepd)
Maersk Oil’s share of Production and Exploration Costs
*All exploration costs are expensed directly unless
the project has been declared commercial
page 20
0
100
200
300
400
500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e
DK UK Qatar Algeria Other
321
387 424 429
377
333
257 235
251 >265
229
404
831
676 605
990 1,088
1,149
765 ~0.7bn
0
200
400
600
800
1,000
1,200
1,400
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e
Virksomhedsdagen 2015
Maersk Oil’s portfolio
1) Development of oil resources in the Greater Gryphon Area (Quad 9) before initiating the Gas Blowdown project in the area (UK) 2) Southern Area Fields cover Dan Area Redevelopment and Greater Halfdan FDP projects (Denmark) 3) The Plan for Johan Sverdrup (Norway) Development and Operation (PDO) has been submitted in Q1 2015 for authority approval 4) Phase 2 of the Johan Sverdrup development (Norway) is expected to commence production in 2022
>100 mmboe 50-100 mmboe <50 mmboe
Bubble size indicates estimate of net resources:
Primarily oil Primarily gas Discoveries and prospects (Size of bubbles do not reflect volumes)
Colour indicates resource type:
Uncertainty
Initiate & Discoveries Assess Select Define Execute Assets
Project Maturation Process Exploration
75
Prospects in the pipeline
7 28 15 8 15
Production Reserves Resources
Total no. of projects per phase
Total of 75 exploration prospects and leads in the exploration pipeline
Johan Sverdrup I3)
Swara Tika
Courageous
Flyndre & Cawdor
Greater Gryphon Area1)
Culzean
Jackdaw
Wahoo
Itaipu
Tyra Future
Tyra SE
Zidane Valdemar WI
Jack II
Al Shaheen FDP 2012
UK
Algeria
Chissonga
Denmark
Kazakhstan
Qatar
Dunga III
Buckskin
Farsund USA
Brazil
Southern Area Fields2)
Total
Johan Sverdrup II4)
page 21
Virksomhedsdagen 2015
page 22
Maersk Oil initiatives
• Ambition to reduce OPEX by 20% end-
2016
• Exploration costs reduced by 30%
• Capitalise on pipeline of projects
• Tender for prolongation of the Al-Shaheen
area in Qatar
• Considering M&A
Virksomhedsdagen 2015
page 23 page 23
APM Terminals
Virksomhedsdagen 2015
Project example
– existing terminal expansion
• APM Terminals Callao, Peru • To be completed in 2015 • Investment of USD 0.7bn modernizing
the multi-purpose terminal into a world-class facility, handling container, bulk, Ro/Ro, general cargo and cruise vessels
page 24
Virksomhedsdagen 2015
Diversified Global Portfolio
page 25 page 25 page 25
Americas,
19%
Europe,
Russia and Baltics, 30% Asia, 30%
Africa and
Middle East, 21%
Container throughput by region (equity weighted crane lifts, %)
13
31
25
18
22
0
5
10
15
20
25
30
35
Americas Europe,Russia and
Baltics
Asia Africa andMiddle East
Totalportfolio
Average remaining concession length in years
Total throughput of 38.3m TEU per year
APM Terminals Tangier, Morocco
page 25
Virksomhedsdagen 2015
page 26 page 26 page 26
Note: Figures have been restated under IFRS 12
0
200
400
600
800
1,000
2009 2010 2011 2012 2013 2014
Underlying Segment Result One-offs
NOPAT (USDm)
0%
4%
8%
12%
16%
20%
0
1,500
3,000
4,500
6,000
7,500
2009 2010 2011 2012 2013 2014
Invested Capital ROIC ROIC excl. One-offs
Average Invested Capital/ROIC (USDm)
CAGR 15.6%
CAGR 5.8%
page 26
Virksomhedsdagen 2015
Maersk Drilling
page 27
Virksomhedsdagen 2015
page 28
Forward contract coverage
reduces near term exposures
Maersk Drilling forward contract coverage
page 28 page 28
86%
61%
32%
0%
20%
40%
60%
80%
100%
2015 2016 2017
Note: As per end of Q1 2015
page 28 page 28
Virksomhedsdagen 2015
Final remarks
The Group reported strong financials for 2014 and Q1 2015.
We will continue to create value through;
• Profitable growth
• Creating winning businesses
• Portfolio optimisation
• Focused and disciplined capital allocation
and we will continue to share the value with our shareholders.
Maersk Line vessel calling Namibia
page 29
Virksomhedsdagen 2015
page 30
Questions, please
Henrik Lund Johan Mortensen Maja Schou-Jensen Head of Investor Relations Senior Investor Relations Officer Investor Relations Officer [email protected] [email protected] [email protected] Tel: +45 3363 3106 Tel: +45 3363 3622 Tel: +45 3363 3639