Maersk Tankers A/S

Maersk Tankers delivered an unsatisfactory loss of USD 523m (USD 62m) due to challenging market conditions across most product tanker vessel segments

ABOUT Maersk Tankers is a leading company in the product tanker industry, transporting refined oil products globally. The company operates one of the largest fleets in the industry, comprising 164 vessels, of which 82 vessels are owned, and employs 2,300 people worldwide.

A.P. Moller Holding holds a 100% ownership stake in Maersk Tankers A/S. Maersk Tankers separated out its shipping assets into Maersk Product Tankers A/S during 2017. STRATEGY REVIEW Established in 1928, Maersk Tankers has nine decades of experience and expertise in providing safe, reliable and flexible services to customers, which are oil majors and trading houses.

The fleet trades in five vessel segments: Intermediate, Handy, Medium-Range (MR), Long-Range 2 (LR2), and Aframax.

Maersk Tankers’ strategy is to deliver industryleading commercial performance, cost leadership and be the preferred partner for vessel management. The use of algorithms in commercial decisionmaking enables the company to optimally position vessels where the customers need them the most and in markets that can yield the highest earnings.

Through cost leadership, Maersk Tankers is reducing costs by creating higher efficiencies in systems and processes and improving procurement leverage.

By commercially managing vessels, Maersk Tankers provides partners with the opportunity to increase earnings as well as flexible and transparent services while achieving scale and income for Maersk Tankers.

The strategy is enabled by digitisation, combining algorithmic trading with commercial expertise to strengthen service offerings, generate new revenue streams and reduce costs.

Maersk Tankers’ order book stands at nine MR product tanker vessels to be delivered in 2018—2019 as well as an optional order of 10 LR2s. REVENUE (USDm)

1,625

1,175 1,058 877 874

2013 2014 2015 2016 2017

EBITDA (USDm)

21 271 297

199

89

2013 2014 2015 2016 2017

UNDERLYING PROFIT (USDm)

139 156

58

-47

-172 2013 2014 2015 2016 2017

FREE CASH FLOW (USDm)

971 882

106

-10

40

2013 2014 2015 2016 2017

THE YEAR IN BRIEF The fundamentals for the product tanker market across all vessel segments continued to be challenged in 2017.

Maersk Tankers reported a revenue of USD 874m (USD 877m) and a negative underlying loss of USD 47m (profit of USD 58m).

Maersk Tankers reported a total of six Lost Time Incidents (LTI) and a Lost Time Incident Frequency (LTIF) of 0.42.

In September 2017, A.P. Moller Holding acquired Maersk Tankers for USD 1,171m in an all-cash transaction with the potential of a contingent consideration reflecting market developments in the coming two years.

After the competition authority clearance in March 2018, Maersk Tankers A/S and Maersk Product Tankers A/S were separated and Mitsui & Co. Ltd. acquired 30% of the shares in Maersk Product Tankers A/S. The transaction closed on 6 April 2018.

FINANCIALS Maersk Tankers reported a loss for the year of USD 523m and a ROIC of -32.3%. The result was negatively impacted by an impairment of USD 465m and by challenging market conditions, which was partly offset by improved commercial performance and efficiency improvements.

Cash flow from operating activities was USD 23m (USD 178m). Net cash flow from capital expenditure was USD - 17m (USD 188m) driven by newbuilding instalments, partly offset by the sale of four vessels. EXECUTIVE LEADERSHIP • Christian M. Ingerslev (CEO) • Henrik K. Jakobsen (CFO) • Claus Grønborg • Tommy Thomassen • Søren C. Meyer • Prakash Thangachan

BOARD OF DIRECTORS • Robert M. Uggla (Chairman) • Paul Reed (Vice Chairman) • Martin Larsen • Maria Pejter

HIGHLIGHTS

Maersk Tankers entered into a strategic partnership with Boston-based hedge fund CargoMetrics to support their digital strategy.

Maersk Tankers will, in a partnership with Norsepower, ETI and Shell, install and trial Flettner rotor sails onboard a Maersk Tankers operated LR2 vessel. This will be the first installation of wind-powered energy technology on a product tanker vessel and is estimated to reduce fuel consumption and associated CO2 emissions on typical shipping routes by 7—10%. The rotor sails will be fitted during 2018, before undergoing testing and data analysis at sea.

Maersk Tankers took delivery of the first out of nine MR tanker vessels in their new building programme from Dalian yard in Q1 2018.