A.P. MØLLER HOLDING A/S ANNUAL REPORT 2019 · MANAGEMENT REVIEW
MAERSK PRODUCT TANKERS Maersk Product Tankers delivered a profit of USD 92m (loss of USD 33m) mainly due to improved market conditions across all product tanker vessel segments and positive sales gains.
Maersk Product Tankers, established in 2017 as a joint venture between A.P. Moller Holding and Mitsui & Co., is a leading company in the product tanker industry and owns one of the largest fleets in the industry with more than 80 vessels in the LR2, MR, Handy and intermediate segments. EXECUTIVE BOARD • Christian M. Ingerslev (CEO) • Morten M. Christensen (CFO) • Claus Grønborg • Prakash Thangachan • Søren C. Meyer • Tommy Thomassen BOARD OF DIRECTORS • Robert M. Uggla (Chairman) • Paul J. Reed (Vice Chairman) • Ibrahim Gokcen • Maria Pejter • Martin N. Larsen • Tatsuya Okamoto
THE YEAR IN BRIEF The product tanker market improved across all segments in 2019 and Maersk Product Tankers delivered an improved financial result, solid safety performance and continued to reduce its CO2 emissions. Maersk Product Tankers saw the positive impact of reduced vessel running costs from USD 5,696 per day compared to USD 6,055 per day in 2018 on average. This was achieved through optimised procurement agreements, increased cost transparency and focus, as well as the use of new technology. Maersk Product Tankers remains committed to continue to work with the cost base. Market rates had a solid start to the year followed by a more natural seasonal pattern, before again gaining momentum towards the
end of Q3 and throughout Q4 2019. The positive development in rates was impacted by several factors, amongst others, continued growth in demand, imposed sanctions limiting the supply of vessels towards the end of 2019 and the implementation of new low sulphur regulations (IMO 2020), increasing the transported distances. The market is characterised by significant volatility and is expected to continue to fluctuate going forward. While markets have benefited from greater tonne-miles demand and a slow growth in operational vessel capacity in the early part of 2020, the outlook for the full year is uncertain. The outbreak and spread of COVID-19 and countries’ containment measures have led to global reductions in transport, industrial and commercial activity. This has caused a decline in the demand for oil and could eventually affect product tanker markets and freight rates. During 2019, Maersk Product Tankers continued its fleet renewal strategy with the focus to remain competitive and enable attractive solutions for its customers. During the year, the company confirmed the order of four LR2s and acquired seven second hand Handy vessels and one MR, while divesting a total of 12 vessels
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