A.P. MØLLER HOLDING A/S ANNUAL ANNUALREPORT REPORT 2019 · MANAGEMENT REVIEW
LETTER FROM THE CEO
The A.P. Moller Group reflects on another eventful year. Financially, it ended on a fairly satisfactory note, with a 2019 revenue of DKK 275bn, a net result of DKK 6.6bn and consolidated assets of DKK 462bn (consolidated equity of DKK 263bn). A.P. Moller Holding, the Group’s parent company, remains debt free and saw a net cash inflow of DKK 5.1bn. The gap between book value of equity and market value of equity was reduced during the year, although portfolio company returns have to improve further for such discount to be completely removed. While the overall financial figures and year-on-year development paint a relatively rosy picture, and we acknowledge the many positive steps taken over the last year to strengthen our portfolio companies’ market position and the balance sheets of the Group, we are mindful of the recent, very negative developments and dark clouds on the horizon, resulting from the COVID-19 pandemic. ROBERT M. UGGLA CEO
A.P. MOLLER - MAERSK TURNS A PAGE Our portfolio’s single biggest holding, A.P. Moller - Maersk, concluded its separation process in 2019. The objective has been to create sufficient focus on the various businesses, which have their
own set of opportunities and challenges, to increase capital discipline and enhance agility. This means that companies like Maersk Tankers and Maersk Drilling now operate with their own management teams and boards, who have relevant expertise in these specific industries. We believe all our group companies will continue to benefit from being part of the A.P. Moller Group, which encompasses a deep network of talent and know-how, but is based on a structure of independent companies, and not a corporate conglomerate. Moreover, following A.P. Moller - Maersk’s sale of Maersk Oil, our Group has divested the portfolio’s single biggest exposure to hydrocarbons, including the abandonment liabilities of our oil activities, seemingly at an opportune point in the cycle. A.P. Moller - Maersk’s strategy entails leveraging the liner activities’ customer footprint, to provide an enhanced service and build a stronger presence ashore, through continued investments in the terminal and related infrastructure activities and in container related logistics. The financial merits of investments in infrastructure activities are well proven at this point, and we recognise the continued good performance of A.P. Moller Terminals in 2019, while the logistics acquisitions carry more uncertainty, as it is an area where A.P. Moller - Maersk has less of a record. With this in mind, we are encouraged by the approach of A.P. Moller - Maersk to make small logistics investments initially, to assess how to best adjust the operating model and harness promising synergies. As owners, we are also glad to see the increased capital discipline of A.P. Moller - Maersk, which is vital for the company in the coming period of great macro-economic uncertainty and slowdown in trade. While the demerger of Maersk Drilling has started out as a bumpy ride, and with more headwind in 2020’s depressed oil environment, we are grateful that the company has been separated from the container related activities allowing sufficient focus on its own activities. Maersk Drilling has a strong team in place, second to none balance sheet, a fairly robust backlog of contracts and a dedicated Board of Directors. The latter is not just highly qualified, but also one of the most diverse boards of all listed companies in Denmark.
5
