Bringing opportunity and growth to every corner of the world
For A.P. Moller - Maersk, 2018 was a year of building the foundation for our future business, and we have made significant progress on the transformation of A.P. Moller - Maersk.
The transformation of A.P. Moller - Maersk was initiated in 2016, based on our strategy to focus A.P. Moller - Maersk on becoming the global integrator of container transportation and logistics to enable global trade in an efficient, simple and sustainable way.
Since the announcement of the new strategy, we have worked hard to change the company from being a diversified conglomerate with individual business units in different industries to become an integrated and focused company leading the transforming of the transportation industry.
Laying the foundation for growth and development
In 2018, we completed the process of finding new structural solutions for the majority of the energy-related businesses, which will enable them to continue to develop and grow under new ownership structures.
The sale of Maersk Oil to oil major Total S.A. was completed in March. The new owner is financially strong and has a long-term interest in the industry. Total S.A. has made Denmark a hub for Total S.A.’s North Sea activities, ensuring the best possible foundation for the continued development of the people, capabilities and assets of Maersk Oil and, not least, the Danish North Sea shelf.
In August 2018, we decided to pursue a demerger of A.P. Moller - Maersk via a separate listing of Maersk Drilling on Nasdaq Copenhagen in 2019, which will offer our shareholders the opportunity to participate in the continued development of Maersk Drilling.
Maersk Drilling owns and operates a fleet of 23 mobile offshore drilling rigs specialising in harsh environment and deepwater operations and is recognised for its safe, efficient, and reliable drilling services to some of the leading and most innovative oil and gas companies around the world. With superior financial uptime compared to peers, reflecting the company’s focus on consistency, safety and reliability, Maersk Drilling is positioned as the contractor of choice among E&P operators. Maersk Drilling’s management has done a remarkable job in preparing the company to operate as a standalone company and is organisationally and financially well-prepared for a listing.
Maersk Supply Service progressed on their divestment programme and strategy to diversify its business into new markets in 2018, and the pursuit of the long-term solution will continue. However, the timing for defining a solution remains difficult to predict due to the continued challenges in their core market.
The core of A.P. Moller - Maersk’s transformation is enhanced customer service and added value for our investors. Furthermore, it is important that A.P. Moller - Maersk maintains a strong financial position with a solid capital structure to be able to pursue the necessary investments through this process. During 2018 the net interest-bearing debt has been reduced by around USD 6bn to USD 8.7bn, through free cash flow generation from the operations, and cash proceeds related to both the separation of Maersk Oil and Maersk Drilling.
Contributing to growth and prosperity worldwide
In parallel to our efforts to complete the separation of our energy-related businesses, we have progressed on strengthening the fundamentals of our transport and logistics business towards profitable growth. In 2018, we successfully completed the integration of Hamburg Süd and delivered significant revenue growth and market share expansion further strengthening our number one position within ocean container transportation.
Digitalisation is a key enabler of transforming both A.P. Moller - Maersk and the industry. Innovative digital solutions delivered by A.P. Moller - Maersk in 2018 are removing the complexity and increasing the visibility and bringing much-needed simplicity to supply chains and documents. As the world’s largest transportation and logistics network, A.P. Moller - Maersk is well placed to lead the digital transformation of the industry.
Based on the foundation laid in 2018, we will accelerate the transformation in 2019.Jim Hagemann Snabe, Chairman of the Board of Directors
Safety and sustainable development
In 2018, seven people regrettably lost their lives while engaged in operational activities, and my deepest condolences go to the families of the victims. Accidents are never intentional but occur as the result of many factors coinciding. The Board and the management team have decided to focus on safety and build organisational capacity and operational controls that will act as barriers to accidents that could otherwise have escalated to cause life-changing or fatal outcomes.
Carrying around 80% of global trade, the shipping industry is vital in finding solutions to one of the world’s most pressing challenges; climate change. As an industry leader, we have a responsibility to contribute to the reduction of CO2 emissions. Since 2008, we have achieved a 41% reduction of our emission relative to cargo moved. In December 2018, we set a goal of reaching carbon neutrality in our Ocean segment by 2050.
The Board of Directors is proud to see the ambition level and the commitment from management to contribute to sustainable development – in particular to help decarbonise logistics, contribute to halving food loss, help multiply the benefits of trade and lead the change in the ship recycling industry.
Rewarding for performance
We believe in rewarding all employees, including executives, for delivering exceptional performance, building shareholder value and working towards the company vision of becoming the global integrator of container logistics.
Our executive remuneration policy is designed to attract, retain and motivate a highly effective and engaged executive team to support the achievement of our vision. In 2018 we have updated our cash-based short-term incentive scheme and our share-based long-term incentive scheme to better align the interests of executives with those of shareholders. The schemes are based on the following criteria: collaboration, agility, customer and people orientation and rewarding individual performance, as well as to which extent the organisation meets the financial and strategic objectives that drive the growth and future of the business.
Accelerating the transformation
Based on the foundation laid in 2018, we will accelerate the transformation in 2019. We are confident that the company has the right strategy and are building the capabilities to successfully transform the company and improve our profitability in the years to come.
In many ways, A.P. Moller - Maersk is the enabler of global trade, as the world’s largest and most reliable transportation network, connecting suppliers and customers globally. Based on our strategy, we are leading the transformation of the industry, using digitalisation to make global supply chains more simple, transparent and efficient, thus making the access to global trade more accessible and less costly. A significant transformation which will not only impact our business, but also the world.
On behalf of the Board of Directors, I would like to extend our sincere gratitude to our leadership team and all our employees around the globe for their continued passion, efforts and dedication to transform our company. This loyalty and focus have built our unique position and is the foundation for our future.