Maersk’s strategy and performance Group CFO Trond...

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.

page 2

The Maersk Group Revenue, NOPAT and Invested capital split

page 3

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


Ambitions

page 4

• 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


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


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


Investing in growth - Capital commitments

page 7

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


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

page 8

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


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

page 9


Share the value creation

page 10

(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


Pay-out

Maersk Line

page 11


Liner market environment

page 12

• 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


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%

page 13


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


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


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, (%)


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

page 17

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


Maersk Oil

page 18


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


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


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


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


page 23

APM Terminals


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


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


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


Maersk Drilling

page 27


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


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


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

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