Posted on September 23, 2016
As announced on 23 June 2016, the Board of Directors has tasked the management of A.P. Møller – Mærsk A/S to perform a review focusing on the strategic and structural options for the Maersk Group with the objective of generating growth, increasing agilities and synergies and unlocking and maximising shareholder value with the long-term view.
The main growth focus of A.P. Møller – Mærsk A/S going forward will be delivering best in class transportation and logistics services as an integrated Transport & Logistics company. Building on the Group’s unique position within container transport and port operations, and significant position in supply chain management and freight forwarding, Transport & Logistics will leverage its leading position through new product offerings, digitalised services and individualised customer solutions.
The Board of Directors expect that the oil and oil related businesses in A.P. Møller – Mærsk A/S will require different solutions for future development including separation of entities individually or in combination from A.P. Møller – Mærsk A/S in the form of joint-ventures, mergers or listing. Depending on market development and structural opportunities, the objective is to find solutions for the oil and oil related businesses within 24 months.
To enable the new strategic direction the Board of Directors has decided to reorganise A.P. Møller – Mærsk A/S’ portfolio of businesses into two independent divisions; an integrated Transport & Logistics division and an Energy division. This will ensure focus on driving synergies and developing new products and services in Transport & Logistics as well as focus on separately developing structured solutions for our oil and oil related businesses.
The Board of Directors continues to focus on ensuring a strong capital structure and defined key financial ratio targets in line with an investment grade rating.
Chairman of the Board, Michael Pram Rasmussen says:
“The industries in which we are operating are very different, and both face very different underlying fundamentals and competitive environments. Separating our transport and logistics businesses and our oil and oil related businesses into two independent divisions will enable both to focus on their respective markets. This will increase the strategic flexibility by enhancing synergies between businesses in Transport & Logistics, while ensuring the agility to pursue individual strategic solutions for the oil and oil related businesses”.
Transport & Logistics – Focus on growth and synergies
Transport & Logistics will consist of Maersk Line, APM Terminals, Damco, Svitzer and Maersk Container Industry based on a one company structure with multiple brands. The mission of these businesses is to enable and facilitate global supply chains and provide opportunities for our customers to trade globally.
Since 2008, the Group has focused on building a lean transparent global conglomerate with each business unit operating on arm’s-length principles. Managing and operating the business activities in Transport & Logistics in a more integrated manner will enable profitable growth through stronger collaboration and disciplined capital allocation.
The strategy of Transport & Logistics rests on three pillars to deliver long term profitable growth.
- Product offering and customer experience will be improved based on the combined capabilities of Maersk Line, APM Terminals and Damco in combination with industry leading digital solutions.
- By operating as one entity, Transport & Logistics will be able to harvest synergies and optimize operations to secure the industry’s most effective and reliable network.
- Strong capital discipline and better utilization of assets will be ensured. When making investments, acquisitions will be the preferred option.
The strategies for the individual businesses will be adjusted accordingly.
- Maersk Line will grow market share organically and through acquisitions.
- APM Terminals will focus on cost and utilization and increase its focus on operational excellence to enhance returns and deliver improved service to existing and new 3rd party customers.
- Damco and Maersk Line will collaborate to deliver new innovative customer solutions supported by significant investments into digital technology.
- Svitzer will pursue a growth strategy based on its market leading position and synergies with APM Terminals and Maersk Line will increasingly be explored.
- Maersk Container Industry will collaborate with Maersk Line on technology development and efficient production planning.
Commercial as well as cost synergies will be unlocked by better utilization of existing assets and by the development of new digital solutions. We expect to deliver revenue growth, cost efficiency and margin improvements. The estimated synergies are expected to generate up to two percentage points ROIC improvement over a period of three years. No material synergies are expected in 2016.
Energy – Optimizing value
Energy will consist of Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers.
Long term growth in energy demand and sharp reductions in investments in the global E&P industry in recent years, leading to an expected reduction in oil supply in the coming years provide opportunities to grow Maersk Oil based on the company’s key technical competencies. Maersk Oil will adjust its current strategy to focus its portfolio in fewer geographies to gain scale in basins, particularly in the North Sea, where it can leverage its strong capabilities within subsurface modelling, well technology and efficient operations. Maersk Oil will aim to strengthen its portfolio through acquisitions or mergers.
Further, Maersk Oil will mature existing key development projects, while keeping exploration activities and expenses at a low level. While the strategic focus will be reflected in a disciplined capital allocation, investments in strategic projects already sanctioned or under development will continue as planned.
Maersk Drilling, Maersk Supply Services, and Maersk Tankers will continue to optimise their market position and operation with the existing fleet and order book. Additional investments in the Group’s offshore service businesses and Maersk Tankers will be limited.
Reorganisation and communication
Financial reporting for the new structure will be effectuated from the financial year 2017.
The registered management of A.P. Møller – Mærsk A/S will be composed and changed as follows:
- Søren Skou will continue as Group CEO of A.P. Møller – Mærsk A/S and CEO of the Transport & Logistics division,
- Claus V. Hemmingsen will be appointed Group Vice CEO of A.P. Møller – Mærsk A/S effective on 1 October 2016 and CEO for the Energy division,
- Jakob Stausholm will be appointed Group CFO of A.P. Møller – Mærsk A/S as of 1 December 2016. On the same date, Group CFO Trond Westlie will step down as member of the registered management and leave the Group,
- Jakob Thomasen will step down as member of the registered management and CEO of Maersk Oil effective on 1 October 2016 and will leave the Group on 1 November 2016.
- Kim Fejfer will step down as member of the registered management effective on 1 October 2016 and as CEO of APM Terminals effective on 1 November 2016 when he will also leave the Group.
Group CEO of A.P. Møller – Mærsk A/S, Søren Skou says:
“Both Energy and Transport & Logistics have strategies positioning them for growth and strategic agility. Transport & Logistics will be able to provide new and digitised world-class solutions for customers, while at the same time capture functional cost synergies and better utilization of existing assets. Energy is well positioned to leverage Maersk Oil´s expertise and gain scale in select geographies, particularly in the North Sea. Its structural agility will enable management to pursue new and different structural solutions and investment.”
Chairman of A.P. Møller Holding A/S, Ane Mærsk Mc-Kinney Uggla says:
“A.P. Møller Holding was established mainly to safeguard the long term viability of the A.P. Møller – Mærsk activities. Since then, A.P. Møller Holding has developed its considerations about the future of A.P. Møller – Mærsk. These have been given to the Board of Directors of A.P. Møller – Mærsk A/S.
Historically the Maersk activities’ strategy and structure have always undergone changes. And these changes will continue in order to stay agile.
While we are rooted in shipping and energy, we must never become static in a dynamic world. We therefore welcome the new strategy and structure announced by the A.P. Møller – Mærsk A/S. A.P. Møller Holding will continue to be an active and influential owner of A.P. Møller – Mærsk activities, applying our core values and name where relevant; and as stated in the trust deed of the A.P. Møller Foundation.
This means that we see A.P. Møller Holding remaining as an influential shareholder in business units undergoing separate structural changes: they will continue to be part of the A.P. Møller family.”
A.P. Møller – Mærsk A/S will in fourth quarter 2016 be hosting a Capital Markets Day, where Group Management and the management teams for Transport & Logistics and Energy will provide further insights into the reorganization and future strategy.
Following Thursday’s update on the announced strategic review, and the decision to separate the Group’s businesses into two independent divisions, Transport & Logistics and Energy, the following changes to executive management in the Group’s portfolio of businesses were announced.
The new CEO of APM Terminals will be Morten Engelstoft, currently CEO of APM Shipping Services and CEO of Maersk Tankers. Morten Engelstoft’s appointment is effective November 1, 2016.
“Morten Engelstoft has a strong track record of delivering results, deep operational experience and is an excellent people leader. I am confident that APM Terminals under Morten’s leadership will continue to thrive as one of the world’s largest terminal operators and successfully execute on APM Terminals’ priorities of costs, productivity and winning new profitable third party business,” says Søren Skou, Group CEO of A.P. Møller – Mærsk A/S.
Kim Fejfer, currently CEO of APM Terminals and Executive Board member in the Maersk Group will take up a new role related to A.P. Møller Holding A/S.
“Succeeding Kim Fejfer, who during the last 12 years has developed APM Terminals into one of the world’s largest and most successful port operators with outstanding results, is a tall order. Kim has expressed a desire to take on a new challenge when timing was right. On behalf of the A.P. Møller – Mærsk Board and the Company’s employees, I want to thank Kim for his leadership, cooperation and commitment over the years. We wish Kim every success in his new role,” said Michael Pram Rasmussen, Chairman of the Board.
The new CEO of Maersk Oil will be Gretchen Watkins, current Chief Operating Officer in Maersk Oil. Grethen Watkins will take up the role as CEO of Maersk Oil effective October 1 2016.
“Gretchen most recently served 2.5 years as Chief Operating Officer and a member of Maersk Oil’s Executive Team. During her COO tenure, she has proven her ability to drive change and operational excellence in Maersk Oil’s portfolio. Gretchen is well-placed and prepared to lead Maersk Oil into the next strategic phase of materialising the sanctioned projects, substantiating Maersk Oil’s position as a leading company in the North Sea and optimizing the economic value and profitability of the current portfolio. I very much look forward to a close cooperation and partnership with Gretchen to see Maersk Oil through the current challenging times in our industry,” says Claus V. Hemmingsen, Group Vice CEO in A.P. Møller – Mærsk A/S.
Jakob Bo Thomasen has decided to leave Maersk Oil after 27 years with the Maersk Group, the last 7 of which as CEO of Maersk Oil.
“Under Jakob Thomasen’s leadership, Maersk Oil has turned its Incident-Free mindset into results and simultaneously transformed the company to become a scalable, global organisation. During Jakob’s more than 27 years with the Maersk Group, he has delivered on the project portfolio of Maersk Oil and coupled commercial and external orientation with technical reputation. We thank Jakob for his strong contributions to Maersk Oil as well as the wider Group during his 7-years long tenure as a member of the Executive Board and we wish him the very best,” says Michael Pram Rasmussen, Chairman of the Board.
Jørn Madsen has been appointed CEO of Maersk Drilling. Jørn Madsen is currently CEO of Maersk Supply Service a role he has held since 2015. He will assume his new position after a replacement is named as CEO of Maersk Supply Service.
“Before taking up the CEO role for Maersk Supply Service, Jørn Madsen served for almost 25 years in Maersk Drilling, most recently as COO. In that capacity, he was instrumental in executing on Maersk Drilling’s growth strategy and laying the foundation for the company’s operational excellence success. I am confident that he and the management team going forward will successfully enhance and execute on our current strategy focusing on delivering high quality performance and securing revenue with our existing assets.” says Claus V. Hemmingsen, Group Vice CEO in A.P. Møller – Mærsk A/S.
Christian M. Ingerslev has been appointed CEO of Maersk Tankers taking effect as of November 1 2016. Christian has since 2014 been CCO of Maersk Tankers.
“Christian M. Ingerslev has for 15 years been with Maersk Tankers where he has held a number of different leadership roles. He brings with him a deep passion for and profound knowledge of Maersk Tankers’ business combined with strong leadership skills. Christian has been an instrumental part of the development and execution of the Maersk Tankers strategy “Taking Lead”, and he is ideally positioned to take over the helm as CEO for Maersk Tankers. I look much forward to working with Christian in his new role,” says Claus V. Hemmingsen, Group Vice CEO in A.P. Møller – Mærsk A/S.