Friday, March 29, 2019

Praise for Staff as Container Shipping and Logistics Giant Fails to Divest Itself of Subsidiary

Attitude and Dedication Praised Despite Troubled Times
Shipping News Feature
DENMARK – The downturn in the offshore support vessel industry has thrown a spanner in the works for AP Moller - Maersk's restructuring plans as the Danish container shipping conglomerate announced its decision to abandon plans to sell Maersk Supply Service. Maersk plan for the last few years has been to simplify its business operations and focus solely on the transport and logistics business.

The company had initially grouped Maersk Supply Service with the Maersk Oil, Maersk Drilling, and Maersk Tankers, to form the Energy division. Both the Oil and Tankers businesses have been successfully divested from Maersk with Maersk Drilling the next up for demerger as reported last month. Maersk Supply Service has the last two years been progressing towards becoming a stand-alone entity currently operating almost fully independently and it will continue to do so.

The struggling offshore support services sector has, over the last three years, exhibited what Maersk says are ‘clear signs of distress’, reducing company market capitalisations and lowering asset values.

The result of worsening industry conditions has negatively impacted the ability of the Maersk group to find a sustainable ownership structure for Maersk Supply Service outside of AP Moller - Maersk. The industry continues to be characterised by oversupply, financial restructurings and consolidation and the market outlook for the sector is expected to remain subdued for the near and mid-term. Claus Hemmingsen, Vice CEO of AP Moller - Maersk and CEO of the Energy division commented:

"We have over the past two years been investigating various structural solutions for Maersk Supply Service. However, having been unable to establish any solutions meeting our objective of creating shareholder value, we have decided to retain Maersk Supply Service.

"Maersk Supply Service launched a new strategic direction in the autumn of 2016 as a response to the downturn, which is positioning the company more strongly, and with a more robust and differentiated platform to compete from, when we eventually see a recovery within their core markets in the Oil & Gas space.

"I am deeply impressed with the attitude and dedication shown by the Maersk Supply Service management and the entire organisation both on and offshore. Through a period of uncertainty and change, Maersk Supply Service has continued to deliver safe and efficient services and not least managed to develop their customer propositions and market position."

Maersk Supply Service's strategy is focused on optimising the existing core business through time chartering out their assets, pursuing of new business as an integrated solution contractor, and by diversifying into new markets. Maersk says that the strategy is progressing well and in 2018 approximately 30% of Maersk Supply Service's revenue were generated from new and diverse business, including offshore wind, ocean cleaning and deep-sea mining. Steen Karstensen, CEO of Maersk Supply Service, said:

"Our diversification initiatives are building presence in other markets and enable us to be less dependent on the traditional Oil & Gas market in the future. Our 44-vessel fleet has an average age of less than ten years and supports our integrated solutions offerings. With our modern fleet and skilled people, we are well positioned to take advantage of market opportunities in the future and differentiate us from our peers."

Maersk Supply Service was classified as discontinued operation and held as asset for sale in Q4 2017. The company will be reclassified to continuing operations and will be included in AP Moller - Maersk's income statement, balance sheet and cash flow statement as part of the segment Manufacturing & Others.

Photo: Maersk Connector, one of the Maersk Supply Service's fleet.