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Maersk Group's actual profit for the third quarter of 2016 was $426 million

         The total disposable cash flow of all business units amounted to US$736 million. The Group's financial position is stable and its liquidity reserve reached US$11.8 billion.

         Maersk Oil and Maersk Oil Drilling operations remained strong, while cost-saving measures were implemented to positively impact the Group's performance

         Maersk Oil has increased its operating efficiency and reduced costs, and its actual profit has increased. In 2016, the price range of oil and gas balance was below US$40 per barrel.

         Maersk Line's cargo volume increased by 11% in the third quarter, and its market share increased. The company continued to improve the ship loading rate of the route network, while maintaining the cost per container at less than US$2,000 per 40-foot container.

         Maersk Wharf’s third-quarter results improved compared to the second quarter due to good performance at major gateway terminals and cost-saving measures

         The Group still expects full-year results to be significantly lower than 2015 ($3.1 billion) and clearly stated that actual profit for 2016 is expected to be less than $1 billion.

         Beijing, China, November 2, 2016 - Maersk Group today (November 2, Wednesday) released its third quarter 2016 financial results. The data shows that Maersk Group's third-quarter profit was $438 million (compared to $778 million in the same period last year) due to market imbalances in supply and demand, container freight rates and continued low oil prices. Despite the decline in container freight rates, the cost of Maersk Oil Drilling due to the early release of drilling contracts has had a positive impact on the Group's performance. The Group's return on investment capital in the third quarter was 4.9% (compared with 7.6% in the same period last year), and disposable cash flow was $736 million (previous year: $904 million).

         The Group's third-quarter actual profit was US$426 million (previous year: US$662 million), which was much lower than the same period last year, mainly due to the loss of Maersk Line's performance in the third quarter, Maersk Maritime Services and the actual profit of Maersk Terminal. Maersk Oil Drilling and Maersk Oil's third-quarter actual profit increased.

         The Maersk Group focuses on continuous cost-saving measures and is committed to maximizing synergies between business units to enhance operational performance and maintain industry leadership.

         Maersk Group CEO Søren Skou said: "The Maersk Group's actual profit for the third quarter of 2016 was $426 million. The group's performance was not satisfactory, but mainly due to lower freight rates and oil prices. Overall, the Group achieved significant cost savings and volume growth in all business units. However, due to the continuous decline in freight rates, which was down 16% from the same period last year, Maersk Line experienced a loss for the second consecutive quarter. Compared with the previous quarter, the freight rate has risen for the first time since the third quarter of 2014, with a growth rate of 5.5%. In addition, Maersk Line has performed well in terms of volume growth and single-box cost control. Maersk Terminal's performance is lower than In the same period last year, it was mainly due to the slow growth of cargo compared with the same period of last year. With effective cost savings and productivity improvement measures, Maersk Oil achieved profit for the second consecutive quarter. In addition, Maersk Oil's profitability was stable, mainly due to the advancement of drilling contracts. Termination of the costs and cost-saving measures. The Group's new strategic direction and framework Restructuring plan is being implemented, and will disclose more details on 'Capital Markets Day' on December 13 held. "

         The average container freight rate fell by 16%, resulting in a decline of 659 million US dollars in Maersk Line operations, 8% of oil prices fell, resulting in a decline of Ma Shiji oil revenue of 95 million US dollars, in addition, the freight rates of Danmark and Maersk tankers have declined. On the other hand, Maersk Line's cargo volume increased by 11%, and Maersk Terminal's cargo volume increased by 7%. Affected by the above factors, Maersk Group's third quarter operating income decreased by 933 million US dollars compared with the same period last year, a decrease of 9.2%.

         Affected by lower fuel prices and cost-saving measures, the Group's operating expenses fell by 573 million US dollars, a decrease of 7.3%.

         The Group’s cash flow from operating activities was $1.7 billion in the third quarter (previous year: $2.2 billion). The net cash flow for capital expenditures was $935 million (previous year: $1.3 billion) and the investment was mainly for the Culzean field in the UK and the Johan Sverdrup field in Norway.

         The group's equity ratio was 55.5% (57.3% at December 31, 2015), and the liquidity reserve reached US$11.8 billion (December 31, 2015: US$12.4 billion). The Group maintained a sound financial position.

         In the third quarter, Maersk Line continued to achieve its established strategic objectives, with market share growth, volume growth of 11%, and ship loading rate of the route network continued to increase. The freight rate of the container continued to be under downward pressure, resulting in a 16% drop in the average freight rate and an actual loss of US$122 million. Despite this, Maersk Line's total disposable cash flow was $192 million (previous year: $159 million). The company's return on investment capital in the third quarter was negative 2.3% (compared with 5.2% in the same period last year). A number of tax policies have had a positive impact on the company's performance.

         Compared with the same period of last year, the company's third quarter operating income decreased by 11% to 5.4 billion US dollars. The average freight rate decreased by 16% to $1811 per 40-foot container (FFE) ($2163/FFE for the same period last year), and the volume increased by 11% to 2.698 million FFE (compared to 2.427 million FFE in the same period last year). The increase in cargo volume was mainly due to the higher growth rate of the eastbound route than the westbound route, but the freight rate was lower. The company's capacity increased by 3.8%, and the increase in cargo volume indicates that the ship loading rate of the route network has increased. The decline in freight rates was mainly due to a 25% reduction in fuel prices, an increase in the volume of goods on the eastbound route, and continued weakness in the market.

         Under the market conditions of an average oil price of US$46/barrel, Maersk Oil continued to make profits in the third quarter, achieving an oil price range of below US$40 per barrel in 2016. As oil prices continued to fall and the company was withdrawn from the Qatar oil field in mid-2017, the company began to adjust its business and organizational structure.

         Maersk Oil's third-quarter profit was $145 million (previous year: $32 million), and the return on investment capital was 13.5% at an oil price of $46/barrel ($50/barrel in the same period last year) (compared with 2.1% in the same period last year). ). In the third quarter, the company's operational efficiency increased, and costs were reduced, which had a positive impact on performance.

         In the third quarter, the company stopped some projects as planned to carry out equipment maintenance, and authorized production reached 295,000 barrels per day (compared with 300,000 barrels of Nissan oil in the same period last year), which was the same as that of the same period last year. Exploration costs were $57 million (previous year: $82 million), a 30% decrease from the same period last year.

         Maersk Wharf earned $131 million in the third quarter ($175 million in the same period last year), with a return on investment capital of 6.6% (previous year: 11.6%). The company's strong performance in key portal terminals has improved its performance compared to the first two quarters of 2016. Despite the challenges in the decline in the volume of some of the terminals, the cost-saving measures implemented by the company gradually offset the above-mentioned adverse effects.

         Compared with the second quarter, the company's third-quarter profit increased by 17%. Operating results achieved a profit of US$136 million (previous year: US$189 million), with a return on investment capital of 9.5% (13.8% in the same period last year), and some projects under development, as well as Grup MaritimTCB, which started operations in March this year, generated a total of 5 million. The US dollar’s performance loss (a loss of $14 million in the same period last year) was mainly due to the initial cost of the project. Due to the adjustment of the route network, the market conditions continued to be weak, and the profit growth of terminals in Latin America, Northwest Europe and Africa was challenged, and the company's earnings still faced downward pressure.

         Maersk Oil's third-quarter profit was $340 million (compared to $184 million in the same period last year), and the return on investment capital was 17.2% (compared with 9.0% in the same period last year). Termination fees, higher operational time and operating cost savings from early termination of the contract have had a positive impact on performance, but more equipment idle time partially offsets these effects. As the contract of the drilling platform Maersk Valiant was terminated early, the company received a contract termination fee of US$210 million, which had a positive impact on actual profit.

         When the company signed a contract with a good market environment, its daily rental rent was higher than the current market level, and the company's contract coverage rate was high, which continued to have a positive impact on the performance of Maersk Oil Drilling. Despite this, the market prospects for the offshore oil drilling industry are still challenging. As the existing contracts expire, the daily contract rates for new contracts decline, and the idleness of drilling equipment will affect the future profitability of Maersk Oil Drilling.

         Maersk Marine Services earned $25 million (a profit of $154 million in the same period last year) and a return on investment capital of 2.1% (13.1% in the same period last year), mainly due to a loss of $11 million in Maersk's service offerings ($45 million in the same period last year). ), the Maersk tanker lost $1 million (a profit of $59 million in the same period last year).

Group strategy

         The Maersk Group has evaluated the company's strategy and structure since June 23, 2016, with the aim of driving new growth, increasing flexibility and synergy to create maximum value for shareholders. The group announced the latest progress of the strategic assessment on September 22.

         The Maersk Group will become a company providing integrated shipping and logistics services and seeking architectural solutions for all petroleum and petroleum related business units. The Group will become an integrated company dedicated to providing customers with the best transportation and logistics services with comprehensive strength and industry-leading digital solutions.

         As a result, the Group's business will be reorganized into two separate business segments: the Maersk Marine and Logistics segment and the Maersk Energy segment. The maritime and logistics segment will consist of Maersk Line, Maersk Wharf, Danmark, Maersk Tugboat and Maritime Rescue (Schweitzer) and Maersk Container Industry. The energy sector will consist of Maersk Oil, Maersk Oil Drilling, Maersk Supply Services and Maersk Tankers.

         The maritime and logistics segment will be based on a single company structure of different brands, focused on promoting growth and synergy to manage and operate related businesses in a more integrated manner. The development strategy of the shipping and logistics sector relies on the following three aspects to achieve long-term profitable growth:

         • Combining industry-leading digital solutions, Maersk Line, Maersk Terminal and Danmark's overall capabilities provide customers with better products and enhanced customer experience.

         • Operating as a single business entity, the maritime and logistics segments can work together to optimize operations to achieve the industry's most efficient and reliable service network.

• Can ensure a reasonable capital investment and better asset allocation. If you invest, the acquisition will be a more inclined choice.

         In the next three years, collaborative operations can achieve a two-percent improvement in return on investment capital, but there will be no substantial progress in synergy in 2016. The oil and petroleum-related businesses of the Maersk Energy sector will require different solutions to achieve future growth, including separation from the Maersk Group through independent companies or joint ventures through joint ventures, mergers or acquisitions. Based on market developments and architectural opportunities, the goal is to find solutions for oil and petroleum-related businesses in the next 24 months.

         The Maersk Group Board of Directors will continue to work to ensure a strong capital structure and determine important financial ratio indicators that are consistent with the investment credit rating. The financial report for the new structure will be implemented in the first quarter of fiscal 2017.

Source: Maersk China