Maersk hints at transformation

AP Moller Maersk was very much the creation of its pater familias, Arnold Maersk McKinney-Moller. It was he who led the expansion of the shipping line in the post-war era, it was he who branched-out into a variety of businesses from banking to retail and it was he who exploited the discovery of oil in Denmark’s part of the North Sea.

Now, four years after Arnold McKinney-Moller’s death it appears the company is being rethought. For some time there has been a drift towards divestment of peripheral businesses, such as the sale of its stake in a Danish supermarket and the Dankse Bank finance house. Yet what it is being implied will change now is much more profound.

On the surface not that much is new. Nils Smegard Anderson, the successful CEO who was brought in to stabilise the group, has retired to be replaced by Soren Skou who has been head of Maersk Line. Yet in the press release announcing Skou’s appointment the Board of Maersk commented that “since 2008 the Maersk Group has successfully gone through a phase of operational optimisation in each of its businesses to the point of top quartile performance in most units. In order to leverage this position the Board of Directors have initiated a process to further develop the strategic options for the Maersk Group. To lead this phase the Board of Directors has today appointed Søren Skou as new Chief Executive Officer of A.P. Møller – Mærsk A/S, replacing Nils S. Andersen, who will leave the Maersk Group.”

In further remarks to a group of journalists, the Chairman of the group Michael Pram Rasmussen, suggested that the “break-up of the group” could be considered, commenting that “should we be a group as we are today or might it be an idea to have a number of different separate businesses instead?”

This has been interpreted as implying that Maersk’s shipping and oil businesses could be split apart, with the marine businesses grouped together whilst the oil interests could be floated-off as a separate company.

What does appear clear is that both arms of the group are faced with fundamental strategic choices. The oil industry is undergoing a restructuring that may see many of the offshore production assets owned by Maersk become less valuable. Although the group has investments in new fields in Africa, its North Sea operations are ageing and it appears to have just lost a major contract in Qatar.  

The container shipping business also faces strategic questions. Compared to the rest of the industry, Maersk Line has been successful in delivering cost advantage, however sustaining this may require further major investment and possibly acquisitions.  

Therefore, the likelihood is that Maersk Group may embark on a transformation of its business that could result in a very different company to the one we see today.

More insight?

Source: Transport Intelligence, June 29, 2016

Author: Thomas Cullen