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Maersk to split into 2 separate divisions: Transport and Energy

Danish shipping and oil giant A.P. Moeller-Maersk A/S said Thursday it will split its operations into two separate divisions focused on transport and energy as it battles one of the worst ever shipping down-cycles and a historic oil-price rout.

Maersk Line, the company’s biggest unit and the world’s largest container operator in terms of capacity, will spearhead a new Transport & Logistics division, while the group’s extensive oil interests will be pooled under an Energy division, in what is seen as the biggest shake-up in the group’s 100-year plus history.

(Manila Bulletin)

(Manila Bulletin)

The Transport & Logistics division will consist of Maersk Line, APM Terminals, Damco, Svitzer and Maersk Container Industry businesses. Maersk Line has been tasked with growing market share, both organically and through acquisitions.

The four businesses within the Energy unit – Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers – will either remain part of the Maersk group or be separated in the form of joint ventures, mergers or a listing. A decision will be made within two years but the company isn’t looking to spinoff all four businesses, the company said on a call after the announcement.

On the strategic front, Maersk Oil will adjust to focus on fewer geographies, particularly in the North Sea, where it will strengthen its portfolio through acquisitions or mergers. Exploration activities and expenses will be kept at a low level, it added.

“The industries in which we are operating are very different, and both face very different underlying fundamentals and competitive environments,” Chairman Michael Pram Rasmussen said in a news release.

“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.”

Maersk stunned investors in June when it fired Chief Executive Nils Andersen and asked his replacement, Soren Skou, to look into breaking up the group and possibly selling or listing some of its units. Mr. Skou, who has headed Maersk’s shipping business, was instantly tasked with evaluating whether to disband the holding company.

The container-shipping industry has seen freight rates tumble amid a capacity glut, prompting price wars between operators that have pushed freight rates to levels barely covering fuel costs. Meanwhile, nearly two years of low crude-oil prices have hit Maersk’s energy unit hard.

Thursday’s shake-up comes amid a wave of consolidation sweeping the container-shipping industry, as a number of big companies in recent years have combined forces to cut costs and increase competitiveness, while others, such as South Korea’s Hanjin Shipping Co., haven’t been so lucky.