A. P. Møller – Mærsk will no longer pursue a separation solution for its offshore marine services business, Maersk Supply Service.
This was decided at a meeting of the company’s board of directors on March 29, 2019.
Consequently, Maersk Supply Service will be reclassified from discontinued operations to continuing operations in A.P. Møller – Mærsk (APMM).
As a result of the decision in 2016 to separate the oil and oil related businesses from APMM, Maersk Supply Service was classified as a discontinued operation and held as an asset for sale from Q4 2017.
“Despite continuous efforts, no attractive separation solution has been identified for Maersk Supply Service, primarily due to the challenging market conditions with overcapacity within the offshore support vessel industry,” the company said in a statement.
The sale was part of Maersk’s transformation from a conglomerate to an integrated global container logistics company, which included the separation of the group’s energy business.
“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,” Claus V. Hemmingsen, Vice CEO of A.P. Moller – Maersk and CEO of the Energy division, commented.
“Maersk Supply Service launched a new strategic direction in the autumn of 2016 as a response to the downturn, which is positioning the company stronger 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,” Hemmingsen added.
A.P. Møller – Mærsk further said that Maersk Supply Service’s strategy remains 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.
The company has been progressing towards becoming a stand-alone entity. Today, it operates almost fully independently and will continue to do so, according to Maersk.
Following the reclassification, Maersk Supply Service will be included in A.P. Moller – Maersk’s income statement, balance sheet and cash flow statement as part of the segment Manufacturing and Others.
For the financial year 2018, Maersk Supply Service reported a revenue of USD 263 million and an EBITDA of USD 3 million with negative free cash flow (FCF) of USD 316 million due to the payment of four newbuildings.
At the end of 2018, the Invested capital was USD 714 million following a negative fair value adjustment of USD 400 million recognized in Q3 2018. For 2019, the expectations are an EBITDA close to break-even level and a negative FCF of around USD 200 million due to delivery of the remaining newbuildings ordered in 2014.
The reclassification of Maersk Supply Service will not affect the guidance for APMM for 2019, the company said.