Maersk CEO: ‘We cannot be satisfied with our performance’

A.P. Møller-Maersk CEO Soren Skou said the third quarter was “one of the busiest quarters that this company has ever seen with multiple moving parts” in the Danish’ conglomerate’s third quarter earnings call.    Soren Skou, CEO of Danish shipping conglomerate A.P. Møller-Maersk, says the company “cannot be satisfied” with its performance during the third quarter of 2017.
   Maersk group executives spent the majority of their third quarter earnings call explaining how the company managed to take a $1.5 billion loss during the period despite strong revenue growth. 
   “The third quarter of 2017 was in all likelihood one of the busiest quarters that this company has ever seen with multiple moving parts,” said Skou. “The overall headline for Maersk Line is that we cannot be satisfied with our performance in the third quarter of 2017. As you’re well aware, we had a cyber-attack that impacted the business severely in July and into August, mainly in Maersk Line and Damco. This cyber attack caused volume and revenue loss, as well as additional cost. And we have also estimated this impact to in the range $250 million to $300 million.”
   Maersk Line reported revenues of $6.1 billion in the third quarter of 2017, up from $5.3 billion in 2016, but saw freight rates and volumes decrease 1.1 percent and 8.8 percent, respectively, in part as a result of the cyber attack.
   “But looking beyond the cyber attack, we are not happy with the development in unit costs, driven mainly by the lower network utilization, but also increasing fuel cost in the quarter,” continued Skou. “Bunker cost increased 11 percent from the beginning of the quarter to the end of the quarter. We deployed on average 10.7 percent more capacity year on year, half of which was related to slot sales to Hamburg Süd and HMM. 25 percent of which was related to cleaning up after the cyber attack and the remaining 25 percent to cater for expected volumes that never materialized.
   “We are also not happy with the development in volume growth,” he said. “We had negative volume growth in the quarter with solid 5 percent global demand growth. And adjusting for cyber loss, we would have had flat development in volumes.”
   Skou noted that his team could have explained everything away with the cyber attack, “but as a management team, we believe we can do a better job than we did in the third quarter. And we are confident that we will be restoring our operational performance to best-in-class for our industry over the coming quarters.”
   Jakob Stausholm, the chief finance, strategy and transformation officer at Maersk, added that the many changes in the quarter reflect in large part on the discontinued businesses: Maersk Oil, Maersk Tankers and Maersk Drilling. “And therefore, you have to look very carefully when you look into the account and when you make comparables,” he said.
   Company officials were quick to remind listeners, however, that the quarter’s performance is temporary and that Maersk will bounce back.
   “I’ll just caution you against using Q3 too much for measures of performance,” said Stausholm. “What you can look at though is the capital expenditure. And that’s something we are monitoring very tightly.”