World’s biggest shipper to spin off Maersk Drilling

The world’s biggest shipping company, A.P. Moller-Maersk, said Friday it turned in a profit, but is now spinning off its drilling unit as a standalone company.

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“Having evaluated the different options for Maersk Drilling, A.P. Moller – Maersk has concluded that listing Maersk Drilling as a standalone company presents the most optimal and long-term prospects for its shareholders, offering them the possibility to participate in the value creation opportunity of a globally leading pure play offshore drilling company with long-term development prospects,” the company ‘s statement read.

A.P. Moller-Maersk took a hit in the second quarter of 2016, saying its profitwas “significantly lower” on declining revenue because of a 24 percent dip in freight rates and a 26 percent drop in crude oil prices. The company by then had advanced on a restructuring plan by sidelining top executives and suggesting it could split off its business units into separate groups.

Maersk Drilling was put in the auction block two years ago as part of the restructuring plan, but the shipping giant said Friday the standalone listing was now the best course of action.

“The announcement of the intention to list Maersk Drilling completes the decision process on the structural solutions for the major oil and oil related businesses,” A.P. Moller-Maersk Board Chairman Jim Hageman Snabe said.

Maersk Drilling reported revenue in the second half of 2017 was $349 million, a decline from the $566 million during the same period the previous year. The company last month said it was breathing a sigh of relief, however, after getting contract extensions for two of its rigs in the North Sea.

Elsewhere, the shipper reported second quarter revenue increased 24 percent to $9.5 billion, offsetting a multi-million dollar loss from one year ago. In its market outlook, the shipper said it was upbeat about trade developments in general, but concerned about the fallout from global trade tensions. So far, the impact of U.S. tariffs has been limited with global trade on pace to decline by about 0.3 percent.

“However, the U.S.-China bilateral trade could be more significantly impacted,” the company’s statement read. “U.S. container imports from China could be reduced by up to 4 percent, while Chinese container imports of U.S. goods might be reduced by up to 6 percent.”

 

By Daniel J. Graeber