Company Overview

The A.P. Moller–Maersk Group, more commonly known as Maersk, is a $50 billion diversified business conglomerate headquartered in Copenhagen, with a presence in 130 countries. Since its origins as a one-ship wonder founded in Copenhagen in 1904, the A.P. Moller - Maersk Group has grown into a $50 billion company with locations in 130 countries and business lines that include shipping, containers, energy, retail, and other related sectors. Today, the company employs about 110,000 people in 325 locations. Diversification and acquisition have been the keys to A.P. Moller - Maersk’s massive growth. However, the container division (involving those big metal boxes that transport everything from food to furniture all around the world) and ocean shipping divisions are still the hallmarks of the company. Operating under the names Maersk Line, Maersk Logistics, Safmarine, and APM Terminals, the conglomerate collectively operates more than 550 container vessels; APM Terminals operates more than 45 terminals. After the 2006 acquisition of one of its shipping sector rivals, Royal P&O Nedlloyd N.V., Maersk Line posted a $568 million loss for the year.

Forbes reported that Maersk Line CEO Eivind Kolding, who was then division president, chalked up the loss to the integration of the new company, as well as to rising fueling fees and falling freight rates. The company’s 2006 annual report also cited the development and integration of comprehensive IT systems as a factor in the company’s financial performance. Shipping industry expert John Manners-Bell, CEO of the consulting firm Transport Intelligence, told a reporter from ArabianBusiness.com that while A.P. Moller-Maersk has embarked on an aggressive growth-through-acquisition quest, “its last purchase, Anglo-Dutch line P&O Nedlloyd, was designed to catapult the company into a position of unassailable leadership.” It wasn’t an immediate success. However, figures show an inability to keep the market share after the acquisition, with much business migrating to [Mediterranean Shipping Company] and CMA CGM. Maersk Line CEO Kolding said freight rates are back on the upswing and the realignment of ships to serve the Asia-Europe markets is putting the company back in the black for 2007, with “further improvements in 2008, [and we’ll] probably see a result we regard as satisfying in 2009.” There’s reason to believe he’s right. Shipping company stock prices are sailing strong, keeping investors awash in healthy dividends. A.P. Moller-Maersk is shifting resources from relatively unprofitable lines between Europe and the U.S. to the red-hot routes between Asia and the U.S. On a related note, Bloomberg.com recently reported that China’s exports rose 27 percent in 2006, with imports rising 20 percent, promising a healthy demand for job applicants who know Asian markets. “I now am part of the two-year MITAS program …moving within the different divisions is highly encouraged,” one insider explains. “The idea is to spend eight months in the home division, eight months abroad, and then the last rotation is yet to be decided. After this period I can decide…in which division I would like to remain [for the next couple of years].” The company is much more than a shipping giant. Maersk Oil was established in 1962 when A.P. Moller received permission to conduct oil and gas exploration and production in Denmark. Today, the company produces about 600,000 barrels of oil per day, and maintains gas production of up to a billion cubic feet per day, making it a solid midsize presence in the oil and gas game. Maersk Line CEO Eivind Kolding chalked up the $568 million loss in 2006 partly to the integration of P&O Nedlloyd. Maersk Oil has production activities in Denmark, Qatar, the U.K., Algeria, and Kazakhstan. It also participates in exploration activities in the North Sea, North Africa, West Africa, the Middle East, Central Asia, South America, and the U.S. Gulf of Mexico. Collectively, the company’s revenue from oil and gas activities shot up 51 percent in 2006 to $6.9 billion, benefiting from soaring oil prices. Thanks in part to soaring oil prices, Maersk’s oil and gas revenues shot up 51 percent in 2006. Beyond these two key areas, A.P. Moller – Maersk has its hands in a lot of places: Tanker shipping and related offshore activities, including transportation of crude oil and refined products, supply vessel handling, and drilling. These activities are conducted under the names Maersk Tankers, Maersk Supply Service, Maersk Contractors, Svitzer, and Norfolkline. Retailing through Dansk Supermarked, which includes Fotex stores, Netto stores, and Bilka superstores in Denmark, Germany, the U.K., Poland, and Sweden. Shipyard operations in Denmark, Germany, and the Baltic countries. Industrial production of plastic products. Contract parcel flying in Europe and 50-percent ownership of Martinair Holland, which specializes in air freight and charter services for passengers. Banking, with 20-percent ownership of Danske Bank. In mid-2007, several members of the company’s management team left in a big shake-up. First, CEO Jess Soderberg’s planned 2009 retirement was moved up to 2007. Maersk announced Soderberg’s departure in June, but he did not retire until November. A.P. Moller - Maersk announced that it was hiring head Nils Smedegaard Andersen, former head of Danish brewing giant Carlsberg, to take over the top spot. Soderberg had held the post since 1993. A.P. Moller - Maersk’s company line on the changes was that “The board of directors has wished to clarify future management relations and maintain the impetus of the company.” On the same day, Maersk Line’s dual CEO structure was streamlined as Eivind Kolding became the lone leader of that division. Key management team members Knud E. Stubkjaer and Tommy Thomsen also left the company. The fallout from these departures and Andersen’s official arrival (on November 5, 2007) will take a while to play out. Even with its industry-leading shipping business, A.P. Moller - Maersk’s top business, revenue-wise, is oil and gas, followed by the shipping and container business lines. Maersk’s focus on exploration has made it an attractive partner for larger companies, and it has inked recent deals to expand its exploration activities in the Gulf of Mexico, the North Sea, Qatar, and other locations, creating a positive outlook for the foreseeable future. Maersk will have a bigger challenge turning around the losses of its shipping units, as it continues to work on integrating P&O Nedlloyd without losing any more customers. Although factors such as rising fees and increased traffic from China bode well, a recent Bank of America survey found that manufacturers aren’t very optimistic about the economy, with 35 percent of those surveyed expecting contraction in the U.S. manufacturing sector. This may spell trouble if some of the company’s massive ships can’t fill their containers enough to operate profitably, but that’s not likely—if push comes to shove, the company’s sheer mass should pull it through. The unknown factor in the equation is the impact the new management team will have in the coming year and beyond.