Investor Presentaiton
24
A.P. Moller-Maersk Annual Report 2020
Directors' Report
Our business
Strategy
3 Superior delivery network
end-to-end
The bedrock of the strategy of A.P. Moller-Maersk
is a superior delivery network end-to-end, which
delivers on fundamental needs for getting goods
to the right place, at the right time, at the right
price, with minimum environmental impact.
The COVID-19 pandemic stressed the global sup-
ply chains to a degree never experienced before.
A.P. Moller-Maersk takes pride in being able to
continue to serve its customers' global trans-
portation needs and supply chains throughout
the year under very difficult circumstances.
A.P. Moller
Maersk was never closed for business.
The many challenges caused by the pandemic
and the related volatility in supply and demand
emphasised the strength of having operational
control over the critical parts of the global logis-
tics supply chains. A.P. Moller-Maersk was able to
leverage its operational control of vessels, ware-
houses, and terminals and co-developed new
innovative solutions and products with customers
in response to the disruptions. The main customer
problems typically related to speed and/or flexi-
bility of the supply chain, and examples of new
solutions were storage in transit, dedicated air
charters, and seaborne e-commerce solutions.
Transformation metrics
A.P. Moller-Maersk cash return on invested capital'
Infrastructure and Logistics revenue², USDm
Logistics & Services EBITDA², USDm
Long-term targets
2020
2019
1 Last twelve
months
16.6% 10.0%
2 Excluding freight
9,428
9,201
forwarding and
restructuring
470
221
costs
Return on invested capital'
9.4%
3.1%
Underlying return on invested capital'
9.6%
3.2%
CASE: PERFORMANCE TEAM
On 1 April 2020, A.P. Moller - Maersk closed
the acquisition of Performance Team, which
has further strengthened the capabilities of
A.P. Moller-Maersk as an integrated container
logistics company offering customers end-to-end
services.
The integration of Performance Team's engi-
neered solutions and distribution centre capabil-
ities to retail, wholesale and direct to consumer
services with Maersk Warehousing & Distribu-
tionOs regional network in the US and Canada is
progressing according to plan. In a time where
transparency and resilience in supply chains have
been increasingly important for customers, the
extended offering of increased flexibility and
value adding services have contributed signifi-
cantly to the growth of Logistics & Services with
a revenue of USD 398m and an EBITDA of USD
59m. Looking ahead into 2021, our focus will be on
driving commercial synergies and cross-selling to
Maersk Ocean customers as part of the integrated
container logistics strategy.
"Having premium assets in
warehousing and distribu-
tion in 2020 was vital to meet
unprecedented customer
demand and keep pace
with ecommerce growth."
- Craig Kaplan, CEO Performance Team.
Transformation metrics
To measure the strategic transformation
towards becoming the global integrator
of container logistics and the ability of
A.P. Moller-Maersk to create shareholder
value, three metrics are tracked besides
the overall ROIC target (see table).
On the back of the improvement in
profitability and positive cash flow
generation during 2020, positive
developments were seen across all
transformation metrics.
Cash return on invested capital (CROIC),
last twelve months, increased to 16.6%
(10.0%), due to stronger cash flow from
operations, lower gross CAPEX and
slightly lower invested capital.
Infrastructure and Logistics revenue
(excl. freight forwarding) increased to
USD 9.4bn (USD 9.2bn), mainly due to the
increased revenue in logistics from ware-
housing and distribution and supply chain
management, only partly offset by lower
revenue in gateway terminals because of
the impacts of COVID-19.
Logistics & Services EBITDA (excl. freight
forwarding and restructuring costs)
improved to USD 470m (USD 221m) due
to margin optimisation in intermodal and
warehousing and distribution, supported
by the acquisition of Performance Team
in April, as well as KGH Customs Services
in September.View entire presentation