Investor Presentaiton
8
A.P. Moller-Maersk Annual Report 2020
Directors' Report
Message from the Chairman and the CEO
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Secondly, we are leveraging the financial and
operational synergies between our Ocean busi-
ness and our Terminals business for lower cost as
well as higher productivity and asset utilisation.
Owning and operating container ports enables us
to control our global transhipment hubs that are
crucial for the reliability and cost effectiveness of
our Ocean network.
And thirdly, we are building competitive advantage
through technology. We are digitising the interac-
tion with our customers while offering unique dig-
ital products and leveraging Maersk.com, which is
one of the biggest B2B transaction platforms in
the world. We are standardising, automating and
digitising our core processes as well as our assets,
such as ships, containers, warehouses and ports,
to manage fuel cost and improve visibility in sup-
ply chains, while lowering the overall cost base.
"We have improved our
financial performance
while we transformed
our business."
Disciplined execution enables us
to perform and transform
Since we embarked on our transformation to
become the global integrator of container logis-
tics, we have executed the strategy consistently
and with discipline. Despite a backdrop of weak
trade growth, ongoing trade tensions, geopoliti-
cal uncertainty and a pandemic in 2020, we have
improved our financial performance while we
transformed our business.
We achieved good results in a year with extraordi-
nary demand fluctuations due to COVID-19, which
led from a sharp oversupply of capacity in Q1 to a
shortage of vessels and equipment in the second
half as demand rebounded, leading to a signifi-
cant increase in short-term freight rates. We leave
2020 with a strong balance sheet which enable us
to both increase payouts to our shareholders and
fund the transformation that will enable the long-
term growth of the company.
The work we have done over the past five years to
improve the performance of our Ocean business
delivered solid results in 2020. Our acquisition of
Hamburg Süd in 2017, our focus on cost, and our
disciplined approach to CAPEX were all contribut-
ing factors to the delivery of excellent results and
strong cash flow in 2020. In parallel, we developed
new, unique products such as Maersk Spot, which
offers loading guarantee, easy online booking and
a fixed price for our short-term customers.
Our Logistics & Services business delivered excel-
lent margin growth in 2020 and good revenue
growth, mainly through acquisitions. We restruc-
tured further to reduce cost and develop end-
to-end products. We began the implementation
of new technology platforms and recruited new
leadership and logistics experts globally. Our
"Since we embarked on our trans-
formation to become the global
integrator of container logistics,
we have executed the strategy
consistently and with discipline."
Logistics & Services business grew revenue to
almost USD 7bn with competitive margins and
a sound foundation to accelerate growth in the
coming years.
In Terminals, we have executed a turnaround since
2016 and the business has shifted its focus from
developing new terminals to becoming a world-
class terminal operator. Results and cash genera-
tion have steadily improved, also in 2020, despite
lower volumes. Due to strong cost performance
across all segments, we now have an infrastruc-
ture business with resilient returns.
Continuing the transformation
At the Annual General Meeting in 2020, we
announced three metrics to track progress on
our strategic transformation. During 2020, we
progressed well despite challenging market
conditions:
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 lower invested capital.
Infrastructure and Logistics revenue (excl.
freight forwarding) increased to USD 9.4bn (USD
9.2bn), mainly due to the acquisition of Perfor-
mance Team, a leading US-based warehousing
and distribution company, only partly offset by
lower revenue in gateway terminals because of
the impacts from COVID-19.
Logistics & Services EBITDA (excl. freight for-
warding) improved to USD 470m (USD 221m) as
a result of margin optimisation in intermodal
and supported by the acquisition of Perfor-
mance Team.
ROIC, which is the overall return ambition of
A.P. Moller-Maersk increased to 9.4% compared
to 3.1%, driven by significantly improved earnings.
Strategic milestones strengthen
integrated offering
In 2020, we finished the restructuring of our
Ocean and Logistics & Services businesses into
one, integrated and simplified organisation to
enable further improvements in the customer
experience and end-to-end service delivery.View entire presentation