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Russian crisis sent Global Ports into major deficit

The slide of the Russian ruble was costly for Russia's biggest port company Global Ports, of which the Maersk Group owns around 30 percent. The company lost around USD 200 million and declining freight volumes have continued into this year.

The weakening of the ruble sent the stock-listed Russian port company Global Ports, of which Maersk owns around 30 percent, into a major deficit in 2014.

The increase in the company's net financing costs came to USD 507.7 million due to the massive devaluation of the ruble, corresponding to a net loss of USD 193.1 million for Global Ports' owners, says the company in its annual report.

Maersk-owned APM Terminals acquired 37 percent - 31 percent today - of Global Ports Investments in September 2012 for around USD 900 million, but the major Russian port company has since then seen its value drop as the crisis has escalated between Russia and the West.

Maersk's Russian port company plummets on the stock exchange

Global Ports Investments, which is listed on the London Stock Exchange and is Russia's biggest port operator of container and oil products, saw its share plummet 81 percent in 2014, corresponding to a reduction in market value of around USD 776 million measured in the USD rate that applied at the end of the year.

Global Ports chairman Tiemen Meester says in relation to the annual report that the company is also hit by declining freight volumes into Russia, and that this development continued in the first months of 2015 as volumes dropped 23 percent in January and February compared to the same period last year.

A long-term investment

APM Terminals invested around USD 900 million in Global Ports in the late summer 2012, thus at the time acquiring a 37 percent stake in the Russian company. Even though some observers noted that the price was very high, APM Terminals has continuously stated that the move represented a strong and long-term investment in Russia as one of the biggest growth economies going forward.

Global Ports is losing revenue

This was especially the case in the time following the acquisition. But the political crisis in the relationship between the West and Russia, which began to take a toll on the country's economy in the 4th quarter 2014, have changed the picture completely.

"It's a long term investment, so to us it's an opportunity to secure a platform in that part of the world, to develop the business and make new investments. We believe Russia in itself holds enormous growth potential, and it won't be many years before Russia is the biggest consumer market in Europe," APM Terminals CEO Kim Fejfer told ShippingWatch in 2013.

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In addition to the deal with APM Terminals, Russia's recent WTO membership made Global Ports optimistic in September 2012 when the deal was signed:

"The long-term prospects for the container market in Russia post-WTO access are considered extremely promising, and I believe that Global Ports, with its combination of well-invested assets in the right locations, has all the necessary components to be able to maximize the opportunities for growth that the market offers. In addition, we very much welcome APM Terminals as another major shareholder alongside N-Trans. With their the support we look forward to even more efficient development and deployment of new capacity along with containerizing Russian trade further," said Global Ports chairman Nikita Mishin at the time.

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