The bottom line is red, equity is negative and the parent company has pledged its support, applicable until the turn of the year.
All this is evident from the annual report for Maersk Broker's dry bulk business, Maersk Broker Bulk Chartering, which counts several former partners of Lightship Chartering, including CEO Frank Mortensen.
Based on the first five months, we definitely expect a profitable result for 2018, which would be a consolidated result"
In its second fiscal year, a deficit after taxes of DKK 4.7 million (USD 738,500) contributed to a negative equity, and a note added to the report says that "the company has lost more than half its equity."
"Equity is negative at DKK 7.3 million. Management expects to reestablish this equity through its own operations and possibly through capital injection. Parent company Maersk Broker A/S has pledged its support until December 31 2018," writes the company in the report.
But there is a reason for all this, Frank Mortensen, CEO of the Maersk Broker business unit, tells ShippingWatch.
Expects profitable 2018
The annual report for the Danish business so far only covers the company's chartering activities in Copenhagen, London, Hamburg and Dubai. The businesses in Asia, however, will be fully incorporated in the financial report starting Jan. 1 2018, he explains.
"There have been some costs related to the launch phase, but there's nothing surprising in that, as the Asian activities are not yet included in the Danish financial reporting. As such, a deal was made with Maersk Broker for a declaration of support until the entire business has been consolidated," Mortensen tells ShippingWatch.
The Asian activities are gathered in a Hong Kong unit that covers Japan, Taiwan, India and Singapore.
"Including Asia in the 2017 results, we actually have a very profitable overall result," says Mortensen.
Maersk Broker Bulk Chartering's gross income in 2017 came to DKK 15.6 million, and this was more than three times higher than DKK 4.3 million the year before. The result also improved in 2017, though it remained negative with a deficit of DKK 4.7 million, up from a deficit of DKK 7.9 million in 2016.
In the next annual report, which will show a combined picture of Maersk Broker Bulk Chartering, development will be significantly better, says Mortensen, who was appointed CEO of this business unit last year.
"Based on the first five months, we definitely expect a profitable result for 2018, which would be a consolidated result," notes Mortensen.
Opened an office in Hamburg
Maersk Broker, which is owned by the Maersk family, has intensified its focus in dry bulk activities in recent years.
The company has, among other developments, entered a joint venture with Germany's Stratos Albis Schiffahrt, for the parties have opened a Hamburg office. Maersk Broker has also acquired 35 percent of Danish firm Wonsild A/S, after fully acquiring Lanic A/S last summer, after which the dry bulk broker was made part of Maersk Broker Bulk Chartering.
Maersk Broker Bulk Chartering has also expanded its staff, most recently with Claus Stahl, former VP at Lauritzen Bulkers, who had his first day at the firm Friday last week. ShippingWatch learned in January that Stahl had submitted his resignation before, later in the year, planning to join Maersk Broker Bulk Chartering after a so-called garden leave.
Today the business unit has seven employees in Hamburg in addition to the new joint venture, plus people in Dubai, 14 employees in Copenhagen and three people in Great Britain.
We're in the midst of a good expansion, strong growth in activities and our number of sealed contracts is up almost 25 percent compared to 2016"
"We're in the midst of a good expansion, strong growth in activities and our number of sealed contracts is up almost 25 percent compared to 2016," says Mortensen, though he declines to go into further detail about the 25 percent increase.
"Things are going according to plan, and it's actually looking a bit more positive. We've also been helped by the generally better market in early 2018. There's been more activity in terms of period business, where we've signed many contracts. We've boosted our long-term charter, an area where we saw less activity in 2016 and 2017."
Mortensen joined Maersk Broker in 2016, switching from Lightship Chartering, which a few years ago was on track to form a partnership with the Maersk-owned broker firm, though these plans collapsed in the summer 2015.
Maersk Broker owns a majority stake in Maersk Broker Bulk Chartering. The company is also owned by Ocean 4 ApS, whose ownership includes Mortensen alongside Thomas Stahl, Kenneth Harritsø and Michael Creaven, all formerly of Lightship Chartering.
English Edit: Daniel Logan Berg-Munch