Nils Smedegaard: Most things point in the right direction

An awesome start to 2014 for virtually all the Maersk Group's companies bodes well for the year as a whole. The growth in the global economy is gradually emerging, and even the crisis in Russia can not be felt, says Maersk Group CEO Nils Smedegaard.
Photo: Mik Eskestad
Photo: Mik Eskestad

Even though Nils Smedegaard referred to the dazzling summer weather in Copenhagen to explain his use of the word "magnificent," there was pretty much optimism across the board from the Maersk Group CEO when he was interviewed by journalists on Wednesday morning in relation to the Group's 1st quarter interim report.

Except for a slight under-performance at Maersk Drilling, which is currently implementing its new investments, the Group achieved improvements across the board - and the company maintains its expectations for a 2014 result significantly above that of 2013, where the Maersk Group achieved a profit of USD 3.8 billion.

"All the major business units are showing progress, except for Drilling, which saw a slight decline. Maersk Line achieved a solid result for the first three months, with a high capacity utilization rate that brought reduced unit costs," said Smedegaard.

Can survive without P3

Maersk Line has now stepped up to the next league in terms of the Group's key goal of securing a 10 percent return on invested capital. From hovering at four percent in the first quarter 2013, the carrier's return has now grown to nine percent.

The postponement of the major P3 collaboration with MSC and CMA CGM - now expected to be launched in the fall of this year - will not affect the carrier's result for 2014, said Smedegaard:

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"We are in close talks with the competition authorities and we hope that this matter will be settled by the middle of this year. There are several smaller countries that we want to secure approval from before we launch the collaboration. As such, we expect to be able to launch the alliance this fall. However, this will have zero impact on our businesses for the year as a whole. And we're still confident that we'll be able to perform well without P3, and the first quarter has only served to strengthen this confidence," he said.

He did, however, add that the company still expects the alliance to be approved.

Faith in economic growth

Even though growth expectations for the global economy have become slightly more modest, the Maersk CEO remains optimistic, and Maersk Line in particular is seeing improvements from Europe and further east, he explained.

"In Southern Europe, especially, we're seeing things move in the right direction. We generally expect the overall growth in 2014 to be slightly above last year. Things are somewhat improving in Europe and the US, though one probably shouldn't expect a rapid growth in Europe"

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"We believe that the improvements seen in the first quarter could continue throughout the year. When I travel around the world, I see that our employees are determined to deliver a solid result for 2014," he said.

No real impact from Russia

As the conflict between Russia and the West has escalated following the dispute between Russia and Ukraine, among other things, economists have reduced their growth expectations for the country, just as rating bureaus have taken a more critical stance toward the Russian economy.

The Maersk Group is primarily represented in Russia through its one third ownership stake in Global Ports, and through Maersk Line's activities in the region. APM Terminals states in the interim report that the conflict has had no significant effect on the company's Russian business, and according to Smedegaard, the same thing goes for the Group's businesses with Russia in general.

"The Russian business is the same as before, and it has not become more difficult for us to do business in Russia," said Nils Smedegaard.

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