Investeringskommentar, Michael Field, Analyst, 10/02/2016
Maersk reported fiscal 2015 results that were most negatively affected by a EUR 2.6 billion net impairment charge on Maersk Oil. Guidance for 2016 shows no signs of let-up, with performance expected to be significantly below that of 2015 across the business. Having only recently cut our near-term forecasts for the company, we're not planning on making any material changes to our DKK 9100 fair value estimate or our no-moat rating on the back of these results.
Activity across the business remained weak in 2015. In Maersk Line, improved volumes year over year were more than offset by continued weakness in shipping rates, which fell further in the fourth quarter. This decline in shipping rates to all-time lows is further evidence of the industry's excess capacity, which we highlighted in our recent company report. As a result, we expect rates to remain at around $2000 per forty-foot equivalent unit for the remainder of 2016, before recovering incrementally over the following four years. The EBIT margin gap between Maersk and peers narrowed in 2015 to 5%, from 9% the previous year, underlining our no-moat rating on the stock.
Despite the weak set of numbers and gloomy outlook, we still see some upside to the current share price in the longer term. While we acknowledge that Maersk’s no-moat and high uncertainty ratings suggest that volatility in the share price could persist, we feel that today’s reset in terms of forward guidance offers a reasonable base for future growth.
Bulls Say
- Maersk Line remains one of the most profitable ocean carriers; since 2011, the firm has boasted an EBIT margin that is on average 500 basis points higher than those of its peers.
- Large cost-cutting measures, including significant headcount reduction, should help create a leaner business model going forward.
- Significant divestments of noncore assets, such as Danske Bank and Supermarked, have led to a more focused entity.
Bears Say
- Excess capacity in global container shipping continues to put pressure on shipping rates.
- Lower crude oil prices will likely remain a significant headwind for Maersk Oil, while also providing a problem for other divisions, including Maersk drilling.
- Maersk Line operates in a highly cyclical, maturing business marked by capital intensity and intense price competition.
