A.P. Moller - Maersk AS - Company Strategy & Performance Analysis
A.P. Moller-Maersk A/S (Maersk) is a diversified conglomerate that is involved in a range of activities including shipping, transportation, offshore and energy. The group is also involved in the production of oil, gas and other oil related activities including drilling and offshore services. The group operates through eight reportable business segments including Maersk Line, Maersk Oil, APM Terminals, Damco, Maersk Drilling, Maersk Tankers, Svitzer and Maersk Supply Service.
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Modest market demand and lower freight rates, leading to a decline in the Maersk Line segmental revenue
Maersk Line is a global container shipping segment providing ocean transportation services. Its cargo handling services include the pre-treatment of cargo, and packing and stuffing of chilled commodities. The Maersk Line segment revenues declined from US$23,410.0m in 2015 to US$20,416.0m in 2016, posting a decrease of 12.8%. The decline in the revenue was due to 18.7% decline in average freight rates.
Lower freight rates, leading to a decline Damco segmental revenue
Damco provides third party logistics services including freight forwarding, customs brokerage, warehouse and distribution, supply chain management solutions and other value added services. The segment accounted for 7.0% of the company's total revenue in 2016. The revenue of the Damco segment decreased from US$2,737.0m in 2015 to US$2,507.0m in 2016 posting a decline of 8.4%. The decline in the revenue was due to lower freight rates and exchange rate movements.
Lower activity levels and increased competition, leading to decline in the Svitzer segmental revenue
The Svitzer segment provides towage and emergency response services at sea. Its service portfolio includes harbor towage, terminal towage, and salvage and emergency response services. It also provides customized marine services to LNG terminals, ports and oil and gas terminals. The revenue of the segment decreased from US$638.0m in 2015 to US$611.0m in 2016, posting decrease of 4.2%. The decline was due to lower activity within harbour towage and increased competition.
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