AP Moller Maersk said its integrator strategy that will see the company transform into a comprehensive, customer-facing door-to-door logistics service will offer the carrier significantly improved profits.
Speaking at Maersk’s Capital Markets Day Maersk CEO Søren Skou told analysts and investors that the company is ready to build three divisions with strong synergies between them, with a customer focus, that will drive value creation through digitalisation.
”Today, we are rapidly transforming our A.P. Moller – Maersk in line with our strategy. We have come far, but we are not yet done. We continue to see a significant opportunity in the market for global end-to-end logistics and are confident that we can continue to deliver value generating returns above 7.5%, ROIC, considering the extraordinary earning levels of 2021 an average of above 12% for the five year period 2021-2025,” said Skou.
Maersk’s value creation model will links Logistics and Ocean through customer synergies and Ocean and Terminals through financials and operational synergies. And while Ocean and Terminals are expected to deliver steady returns Logistics and services will be the major profit driver.
“Whereas, Ocean will continue to deliver stable earnings levels and [will be] strong enabler of the company’s strategy, Logistics & Services aims for significantly higher growth rates and new ways of addressing customers needs,” said Maersk.
In addition, Maersk will provide institutional investors and financial analysts with updated ambitions on the development and progress in the 2021-2025 horizon.
”With our portfolio, our approach, and the need that we see across customers and verticals, we are confident that Logistics & Services has become our growth engine, capable of growing organically at 10% per year while maintained a strong EBIT margin above 6%,” noted Vincent Clerc, CEO of Ocean and Logistics at A.P. Moller – Maersk.
To support this growth, Maersk will invest around US$1 billion in capital expenditure over the coming two years and continue to complement this with mergers and acquisitions to build capabilities and progressively scale the business.
Moreover, the company said it will focus on best-in-class returns for its terminals businees, and over the next five years the company plans to invest approximately US$600 million in total on automation in around 30 terminals. The company has already seen significant improvements on the operational side as well as reductions in carbon emissions from increased use of automation.
In the meantime, Maersk will continue to secure a financial solidity and guides for a stable underlying profitability and cash generation through continued capital discipline with CAPEX close to depreciation.
“We will continue to execute on the strategy through capital discipline,” said Skou who went on to add, “Given the financial strength of the company we are able to maintain a strong balance sheet and use cash to invest in business, acquisitions, ordinary dividends and lastly return excess cash through share buy-back or extra-ordinary dividends.”
Maersk also announced the signing of the UN Global Compact commitment letter to a “Business Ambition of 1.5degs C”, committing to set a long-term science-based target to reach net-zero emissions across the full value chain no later than 2050 and set interim targets in line with Science Based Targets initiative criteria.