Wednesday, March 7, 2012

Maersk Line's new CEO Soren Skou cries 'slow down - we're destroying shareholder value'

Maersk Line's new CEO Soren Skou

THE container shipping business is consistently destroying shareholder worth and wishes to rein back fleet growth to enhance returns, says Maersk Line's new CEO Soren Skou.

Mr Skou, who took over in mid-January, created the comments in London shortly once parent company, AP Moller-Maersk, announced a internet loss of US$537million from its container activities division in 2011, against a $2.64 billion internet profit the previous year.

Nils Andersen, AP Moller-Maersk's chief govt, has accepted that Maersk helped to accelerate last year's industry-wide fall in rates by introducing a daily service from the most Asian ports to the most northern European gateways, reported London's money Times. The Daily Maersk service significantly increased ship capability on key trade route at a time of already weakening demand.

But Mr Skou said Maersk had captured enough market share to fill the additional capability and currently required to enhance profitability.

"We we have a tendency tore notably happy to envision the uptick we have a tendency to had in volume once we launched," he said. "On the degree, we're where we want to be so as to be competitive. currently it's concerning attempting to induce higher paid."

Mr Skou noted that ocean liners had achieved, on average, operating profit margins of simply 2 per cent over the past seven years and solely earned "acceptable" margins of twelve per cent in 2010.

The new chief govt, who was previously CEO of Maersk's tanker division, refused to mention what level of returns the business ought to obtain, however said: "What I will say is that, unless we have a tendency to get business returns up to eight or 9 per cent, we're undoubtedly destroying shareholder worth."

The Danish shipping cluster might do nothing to manage the reaction of the opposite carriers to the speed slump, however would defend its market share if necessary by cutting costs, Mr Skou said.

But the shipping line would aim this year to grow by solely the 3 to four per cent annual rate given the anticipated for demand to ship containers. The carrier has already cut capability on its Asia to Europe services 9 per cent in an endeavor to come back to profitability.

He denied, however, that the shift represented a wholesale modification of strategy. "In the last few years, so as to be ready to provide, among different things, Daily Maersk, we've got been growing considerably faster than the market," Mr Skou said. "The huge modification is basically in our growth aspirations."