Maersk utilises slump to invest

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br mboss Bloomberg Nils Andersen, the group chief executive of AP Moller-Maersk, believes the biggest opportunities for infrastructure investment are in emerging markets as financial firms shy away from them. Photo: Bloomberg

Copenhagen - AP Møller-Maersk, Denmark’s biggest company, was using a slump in emerging markets as an opportunity to invest, chief executive Nils Smedegaard Andersen said in an interview yesterday.

“When we invest in ports and other infrastructure projects, we’re often competing with financial investors,” the 55-year-old chief executive said. “With fewer financial investors interested in growth markets, that can open up investment opportunities for us.”

Maersk, which owns a container line, a port operator and an oil division, invested about $7 billion (R75bn) globally last year, focusing on emerging markets. This year’s rout from Argentina to India would not prompt the company to scale back its commitment to the group of countries, Andersen said.

“I will travel a lot to emerging markets this year, which is where the biggest opportunities for infrastructure investment are,” said Andersen, whose company employs 89 000 people in 135 countries. “I was in Africa for a few weeks earlier this year and have scheduled travels to China and South America. Our investment strategy will focus on these growth markets. We have to think counter-cyclical.”

Investors have fled emerging markets this year as the US Federal Reserve pares its record stimulus measures. A slowdown in manufacturing in China and political unrest in Ukraine have added to the uncertainty. Global investors pulled $3bn from emerging market funds in the week to February 26, the 18th week of outflows, Citigroup said, citing data from EPFR Global.

An exit by short-term investors from emerging markets would help buyers like Maersk generate bigger returns, Andersen said. “In general, these financial investors tend to settle for lower returns than we do; we want double-digit returns.”

Maersk’s investments last year included container terminals in Brazil, Mexico and Russia and building up its offshore oil exploration business in Angola.

“When we invest in a port in a growth market, we spend a mix of the local currency and US dollars, so in the short term our investment costs may be a bit lower,” Andersen said. “And when the port is up and running, we tend to get payments in dollars in the transport industry, so in that way we’re pretty well covered.”

Maersk was planning to shift some investments to its oil, ports and drilling businesses and away from its container line division, which had been hurt by overcapacity in the industry.

Maersk’s earnings before interest and tax fell to 9.46 billion kroner (R18.8bn) in the fourth quarter of last year, the company said last week. Profit was hurt by lower freight rates at its container line and a decline in its oil unit’s share of production. – Bloomberg

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