Annual Report 2010, A.P. Moller – Maersk Group

The Board of Directors of A.P. Møller – Mærsk A/S has today released the Company’s Annual Report for 2010.

The Annual Report is available at www.maersk.com. The printed Annual Report is expected to be available and sent on 3 March 2011 to the registered shareholders who have requested to receive such.

“The Group delivers a strong 2010 result, and we are very satisfied. Our people have done a truly great job. We have become more competitive and our improved service across the Group has led to continued increases in customer satisfaction. We have increased our financial strength and are ready to make significant investments in our businesses,” says Group CEO Nils S. Andersen.

2010 Highlights

• The profit for the year of USD 5.0 billion was in line with the Group’s last announced expected profit as stated on 10 November 2010.

• The Group’s result was positively affected by recov­ery in world trade and continued improvement of competitiveness through further cost savings and alignment of activities.

• The average freight rate for the Group’s container activities increased by 29% in 2010 after a decline of 28% in 2009. Volumes increased by 5% from 2009, and freight rates as well as volumes were close to the 2008 level. Unit costs excluding bunker costs declined by 4%, corresponding to USD 0.8 billion, whereas the profit was USD 2.6 billion (loss of USD 2.1 billion).

• The Group’s oil and gas activities generated a profit of USD 1.7 billion. This profit was positively affected by an increase in oil prices of 29%, to an average of USD 80 per barrel, and negatively affected by a continued declining production share, primarily in Qatar. During 2010, the Group maintained a high level of exploration activity with a share in 14 exploration and appraisal wells which resulted in several new discoveries. The Group has obtained new licenses in Greenland, Great Britain, the USA, Brazil and Norway. Furthermore, the Group has invested in significant and promising oil fields in the US Gulf of Mexico and in Brazil.

• APM Terminals’ profit of USD 793 million in 2010 was impacted by continued optimisation of the terminal portfolio by gain from divestment of certain nonstrategic port terminals and improved competitiveness through productivity increases and savings. The Group’s inland services, including trucking and container depots, etc. were integrated into APM Terminals. APM Terminals continues to focus on emerging markets and entered into an agreement to establish port terminals in Santos, Brazil and in Monrovia, Liberia.

• The tanker market rates were generally low throughout 2010, which is reflected in Maersk Tankers’ loss of USD 118 million. The result was furthermore negatively affected by impairment losses of USD 111 million.

• Maersk Drilling’s profit was USD 399 million which was significantly higher than in 2009, primarily due to operation of new semi-submersible rigs and a generally higher activity level. Maersk Drilling completed a large newbuilding programme with the delivery of the most recent semi-submersible rig.

• Maersk FPSOs and Maersk LNG had a loss of USD 242 million due to lower production for FPSOs and lower rates for LNG as well as impairment losses in both segments of USD 271 million.

• Maersk Supply Service generated a profit of USD 201 million, negatively affected by declining spot rates.

• Svitzer achieved a profit of USD 130 million, positively affected by cost savings and sales gains, etc.

• The Dansk Supermarked Group generated a profit of DKK 2.215 million.

• Generally positive market conditions and the Group’s continued streamlining and cost savings improved the cash flow from operating activities which at USD

10.1 billion was up 117% compared to 2009. At USD 4.6 billion, cash flow used for capital expenditure was somewhat lower than the preceding year. The reasons for the decrease were the completion of the field development in Qatar as well as a generally lower contracting level during the crisis. The Group’s free cash flow was USD 5.5 billion, and the Group’s net interest-bearing debt was reduced by USD 5.7 billion to USD 12.4 billion.

Outlook for 2011

The A.P. Moller – Maersk Group expects a result lower than the 2010 result. Cash flow from operating activities is expected to develop in line with the result, while cash flow used for capital expenditure is expected to be significantly higher than in 2010.

The Group expects the global demand for seaborne containers to grow by 6-8% in 2011. The global supply of new tonnage is expected to match or grow more than the freight volume especially on the Asia to Europe trade. The Group’s container activities expect a satisfactory result, but below the 2010 result.

Maersk Oil expects a higher level of exploration activities than in 2010. The Group’s share of the oil and gas production is expected to decline to around 125 million barrels. Maersk Oil’s result for 2011 is expected to be lower than in 2010 based on an average oil price around USD 90 per barrel.

APM Terminals expects continued growth in volumes and a result somewhat above 2010 excluding sales gains.

Maersk Tankers operates under very difficult market conditions and freight rates are below breakeven for most segments at the beginning of 2011. Maersk Tankers expects the result excluding impairments to be weak, however, better than in 2010.

At the end of 2010, Maersk Drilling had high contract coverage at attractive rates and expects to contribute with a result above 2010.

Maersk LNG and Maersk FPSOs expect an improved result excluding impairments compared to 2010, primarily due to the start-up of the FPSO Maersk Peregrino offshore Brazil.

Maersk Supply Service expects a lower result than in 2010 due to lower contract coverage and weaker spot market rates than at the beginning of 2010.

Svitzer expects a result above 2010.

The Dansk Supermarked Group expects a result at the level of 2010 excluding expected gain of USD 0.7 billion from the sale of Netto Foodstores Limited, UK.

The outlook for 2011 is subject to considerable uncertainty, not least due to developments in the global economy. The Group’s expected result depends on a number of factors. Based on an expected earnings level and all other things equal, the sensitivities for the four most important factors are illustrated in below table.

Factors Change Effect on the Group’s net result

Oil price +/- 10 USD/barrel +/- USD 0.2 billion

Share of oil production +/- 10 million barrel +/- USD 0.3 billion

Container freight rate +/- 100 USD/FFE +/- USD 0.8 billion

Container freight volume +/- 100,000 FFE +/- USD 0.2 billion

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