* Plunges to unexpected Q4 net operating loss of $2.7 bln
* Dividend halved as aims to keep investment grade rating
* Sees 2017 as inflexion point in container shipping
* Names ex-SAP co-CEO to succeed as chairman from end-March
* Shares drop as much as 7 percent
(Adds company, analyst comments, detail, background, shares)
By Stine Jacobsen
COPENHAGEN, Feb 8 Danish shipping and oil group
A.P. Moller-Maersk plunged to an unexpected loss
last year, hit by impairments and a weak performance in
container shipping, and halved its dividend to try to protect
its credit rating.
However, the world's biggest container shipping company said
on Wednesday it saw signs of improvement in an industry that has
suffered for years from a glut of vessels and sluggish global
trade, with freight rates rising and business picking up.
"We believe we are at an inflexion point ... If you go one
year back, we hit a low point in demand. We have slowly but
surely seen a recovery," Chief Financial Officer Jakob Stausholm
said on a conference call.
The Maersk Line container shipping business said it expected
a $1 billion improvement in underlying operating profit this
year, from a loss of $384 billion in 2016, with industry demand
rising 2-4 percent compared with around 2 percent last year.
Nonetheless, the group's shares dropped as much as 7 percent
to a 2-month low of 10,810 Danish crowns, as investors focused
on a surprise $2.6 billion of impairments and the halving of the
dividend to 150 crowns a share compared with the year before.
"Maintaining investment grade rating remains crucial for
Maersk, hence we are not surprised to see capital preservation
put high on the agenda," said analysts from brokerage Fearnleys'
shipping team, who have an "accumulate" rating on the stock.
In December, Moody's downgraded Maersk's credit rating to
Baa2 from Baa1 with a negative outlook, echoing Standard &
Poor's cut to BBB from BBB+ with a negative outlook in November
- both close to the lowest investment grade levels. Below those
levels, Maersk's borrowing costs would be higher.
"We will do what it takes to remain there (in investment
grade territory)," Stausholm said.
With Maersk's energy business also suffering from a drop in
oil prices in recent years, new group Chief Executive Soren Skou
announced a far-reaching restructuring plan in September.
This included bulking up the group's transport and logistics
operations while seeking alliances or a separate listing for its
capital intensive energy division.
The group said on Wednesday there would be further change,
as it proposed Jim Hagemann Snabe, the former co-CEO of German
software company SAP as its new chairman.
He will replace Michael Pram Rasmussen, who steps down at
the end of March after 14 years in the job.
Snabe has recently also been proposed as chairman of German
engineering group Siemens.
"It is about execution now," said Otto Friedrichsen, equity
strategist at Danish asset manager Formuepleje. "With the change
in the board, they have set the team to execute on the announced
Formuepleje, with around 45 billion crowns allocated in
bonds and equities, has shunned the shipping industry, including
Maersk, and sees no point in returning just yet.
"The optimism is very much dependent on Maersk Line and it
still looks challenging," Friedrichsen said.
Maersk Line, with a fleet of more than 600 ships, joined a
wave of dealmaking in the shipping industry last year when it
agreed to buy the world's No.7 container shipping line Hamburg
Sud, its first major acquisition for more than a decade.
Final agreement is expected early in the second quarter,
with regulatory approvals by the end of 2017, Maersk said.
After years of cost cutting, the group said it was in good
shape to benefit from any recovery in container shipping, which
largely ships consumer goods, ranging from iPhones to dresses.
"Suddenly demand exceeds supply," Stausholm said, adding the
group was starting the year in "a very strong position with
strong volumes and record-low unit costs."
The level of idled capacity remained at a record-high,
despite freight rates picking up, he said.
Maersk reported a fourth-quarter net operating loss after
tax of $2.7 billion, missing analysts' average forecast for a
profit of $324 million.
The result reflected an impairment of $1.5 billion at Maersk
drilling and one of $1.1 billion at Maersk Supply Service.
For 2017, the group sees a higher underlying net profit than
the $711 million achieved in 2016.
(Reporting by Stine Jacobsen; Editing by Jason Neely and Mark