“We look back on a year defined by a health pandemic that shook all corners of the globe, leaving an indelible mark on people and society,” says Christian M. Ingerslev, CEO of Maersk Product Tankers. “During one of the most volatile years in tanker market history, we delivered record-high financial results, and strengthened the company’s market position by optimising our fleet composition and performance. We owe special thanks to our colleagues at sea. They have played a critical role in supplying the world’s energy, despite being at sea for long periods during successive lockdowns of society.”
A combination of vessel transactions that ensure an optimal fleet composition, the ability to harness digital, commercial and technical solutions to enhance fleet performance, and rising freight rates, boosted earnings, turning the USD 92.4m net profit in 2019 into an USD 160.7m net profit in 2020. The company’s revenue decreased to USD 663.6 million (USD 727.7 million), mainly caused by a fall in freight rates during the second half of the year, while it delivered a positive free cash flow of USD 183.2 million (a negative free cash flow of USD 11.1 million).
The product tanker market was a tale of two halves in 2020. In the first half of the year, demand for oil products collapsed. This coincided with OPEC releasing extra volumes on to the market, which caused oil prices to hit a historic low. This led to several tanker vessels being used as storage facilities, causing earnings to spike to new highs. The second half of the year saw lower freight rates and a growing tanker fleet, which caused a supply-demand imbalance. Maersk Product Tankers expects the market to remain subdued in the first half of 2021, but it can re-bound later in the year depending on the speed and effectiveness of the COVID-19 vaccine roll-out.
Maersk Product Tankers continued working in strategic partnership with Maersk Tankers, which manages the fleet commercially and technically. Maersk Tankers’ scale with more than 230 vessels under management and significant investments into digital, commercial and technical shipping solutions enabled greater economic and environmental performance of the assets. Critical in this was the use of the digital solution Optimise by ZeroNorth. Through the use of complex algorithms, Optimise helps operators optimise bunker spend, which, in turn, cuts CO2 emissions and boost revenue. The solution was used across the fleet and it now has the commitment of 1,500 vessels in tramp shipping to use it.
These solutions reduced Maersk Product Tankers fleet’s CO2 emissions by 3.3 per cent, giving a total reduction of 28.7 per cent between 2008 and 2020 (as measured on the Energy Efficiency Operational Indicator). This puts Maersk Product Tankers on course to achieve its target of a 30 per cent cut by 2021.
“Shipowners have to put in place comprehensive plans to reduce their CO2 emissions. We have an unwavering commitment to cutting our fleet’s emissions through partnerships and innovative solutions,” says Ingerslev.
The company completed a series of vessel transactions at attractive prices, including a sale-and-lease-back agreement on nine vessels. In total, 20 vessels were sold and two newbuildings entered the fleet. The ongoing newbuilding programme will deliver nine LR2s over the coming years.
Lockdowns and restrictions implemented by governments to contain the pandemic made crew shifting exceedingly difficult and were an added cost. Despite this, Maersk Tankers’ technical management of the vessels reduced average daily running costs to USD 5,590 per day (USD 5,696 per day in 2019). This was achieved, among other things, through greater use of data and technology in vessel repair and maintenance.
Maersk Product Tankers finds itself in a solid market position at the start of 2021 thanks to the performance and results achieved in 2020. It will continue to work in partnership with Maersk Tankers and, in tandem, the two companies will take measures to maintain a competitive fleet that matches the inherent cyclical nature of shipping markets, meets the needs of customers and delivers attractive returns to owners.
Financial highlights in 2020 – full-year results
- Net profit: USD 160.7m (USD 92.4m)
- Revenue: USD 663.6 million (USD 727.7 million)
- Cash flow: Positive free cash flow of USD 183.2 million (negative free cash flow of USD 11.1 million)
- Outstanding capital commitments: USD 301.8 million (USD 421.2 million)
- Vessels’ daily average running costs: USD 5,590 per day (USD 5,696)
About Maersk Product Tankers
Maersk Product Tankers is a leading player in the product tanker industry, owning more than 80 vessels, which are carrying refined oil products worldwide for customers. The company is owned by A.P. Møller Holding A/S and Mitsui & Co. Ltd., and has its headquarters in Copenhagen, Denmark.