Danish oil and shipping group A.P. Moller-Maersk said on Tuesday it is shifting investment focus from its volatile container shipping unit to other core businesses to stabilize results and boost return on capital.
Its container shipping unit Maersk Line swung back to profit in the second quarter but has for years been in the spotlight due to falling freight rates and an oversupply of vessels, a scenario set to continue, it said.
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The group's other core businesses Maersk Oil, APM Terminals and Maersk Drilling, would in future increase their combined share of invested capital to up to 50 percent from currently 34 percent.
Maersk Line's share of the group's invested capital would be reduced to a 25-30 percent range from currently 38 percent, the group said at its capital markets day on Tuesday, its first in the company's 108-year history.
"We will aim for more stable results," Chief Executive Nils Smedegaard Andersen said, adding the group aimed to deliver return on invested capital of above 10 percent in five years.
"Today we see the group as a group of individual businesses," Andersen said.
Maersk Terminals and Maersk Drilling were expected to contribute each $1 billion to the group's result within five years, it said.
The units contributed $0.6 billion and $0.5 billion respectively of the group's 18.1 billion profit last year, while Maersk Line made a $0.6 billion crowns loss and Maersk Oil a profit of $2.1 billion.
"It is going to continue to be a volatile business," Andersen said, referring to its Maersk Line.
"We will continue to see vessel overcapacity for some years," he said, adding the group would not exclude participating in consolidation, but that it was not currently a priority.
Shares in A.P. Moller-Maersk were down 2 percent at 1029 GMT against a 0.6 percent decline in the Copenhagen stock exchange's benchmark index <.OMXC20>.
(Reporting by Mette Fraende; Editing by Mike Nesbit)