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Canceling is also possible

Canceling is also possible
Maersk will cancel or postpone all new investment projects to free up cash as access to bank funding remains limited.

Maersk will cancel or postpone all new investment projects to free up cash as access to bank funding remains limited.

A.P. Moeller-Maersk A/S, owner of the world"s largest container line, will cancel or postpone all new investment projects to free up cash as access to bank funding remains limited. ?We want to free up cash to allow us to seize investment opportunities if they occur,? Chief Executive Officer Nils Smedegaard Andersen said in the Copenhagen-based company"s internal employee magazine, distributed via e-mail today.

Maersk Line, which owns more than 470 vessels that can carry a total of 1.9 million containers, is losing money as it struggles to adjust to recessions in the U.S. and Europe as well as increased competition on global trade routes. Andersen said today the cancellations won"t include projects Maersk has already committed to, including the purchase of new container vessels and of Swedish tanker operator Brostroem AB.

?We will run our business the next couple of years in a way where we do not need additional funds from banks,? Andersen said. The company, Denmark"s biggest, would also cut costs, including all business travel unless it"s ?critical.?

Maersk will earn ?less money in coming years,? Andersen said, as container rates decline and falling energy prices reduce earnings at its oil and gas unit, which is the Nordic region"s second-largest.

Immense Problems

?These comments show how bad money markets are, but are also a testament to the immense problems Maersk has in the container market,? said Jacob Pedersen, an analyst with Aabenraa, Denmark-based Sydbank A/S. ?Maersk has a strong history of investing heavily, so this is a pretty drastic situation.? He rates the shares ?neutral.?

Maersk dropped as much as 4.1 percent in Copenhagen trading after Andersen"s comments, and declined 900 kroner, or 3.1 percent, to close at 28,600 kroner. The shares have lost 47 percent this year.

?I fully understand how frustrating it must be if you have worked hard on a project that is now being postponed or canceled,? Andersen said in the editorial. ?However, even after reducing our investment plan, we"ll still be investing strongly above our depreciation level over the coming two years.?

Maersk agreed in August to buy Brostroem for 3.62 billion Swedish kronor ($450 million), creating the world"s largest operator of gasoline, jet fuel and diesel tankers. Maersk said June 24 it ordered 18 new container vessels from shipbuilder Hyundai Heavy Industries Co. and two weeks later that it will buy 16 ships from Daewoo Shipbuilding & Marine Engineering Co.

www.TurkishMaritime.com.tr

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