Ratings agency Moody’s Investors Service has announced it will place the Baa1 rating of A.P. Møller-Mærsk A/S on review, following news of the company’s decision to split its transport and logistics division from its oil and gas operations.
Maria Maslovsky, lead analyst for Maersk at Moody’s, commenting on the decision, said: “We have placed the ratings of Maersk on review for downgrade because we believe that its business diversification will reduce significantly with the separation of its energy businesses which represented 62% of EBITDA as of the first half of 2016,
“The review will likely result in a downgrade of at least one notch, although ultimately the rating will depend on the amount of debt that will be allocated to the integrated transport and logistics company, as well as any remaining ownership interests in the energy businesses.”
The major restructuring at Maersk comes as pressure continues to mount from oversupply in the container shipping industry and the ongoing slump the price of oil. Efforts to reduce these pressure resulted in Maersk announcing that it would no longer order new ships, instead increasing capacity through acquisitions.
The review will primarily focus on the actions that Maersk intends to take in order to unlock value and create synergies within the newly established transportation and logistics division, the execution risk and timing related to the separation of the energy businesses, as well as the expected impact on financial metrics. The review will also focus on the company’s future financial policy which includes defined key financial ratio targets in line with an investment grade rating. Moody’s expects to conclude the review by the end of December, 2016.