In for the long game
"I remain optimistic about APM Terminals ability to continue to deliver results in 2009 and the years ahead," Kim Fejfer, APM Terminals
International port operating expert APM Terminals tells Ben Hackett you should have a plan and stick to it
APM Terminals has a long term growth strategy designed to weather the economic crisis and collapse of the container trade in 2008-09. The company operates across 34 countries with 50 facilities and a further 26 port projects with its base head office in the unlikely place of The Hague, Netherlands.
With investments in 2008 totaling $723m, growth is on the agenda with an increase in market share of the estimated global market despite the negative growth in trade. According to chief executive Kim Fejfer, revenue increased 25% and profit was above 2007, with container volumes handled increasing eight percent to 34m teu. Still, the company reckons that it is only the third largest operator with a 6.6% market share.
Commenting on the results, Mr Fejfer says that "our focus is on emerging the economic crisis stronger than before and broadening our customer base". Keeping in mind that APM Terminals is part of the AP Moller-Maersk Group, it has managed to build its client base to 60 shipping lines accounting for 38% of the volume throughput, up from 34% in 2007. Maersk Line makes up the rest.
APM Terminals announced its first quarter 2009 financial results in May. While down, they were still profitable with an after tax result of $36m (against $59m in Q1 2008). Volumes were down by 8% but EBITDA remained steady.
Chief commercial officer, Richard Mitchell comments that the company is customer focused and is doing its best to work with them to reduce costs. "We work with lines that are entering into new VSAs and are focusing on our transhipment hubs as lines consolidate ports." The company took early measures to control and reduce costs as the impending economic crisis became apparent.
Looking to the future, the company implemented a new organisational structure aimed at positioning it closer to markets to improve execution agility. The new structure reflects three internal business sectors of existing terminals, new terminals and corporate activities that align the organisation to their business. "Despite the challenging economic environment, I remain optimistic about APM Terminals ability to continue to deliver results in 2009 and the years ahead," says Mr Fejfer.
Still, with credit still tight, it will be not be easy for APM Terminals to raise the sort of money that they have done in the past. Mr Mitchell acknowledges this and confirms that the company is today more focused on generating more cash from existing facilities rather than searching out large Greenfield sites.
The North-South trades have held up remarkably with West Africa being a complete success story for the company. There has been no drop in volumes and investments in existing facilities continues apace, particularly at Onne, Nigeria where Delmas has signed up. A new facility in Pointe Noir, Congo is hoped to open the Central African market.
This strategy is what is creating the company's formula for success. In 2008, gross revenue reached $3.1bn, an increase of 24% on the previous year. The volume of containers handled - measured in crane lifts and weighted with APM Terminals' ownership share - increased by 8% to 34m teu in 2008.
The New Terminals business, led by Peder Sondergaard and Klaus Sejling, currently has 26 port projects underway, three of which are major transhipment facilities in Europe (2) and Morocco's Tangier Med 2. These developments are the outcome of a long term strategy to develop a global balance with developing regions growing side-by-side with the established countries.
The changing patterns of container shipping, with the advent of the very large containerships of 10,000 plus ships coming on stream is challenging all the major global terminal operators. Clearly the trend is towards consolidation, either by having less carriers or more vessel sharing agreements, or both. This will create the need for more hub ports.
APM Terminals seems well placed for this, with its investments in the expansion at Rotterdam, a shareholding in Wilhelmshaven and in Tangiers Med 2, all complementing new facilities in Africa, India and South America.
"Our strategy is to emerge best out of the crisis. You need to weather the storm," says Mr Mitchell.
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