Maersk Lost More Than $700 Million From Russia in Quarter

(Bloomberg) --

A.P. Moller Maersk A/S said it lost more than $700 million in the first quarter from the war in Ukraine as the transport giant counts the cost of exiting Russia.

Maersk said Russia dragged down its earnings before interest and tax by $718 million in the three-month period, with the main amount stemming from losses related to its terminals, according to a report on Wednesday. The Copenhagen-based company had published preliminary first-quarter earnings last month.

Maersk, which controls about one-sixth of the world's container trade, has stopped taking new cargo to Russia and has put the stakes it owns in ports in the country up for sale. Maersk completed its last cargo operation in a Russian port on May 2, it said on Wednesday.

Maersk said $627 million of the Russian losses were writedowns and $91 million were increases in operating costs. The company's Russian assets are now valued at zero, Chief Executive Officer Soren Skou said in an interview with Bloomberg TV's Anna Edwards.

“We decided to write it all down during the quarter,” Skou said. “Hopefully we will regain some of that as we divest the assets in the coming quarters.”

Maersk is “in negotiations with several parties” regarding the sales of the port stakes, the CEO said. “It is a complicated situation, there's also sanctions and so on that we have to abide by. It will take a while, I suspect, for those talks.”

Maersk on April 26 reported earnings that beat estimates and raised its full-year financial outlook as strained supply chains push freight rates higher. Maersk said at the time that worldwide container demand will decline 1% or rise 1% this year, as bottlenecks limit trade flows. On Wednesday, Maersk repeated that outlook.

Maersk spent the quarter “alleviating the persisting bottlenecks,” caused by the pandemic, it said in the statement. “The turmoil and uncertainty caused by the Russian invasion of Ukraine further added to the bottlenecks.”