Annual Report (ESEF) • Aug 3, 2022
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Download Source FileUntitled ALL THE WAY A.P. Møller - Mærsk A/S | Interim Report | 3 August 2022 Esplanaden 50, DK-1263 Copenhagen K / Registration no. 22756214 Q2 2022 Contacts for further information Søren Skou, CEO Tel. +45 3363 1901 Patrick Jany, CFO Tel. +45 3363 3106 Investors Sarah Spray, Head of Investor Relations Tel. +45 3363 3106 Media Signe Wagner, Head of External Relations Tel. +45 3363 1901 Webcast and dial-in information A webcast relating to the Q2 2022 Interim Report will be held on 3 August 2022 at 11.00 (CET). Dial-in information on investor.maersk.com. Presentation material for the web- cast will be available on the same page. The Interim Report for Q2 2022 of A.P. Møller - Mærsk A/S (further referred to as A.P. Moller - Maersk as the consolidated group of com- panies) has been prepared in accord- ance with IAS 34 ‘Interim Financial Reporting’ as issued by the Interna- tional Accounting Standards Board (IASB) and adopted by the EU and additional Danish disclosure require- ments for interim financial reporting of listed companies. The interim consolidated financial statements have not been subject to audit or review. Comparative figures Unless otherwise stated, all figures in parentheses refer to the corre- sponding figures for the same period prior year. Forward-looking statements The interim report contains forward- looking statements. Such statements are subject to risks and uncertainties as numerous factors, many of which are beyond the control of A.P. Moller - Maersk, may cause the actual development and results to differ materially from expectations contained in the interim report. Financial calendar 2 November 2022 Interim Report Q3 2022 8 February 2023 Annual Report 2022 Management review Highlights Q ......................................................................................................................... Summary financial information ................................................................................................. Review Q ................................................................................................................................ – Delivering strong financial results with clear customer focus .............................. – Winding down in Russia ........................................................................................................... – Status on acquisitions ............................................................................................................... – ESG update ..................................................................................................................................... – Change in management ........................................................................................................... – Delivering on the roadmap to .................................................................................. Financial review Q ............................................................................................................. Financial review H ............................................................................................................. Guidance for ........................................................................................................................... Market insights ................................................................................................................................... Segments .............................................................................................................................................. – Ocean ................................................................................................................................................ – Logistics & Services .................................................................................................................... – Terminals ......................................................................................................................................... – Towage & Maritime Services.................................................................................................. Statement of the Board of Directors and the Executive Board ................................... Financials Condensed income statement .................................................................................................... Condensed statement of comprehensive income ............................................................. Condensed balance sheet at June ..................................................................................... Condensed cash flow statement ............................................................................................... Condensed statement of changes in equity ......................................................................... Notes ....................................................................................................................................................... Additional information Quarterly summary .......................................................................................................................... Definition of terms ........................................................................................................................... Improving life for all by integrating the world At A.P. Moller - Maersk we aspire to provide truly integrated logistics. Across oceans, ports, on land and in the air, we are combining our supply chain infrastructure with the power of our people and technology to drive end-to-end innovation that accelerates our customers’ success. With a dedicated team of 100,000+ talents, operating in more than 130 countries, we explore new frontiers and embrace new technologies because we see change as an opportunity. No matter the challenge, we stay optimistic and resilient because our values are constant. By living our values, we inspire trust in our efforts to integrate the world and improve life for all. Contents 2 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Management review A.P. Moller - Maersk continued to deliver record results in Q2 2022 as revenue increased by 52%, and both EBITDA and EBIT more than doubled compared to Q2 2021. Profit was USD 8.6bn (USD 3.7bn) for Q2 and USD 15.4bn (USD 6.5bn) for H1. The company’s focus remains on assisting customers who continue to face exceptional con- ditions with persisting landside congestion particularly in the United States and Europe. The acquisitions of Pilot Freight Services and Senator International were completed in Q2, and A.P. Moller - Maersk further strengthened its air freight offering by launching Maersk Air Cargo. In Russia, A.P. Moller - Maersk continues the process of winding down operations with the intent to ultimately leave the country. Highlights Q2 2022 Revenue for Q2 increased by USD 7.4bn to USD 21.7bn (USD 14.2bn), mainly due to an increase in Ocean of USD 6.3bn, while revenue increased by USD 1.3bn in Logistics & Services and by USD 155m in Terminals. EBITDA increased by USD 5.3bn to USD 10.3bn (USD 5.1bn) and EBIT increased by USD 4.9bn to USD 9.0bn (USD 4.1bn) with an increase in: Ocean by USD 4.9bn to USD 8.5bn (USD 3.6bn), mainly driven by significantly higher freight rates as contract rates con- tinued to be strong despite a progressive softening of short-term rates, slightly offset by a decrease in volumes and by higher costs related to bunker, handling and network. Logistics & Services to USD 234m (USD 153m), mainly due to higher volumes from new customer wins, increased spending from existing customers and acquisitions. Terminals to USD 316m (USD 302m), mainly due to higher storage income, partly offset by higher costs. Free cash flow increased to USD 6.8bn (USD 3.2bn), due to strong cash flows from operating activities of USD 8.6bn (USD 4.1bn), partly offset by CAPEX of USD 1.0bn (USD 452m) and higher capitalised lease instalments of USD 762m (USD 453m), mainly related to vessels and aircraft. Total distribution of cash to shareholders through share buy-backs was USD 553m in Q2 2022. On the ESG agenda, A.P. Moller - Maersk’s terminal business reached an important milestone towards achieving net zero green- house gas emissions in 2040 after having successfully transitioned eight of its European terminals to operating on renewable elec- tricity. Maersk ECO Delivery, the low-carbon shipping product, was in demand with volumes four times higher than in Q2 2021. As communicated on 2 August, guidance for 2022 has been revised upwards to an underlying EBITDA of around USD 37.0bn (previously around USD 30.0bn), an underlying EBIT of around USD 31.0bn (previously around USD 24.0bn) and a free cash flow above USD 24.0bn (previously above USD 19.0bn). Based on the improved guidance the Board of Directors has decided to increase the current share buy-back programme by USD 500m annually from USD 2.5bn to USD 3.0bn for the years 2022-2025. Highlights Q2 USD million Revenue EBITDA EBIT CAPEX Ocean Logistics & Services Terminals Towage & Maritime Services Unallocated activities eliminations etc - - - - - - AP Moller - Maersk consolidated 3 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Management review I Highlights Q2 2022 Q Q M M M Income statement Revenue Profit before depreciation amortisation and impairment losses etc (EBITDA) Depreciation amortisation and impairment losses net Gain on sale of non-current assets etc net Share of profit/loss in joint ventures and associated companies - Profit before financial items (EBIT) Financial items net - - - - - Profit before tax Tax Profit for the period AP Møller - Mærsk A/S’ share Underlying profit Balance sheet Total assets Total equity Invested capital Net interest-bearing debt - - - Cash flow statement Cash flow from operating activities Capital lease instalments – repayments of lease liabilities Gross capital expenditure excl acquisitions and divestments (CAPEX) Cash flow from financing activities - - - - - Free cash flow Financial ratios Revenue growth % % % % % EBITDA margin % % % % % EBIT margin % % % % % Cash conversion % % % % % Return on invested capital after tax (ROIC) (last twelve months) % % % % % Equity ratio % % % % % Underlying ROIC (last twelve months) % % % % % Underlying EBITDA Underlying EBITDA margin % % % % % Underlying EBIT Underlying EBIT margin % % % % % Stock market ratios Earnings per share USD Diluted earnings per share USD Cash flow from operating activities per share USD Share price (B share) end of period DKK Share price (B share) end of period USD Total market capitalisation end of period USD 1 Underlying is computed as the relevant performance measure adjusted for the net gains/losses from the sale of non-current assets, etc. and net impairment losses as well as transaction, restructuring and integration costs related to major transactions. The adjustments include A.P. Moller - Maersk’s share of mentioned items in joint ventures and associated companies and, when applicable, the adjustments are net of tax. Summary financial information 4 AMOUNTS IN USD MILLION Management review I Summary financial information A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Review Q2 2022 Delivering strong financial results with clear customer focus A.P. Moller - Maersk’s strong financial results continued in Q2 2022, with higher profits compared to Q2 2021 in all three major businesses and record operational results in Ocean and Logistics & Services. In particular, the profit in Ocean increased significantly through higher freight rates driven by strong contract rates. Record profitability in Logistics & Services came from both acquisitions and organic revenue growth, with new customer wins, increased business with existing cus- tomers and realised customer synergies between Logistics & Services and Ocean. The increase in Terminals was driven by storage income in North America, Consumer Price Index (CPI) related tariff increases and higher volumes offset by cost increases. Landside congestion continues to be an issue around the world, with additional pressure from the Chinese lockdown which affected most upstream opera tions. A.P. Moller - Maersk continues to assist contract customers facing these excep- tional conditions, supporting their supply chains by alleviat- ing the persisting landside congestion, through investing in additional equipment and increasing the capacity allocated to contracted volumes. Winding down in Russia As previously announced, A.P. Moller - Maersk is winding down its operations in Russia, which will ultimately result in a complete exit from the country. All services to and from Russia have been discontinued, and the process of divesting assets, including a minority stake of 30.75% of Global Ports Investments (GPI), is ongoing. The impact on EBIT from the Russia/Ukraine situation was less negative due to a reversal in Q2 of USD 93m of certain losses and impairments in Ocean previously recognised in Q1. USD 70m relates to more containers successfully being evac- uated from the affected areas than previously anticipated. The net EBIT impact for H1 2022 is negative USD 624m. Russia/Ukraine EBIT impact USD million Q Q H Ocean - - Logistics & Services - - Terminals - - - Towage & Maritime Services - - - Total - - Status on acquisitions The acquisition of Pilot Freight Services (Pilot) was completed in early May and the acquisition of Senator Inter national in early June. Both Pilot and Senator International have been reported in the financials for Logistics & Services for the first time in May and June respectively. Status on other intended acquisitions The intended acquisition of LF Logistics was announced in December 2021 and is expected to close in Q3 2022. The creation of a joint venture with Grindrod Intermodal Group in which A.P. Moller - Maersk would own 51% of the stake was announced in November 2021 and is expected to close in Q4 2022. Both transactions are subject to regulatory approvals. ESG update A.P. Moller - Maersk has a comprehensive and ambitious ESG strategy encompassing the full scope of material sus- tainability risks, responsibilities and opportunities for the company. A.P. Moller - Maersk is guided by three core com- mitments: • Environment: take leadership in the decarbonisation of logistics • Social: ensure that people thrive at work by providing a safe and inspiring workplace • Governance: operate based on responsible business practices. Progress highlights for Q2 are outlined below. For a full overview of A.P. Moller - Maersk’s ESG strategy and roadmap, please see WWW.MAERSK.COM/SUSTAINABILITY. Eight terminals in Europe now operating on renewable electricity A.P. Moller - Maersk has an ambitious target of achieving net zero emissions across all scopes by 2040 and an emis- sion reduction target of 70% (scope 1 and 2) by 2030 for Terminals specifically. One of the major pillars of Terminals’ decarbonisation strategy is to radically reduce the company’s consumption of fossil fuels across terminals by transi tioning to the use of electricity from renew able sources for con- trolled terminals. After switching to renewable electricity in APM Terminals Aarhus, Denmark, earlier this year, the company has achieved an important milestone, with all electric equipment at eight European terminals now powered by renewable electricity. 5 Management review I Review Q2 2022 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 A.P. Moller - Maersk joins initiative to accelerate transition to net zero steel industry Steel is the world’s most widely used material and steel- making is currently a major source of carbon emissions globally, second only to the cement industry. As an impor- tant consumer of steel as well as supplier of scrap steel for recycling, A.P. Moller - Maersk has decided to join Climate Group Steel Zero (SZ), in order to send a clear demand signal and catalyse the transition to sustainable steel. Increased market demand for Maersk ECO Delivery shipping product Growth in demand for Maersk ECO Delivery continued in Q2, with volumes four times higher than in Q2 2021. Maersk ECO Delivery customers pay a green premium for a low-carbon shipping product, which provides certified carbon emissions savings. With this product, A.P. Moller - Maersk enables cus- tomers to take action to reduce their greenhouse gas emis- sions in a flexible and convenient way. Svitzer announces strategy for fully carbon neutral operations by 2040 Under its recently unveiled two-stage decarbonisation strategy, Svitzer aims to reduce the carbon intensity of its entire fleet of tugs by 50% by 2030 compared to a 2020 baseline. This will pave the way for fully carbon-neutral operations just ten years’ later in 2040, in alignment with corporate goals. Increase in employee satisfaction A.P. Moller - Maersk is committed to improving employee engagement across the organisation and the results of the bi-annual engagement survey show continued progress. On 11 out of the 12 engagement items, A.P. Moller - Maersk scores are above the median in Gallup’s global database, and the company is confident that the target of reaching a top - quartile score by 2025 is within reach. Fatalities In the first half of 2022, six fatalities have occurred across the A.P. Moller - Maersk business lines, impacting three A.P. Moller - Maersk employees and three persons employed by third parties while performing work on A.P. Moller - Maersk premises. The company is deeply saddened and committed to full transparency, applying all efforts to learn from these tragic events and work towards eliminating the factors and managing the critical risks that lead to fatal incidents. Stepping up in the fight against sexual harassment Following an internal investigation focused on inclusion, A.P. Moller - Maersk has launched several initiatives to ensure that the working environment across all parts of the company is safe, supportive and welcoming to all. Specially for the seafaring population, this includes active outreach to female seafaring colleagues to gather their first-hand accounts of the culture at sea notably around sexual harass- ment. The conversations, which are still taking place, unfor- tunately confirms that cultural change is needed. The com- pany is fully committed to creating a safe workplace for all and has a dedicated team working on the cultural transfor- mation and collaborates with subject matter experts in the field of anti-sexual assault/sexual harassment (SASH), as well as with other industry participants and advocates. Change in management As communicated, Morten Engelstoft, decided to retire as CEO of APM Terminals by the end of June 2022. Morten Engelstoft has been succeeded in the CEO role by Keith Svendsen, with Henriette Hallberg Thygesen as the Chairperson. 6 Management review I Review Q2 2022 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Delivering on the roadmap to 2025 The roadmap to 2025 initiated in 2021 is providing specific targets for the transformation towards becoming the integrator of container logistics. The return on invested capital (ROIC) (LTM) was 62.5%, well above the target of above 7.5% every year, and above 12% for the period 2021-2025, driven by the increase in profit. A.P. Moller - Maersk will prioritise the capital allocation to investments in the business, including acquisitions in Logistics & Services, repaying debt, paying ordinary dividends based on a pay-out ratio of 30-50% of under- lying net profit and distributing excess cash to shareholders through share buy-backs and special dividends in that order. A.P. Moller - Maersk has a total commitment of USD 10bn (around DKK 64bn) in two share buy-back pro- grammes of each USD 5bn (around DKK 32bn) with the first initiated in November 2021 and the second initi- ated in May 2022. Ocean delivered an EBIT margin of 45.0% over the last twelve months, well above the target of 6% under normalised conditions. Total fleet capacity is within the range of 4.1-4.3m TEU. For Logistics & Services, organic growth of 35% over the last twelve months was above the target of 10%, and 61% of the organic growth related to top 200 customers was also above the target of 50%. Finally, the EBIT margin of 6.2% was above the target of above 6%, making Logistics & Services the strategic growth driver for the company. In addition to rapid organic growth, the expectation is to continue to make acquisitions, mainly of new capabilities and growth platforms, to expand the logistics business. The return on invested capital (ROIC) (LTM) was 7.4% for Terminals in Q2 and lower than the expecta- tion of above 9% towards 2025. Excluding the impact from Russia, ROIC (LTM) was 13.1%. Roadmap to 2025 Targets LTM Consolidated Return on invested capital (ROIC) Every year > % Average - > % % – CAPEX and leases at depreciation level – Stable invested capital over the period Dividend policy of underlying net profit -% Share buy-back over - USDm (of which completed) Share buy-back over - USDm - Ocean EBIT margin – under normalised conditions > % % Execute with the existing fleet size TEUm - Logistics & Services Organic revenue growth per year >% % Of which from top customers % % EBIT margin > % % Terminals Return on invested capital (ROIC) > % % 7 Management review I Review Q2 2022 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Revenue increased by USD 7.4bn to USD 21.7bn (USD 14.2bn), with increases in Ocean of USD 6.3bn, in Logistics & Services of USD 1.3bn and in Terminals of USD 155m. The increase in Ocean was driven by higher freight rates, partly offset by lower volumes. Short-term rates have softened from their peak, but are still higher than a year ago, while the more important contract rates have continued to increase given the continuing congestion. EBITDA increased to USD 10.3bn (USD 5.1bn), primarily coming from Ocean with an EBITDA of USD 9.6bn (USD 4.4bn), driven by an increase in revenue due to higher freight rates, partly offset by a decrease in volumes and by higher costs related to bunker, handling and network. In Logistics & Services, EBITDA increased by USD 121m to USD 337m (USD 216m) due to the higher revenue, and in Terminals, EBITDA increased by USD 30m to USD 400m (USD 370m) because of higher storage income, the increase in volume, and CPI-related tariff increases partly offset by increases in costs. EBIT increased to USD 9.0bn (USD 4.1bn) as a result of the increase in EBITDA. Financial items, net, amounted to USD 203m (USD 186m), as increased interest income was more than offset by for- eign exchange rate adjustments and derivative losses on hedging from share buy-back. Tax increased to USD 164m (USD 152m), primarily due to the improved financial performance. The underlying profit was USD 8.6bn (USD 3.7bn). Cash flow from operating activities was USD 8.6bn (USD 4.1bn), driven by EBITDA of USD 10.3bn, partly offset by an increase in net working capital of USD 1.2bn, mainly driven by higher receivables due to higher revenue, translating into a cash conversion of 83% (82%). Gross capital expenditure (CAPEX) of USD 1.0bn (USD 452m) was driven by higher investments across all segments, with Ocean and Logistics & Services being the main drivers. Free cash flow of USD 6.8bn (USD 3.2bn) was positively impacted by higher cash flow from operating activities, slightly offset by increased lease and financial payments and higher capital expenditures Financial review Q2 2022 Contractual capital commitments totalled USD 4.2bn (USD 3.3bn at year-end 2021), of which USD 2.0bn is for Ocean vessels and equipment, including green methanol- enabled vessels and USD 1.1bn is related to commitments towards terminal concession grantors. Capital structure and credit rating Net interest-bearing debt decreased to a net cash posi- tion of USD 3.4bn (a net cash position of USD 1.5bn at year- end 2021), as free cash flow of USD 12.9bn for the first six months was partly used for share buy-backs of USD 1.2bn, dividends paid of USD 6.9bn, acquisition of companies of USD 2.1bn of which USD 597m is related to settlement of debt and USD 1.5bn is related to acquisition of companies, and an increase in lease liabilities of USD 785m. Excluding lease liabilities, the Group had a net cash position of USD 14.7bn (USD 12.1bn at year-end 2021). A.P. Moller - Maersk remains investment grade-rated and holds a Baa2 (stable outlook) rating from Moody’s and a BBB+ (stable) rating from Standard & Poor’s. The liquidity reserve increased to USD 23.6bn (USD 21.5bn at year-end 2021) and was composed of liquid funds and term deposits of USD 17.6bn, excluding restricted cash (USD 15.5bn at year-end 2021) and undrawn revolving credit facilities of USD 6.0bn (USD 6.0bn at year-end 2021). Share buy-back The Annual General Meeting has approved a total commit- ment of USD 10bn (around DKK 64bn). During Q2, A.P. Moller - Maersk bought back 40,771 A shares and 163,466 B shares, worth DKK 3.86bn (approximately USD 553m), and no shares were bought for the long-term incentive programme. At 30 June 2022, A.P. Moller - Maersk owns a total of 55,811 A shares and 316,838 B shares as treasury shares, corresponding to 1.99% of the share capital. At the Annual General Meeting on 15 March 2022, the can- cellation of 133,779 A shares and 535,076 B shares was approved and the cancellation was completed in Q2. The Board of Directors is permitted to decide to acquire own shares up to a maximum of 15% of the share capital. 8 Management review I Financial review Q2 2022 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Revenue increased by USD 14.3bn to USD 40.9bn (USD 26.7bn), with substantial increases particular in Ocean of USD 12.4bn, in Logistics & Services of USD 2.2bn, and in Terminals of USD 371m. The increase in Ocean was driven by significantly higher freight rates, given the continuing congestion, partly off- set by lower volumes. While contract rates continued to increase, short-term rates have slightly softened during Q2. The increase in Logistics & Services was primarily due to significant volume growth, but also margin improvements, enabled both through increased volume share with existing customers and acquisitions, new customer wins and cus- tomer synergies between Logistics & Services and Ocean. The increase in Terminals was mainly driven by storage income in North America and continued higher volume. EBITDA increased significantly to USD 19.4bn (USD 9.1bn). Ocean contributed with an increased EBITDA of USD 17.8bn (USD 7.8bn), driven by higher revenue due to higher freight rates, partly offset by lower volumes and higher bunker costs from increased bunker prices, handling and network. In Logistics & Services, the increased EBITDA of USD 656m (USD 421m) was due to the higher revenue, and in Terminals, EBITDA of USD 856m (USD 693m) was positively impacted by higher storage income, the increase in volume and increasing tariffs. EBIT increased by USD 9.1bn to USD 16.3bn (USD 7.2bn), positively impacted by the improved EBITDA with a neg- ative impact from the Russia/Ukraine situation of USD 624m. The EBIT margin increased to 39.7% (26.9%). The impact from the Russia/Ukraine situation amounted to USD 69m in Ocean, USD 52m in Logistics & Services, USD 485m in Terminals related to an impairment to the hold- ing in Global Ports Investments as a result of the with- drawal of business in Russia and USD 18m in Towage & Maritime Services. Financial review H1 2022 Financial items, net, amounted to USD 497m (USD 416m), negatively impacted by losses on foreign exchange rate adjustments and derivative losses. Tax increased to USD 335m (USD 302m), primarily due to improved financial performance. The underlying profit after financial items and tax was USD 16.0bn (USD 6.4bn). Cash flow from operating activities was USD 16.8bn (USD 7.6bn), positively impacted by the increase in EBITDA of USD 10.3bn, offset by a negative change in net working capital of USD 2.3bn, leading to a cash conversion of 87% (83%). Gross capital expenditure (CAPEX) was USD 2.4bn (USD 781m), driven by higher investments across all segments. Free cash flow increased to USD 12.9bn (USD 5.6bn), posi- tively impacted by higher cash flow from operating activi- ties, partly offset by higher gross CAPEX and increased lease payments and financial payments. The ordinary dividend of DKK 2,500 per A.P. Møller - Mærsk A/S share of nominally DKK 1,000 (USD 6.9bn) declared at the Annual General Meeting on 15 March 2022 was paid on 18 March 2022. Total equity increased to USD 52.6bn (USD 45.6bn on 31 December 2021), mainly driven by higher net profit of USD 15.4bn, partially offset by dividends payments and share repurchase resulting in an equity ratio of 65.4% (63.1% at year-end 2021). Highlights H1 USD million Revenue EBITDA EBIT CAPEX Ocean Logistics & Services Terminals Towage & Maritime Services Unallocated activities eliminations etc - - - - - - AP Moller - Maersk consolidated 9 Management review I Financial review H1 2022 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Guidance for 2022 As announced on 2 August, given the strong results of Q2 2022, the longer than anticipated continuation of supply chain congestion, and subsequent higher freight rates, full- year 2022 guidance has been revised upwards to an under- lying EBITDA of around USD 37.0bn (previously around USD 30.0bn), an underlying EBIT of around USD 31.0bn (previ- ously around USD 24.0bn) and a free cash flow (FCF) above USD 24.0bn (previously above USD 19.0bn). Guidance is now based on an expectation of a gradual nor- malisation in Ocean taking place early in Q4 2022. Sensitivity guidance Financial performance for A.P. Moller - Maersk for 2022 depends on several factors and is subject to uncertainties related to the situation in Russia and Ukraine, COVID-19, bunker fuel prices and freight rates, given the uncertain macroeconomic conditions. All else being equal, the sensitivities for 2022 for four key assumptions are listed in the table below: Factors Change Effect on EBIT (midpoint of guidance) Rest of year Container freight rate +/- USD/FFE +/- USD bn Container freight volume +/- FFE +/- USD bn Bunker price (net of expected BAF coverage) +/- USD/tonne +/- USD bn Foreign exchange rate (net of hedges) +/- % change in USD +/- USD bn Given the volume developments in Q2, A.P. Moller - Maersk has revised its 2022 outlook for the growth of global con- tainer demand to the lower end of the +/- 1% range. CAPEX guidance for 2022-2023 remains unchanged at USD 9.0-10.0bn, driven by intensified growth in Logistics & Services and ESG investments. Further, CAPEX guidance for 2021-2022 of around USD 7.0bn is maintained. Based on the improved guidance the Board of Directors has decided to increase the current share buy-back programme by USD 500m annually from USD 2.5bn to USD 3.0bn for the years 2022-2025. Guidance 2022 – development USD million New guidance August Previous guidance April Initial guidance February Underlying EBITDA - around Underlying EBIT - around Free cash flow (FCF) - above Underlying EBITDA is earnings before interest, taxes, depreciation and amortisation adjusted for restructuring and integration costs. Underlying EBIT is operating profit before interest and taxes adjusted for restructuring and integration costs, net gains/losses from sale of non-current – assets and net impairment losses. 10 Management review I Guidance for 2022 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Market insights Demand for logistics services continued to moderate across global supply chains in Q2 2022. The war in Ukraine weighed on consumer and company sentiment and added to higher inflation via energy and other commodity prices. While the Omicron wave of COVID-19 faded in large parts of the world and congestion began to ease in some parts of the logistics supply chain, lockdowns in China once again challenged supply networks. Short-term economic indicators turned negative in Q2. Euro Area PMI surveys declined in June, above all in the manu- facturing sector. Consumer sentiment also slowed. With price indices remaining very high, the Euro Area appears to have entered a period of ‘stagflation’. While the ongoing invasion in Ukraine has added to global inflationary pres- sures via higher energy and commodity prices, Europe and many emerging and developing economies are now among the most exposed to the fallout from the war. In the USA, underlying demand held up more firmly in Q2, but short- term indicators suggest weaker growth going forward, as exemplified by the sharp deterioration of business and con- sumer sentiment in July. In response to inflation, the US Federal Reserved recently hiked interest rates by 0.75%, adding further to downward pressure on the US housing market and overall activity. Global container volumes declined by 2.3% in Q2, following -1.7% in Q1 2022 compared to Q1 2021, and container trade is now below the pre-pandemic trend. Meanwhile, global port throughput increased by 2.8% (Drewry), and global air cargo volumes (CTK) were 9.4% lower in April/May. Trade flow levels flattened at high levels in the USA, where con- sumption of technology and retail goods rose dramatically during the COVID-19 pandemic. North American container imports from the Far East fell by around 1.0% in Q2, but overall levels remain elevated. European consumption was held back by high inflation and the impact on consumer confidence from the war in Ukraine, and European con- tainer imports from the Far East fell by 5.2% in Q2. Further- more, Chinese lockdowns constrained container exports. On the North-South trades, trade flows were also nega- tively impacted by high inflation as well as the Chinese port lockdowns in the spring, and container demand declined by 3.6% in Q2. The supply side of the logistics industry continued to be disrupted by COVID-19-led capacity shortages. Container availability and air capacity remained tight, although wait times for vessels outside of ports eased, above all on the US West Coast. In Europe, supply chain congestion remained as retailers and manufacturers kept containers in ports and warehouses due to weak final demand. Port lockdowns in China due to the COVID-19 zero-tolerance policy as well as consequences from the war in Ukraine also caused strains in key areas of the logistics network. The air freight industry remained capacity constrained during Q2, and although capacity in the commercial air industry was 3.5% higher than a year earlier (April/May 2022 vs April/May 2021), it remained well below the 2019 level. From an Ocean perspective, the nominal global container fleet stood at 25.4m TEU at the end of Q2, an increase of 3.9% compared to Q2 2021. The idle fleet increased slightly but remained low in Q2 2022 at 1.1% as the industry battled landside disruption and bottlenecks in ports. Nevertheless, lost sailings and vessel delays driven by the congestion and an ongoing com positional shift in deployment from shorter intra- regional trades to longer East-West trades continued to weigh on effective supply growth in Q2 2022. In sum, effective supply declined more than headhaul demand in Q2 compared to Q2 2021, and the demand- supply balance improved slightly. Freight and charter rates remained elevated in the con- tainer industry, reflecting congestion, although spot/short/ short-term contract rates declined in Q2 relative to Q1. Some of this decline reflected the normal seasonal pattern. The order book reached 28% of the global fleet in Q2, compared to 26% of the fleet at the end of Q1 on the back of continued high new order activity. Freight rates out of China, as meas- ured by the China Composite Freight Index (CCFI), were 46% higher in Q2 2022 than Q2 2021. The continued congestion and dislocation of supply and demand fundamentals in the logistics industry increases the uncertainty surrounding the outlook for freight rates. On the demand side, sharply rising prices reduce real house- hold income and may well lead consumers to adjust their spending plans. The Russian invasion of Ukraine has weak- ened the global demand outlook and significantly added to uncertainty, and overall recession risks are mounting as indicated by weak consumer and business sentiment, slow- ing housing markets and tighter financial conditions. Global container demand is projected to stay flat at the lower end of +/- 1% in 2022, but downside risks dominating, while air and land-side logistics demand is expected to remain more robust through 2022. On the supply side, supplier delivery times remain lengthy, and it is still uncertain when capacity constraints including landside bottlenecks in trucking and warehousing will abate. 11 Management review I Market insights A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Segments Ocean Profitability for Q2 increased substantially compared to the same quarter last year, driven primarily by significantly higher freight rates, given the continuing congestion. While contract rates continued to increase, short-term rates have slightly softened during the quarter. To tackle the recent China lockdown, cargoes were diverted to neighbouring ports to avoid the congestion in Shanghai. None theless, the continuous disruptions in Europe and North America have led to volume declines in these two markets. As a result, the loaded volumes decreased by 7.4%. The average loaded freight rates increased by 64%, driven by both contracts and shipment rates on routes from Asia to Europe and to North America. Unit cost at fixed bunker increased by 14%, driven by higher network and container- handling costs and lower volumes. Utilisation on offered capacity remained strong at 92.5% and while schedule relia- bility in Q2 was industry-leading, challenges remain due to increased congestion in Europe and the ongoing congestions in the United States on both the West and East Coast, while congestions in Asia began to ease at the end of Q2. Ocean highlights USD million Q Q M M M Freight revenue Other revenue including hubs Revenue Container-handling costs Bunker costs Network costs excluding bunker costs Selling General & Administration (SG&A) Cost of goods sold and other operational costs Total operating costs Other income/costs net - - - - - Profit before depreciation amortisation and impairment losses etc (EBITDA) EBITDA margin % % % % % Profit before financial items (EBIT) EBIT margin % % % % % Invested capital Gross capital expenditure excl acquisitions and divestments (CAPEX) Operational and nancial metrics Loaded volumes (FFE in ’) Loaded freight rate (USD per FFE) Unit cost fixed bunker (USD per FFE incl VSA income) Bunker price average (USD per tonne) Bunker consumption (tonne in ’) Average fleet capacity (TEU in ’) Fleet owned (end of period) Fleet chartered (end of period) A.P. Moller - Maersk continued to focus on supporting customers’ supply chains by alle- viating bottlenecks through adequate availa- bility of equipment and adapting the networks to the customer needs. Digitalisation of the product offering continues with increased traction for Maersk Spot and Maersk Twill. Maersk Spot has reached a 66% (35%) conversion across all brands, and Maersk Twill has delivered over 78k FFE (59k FFE) in Q2. Financial and operational performance Revenue increased to USD 17.4bn (USD 11.1bn), driven by an increase in freight revenue of 57% with loaded freight rates up by 64%, partly offset by a decrease in volumes of 7.4%. EBITDA increased by USD 5.2bn to USD 9.6bn (USD 4.4bn) due to higher revenue, partly offset by higher bunker costs from increased bunker prices, higher container-handling 12 Management review I Segments I Ocean A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 costs from ongoing congestions and higher network costs, mainly due to time-charter equivalent costs. The EBITDA margin increased by 15.4 percentage points to 55.1% (39.7%). Consequently, EBIT increased by USD 4.9bn to USD 8.5bn (USD 3.6bn). Loaded volumes decreased by 7.4% to 3,095k FFE (3,341k FFE) due to weaker markets and operational bottlenecks. Volumes on East-West decreased mainly from the Asia- Europe route and the backhaul trades. North-South decreased on both headhaul and backhaul volumes. Intra- regional volumes decreased, driven by a decrease in Intra- Europe volumes. The average loaded freight rate increased by 64% to 4,983 USD/FFE (3,038 USD/FFE), driven by significant increase on both contracts and shipment rates, with the sharpest increase on Transpacific and Asia-Europe trades. Total operating costs were 18% higher at USD 7.8bn (USD 6.6bn), mainly driven by higher bunker costs with an increase of 74% on bunker prices, slightly offset by lower consump- tion. Network costs excluding bunker costs increased by 1.5%, mainly due to higher slot charter costs. Container- handling costs increased by 6.4%, primarily due to higher transportation costs of empty containers. Adjusting for Loaded volumes FFE (’) Q Q Change Change % East-West - -% North-South - -% Intra-regional - -% Total - -% Average freight rates USD/FFE Q Q Change Change % East-West % North-South % Intra-regional % Total % the positive impact of foreign exchange rates, operating costs increased by 20%. Bunker costs increased by 69% to USD 2.2bn (USD 1.3bn), with an increase in average bunker prices of 74% to 827 USD/ tonne (475 USD/tonne), partially offset by a 2.7% decrease in bunker consumption. Bunker efficiency decreased by 2.2% to 41.9 g/TEUNM (41.00 g/TEUNM). Unit cost at fixed bunker increased by 14% to 2,327 USD/FFE (2,039 USD/FFE) driven by higher time-charter equivalent costs, container-handling costs and foreign feeders. Due to successful evacuation of equipment from Russia, USD 81m of cost provisions were released during the quarter. Adjust- ing for this, unit cost at fixed bunker would be 15% higher at 2,353 USD/FFE. The average operated capacity of 4,282k TEU increased by 4.1%. A total of 13 carbon-neutral vessels are in the new- building programme by the end of Q2. The fleet consisted of 318 owned and 413 chartered vessels, of which 162k TEU or 3.8% of the fleet were idle (27 vessels), mainly due to repairs. Key initiatives in Q2 Ocean continues to partner with key customers, offering contract customers additional flexibility and space to help with volatility in their supply chains. As a result of continu- ous strategic focus on customer stability and resilience, the share of contract volumes on long-hauls increased to 72% (70%). More than 1.9m FFE are currently signed on multi- year deals. Chinese authorities have allowed A.P. Moller - Maersk to conduct international cargo relay in China, making it the first foreign carrier to perform transhipment between two Chinese ports. This initiative will improve services through optimised networks and could potentially address some of the factors behind the bottlenecks in Chinese supply chains, shortening transit times, reducing emissions and freeing up additional capacity. A.P. Moller - Maersk continues to expand on digital engage- ment models like Maersk Spot to serve the short-term cus- tomers. Maersk Spot increased the share of short-term volumes on the Spot product to 66% (35%). Twill, the end-to-end digital product designed for small customers without in-house logistic capabilities, delivered more than 78k FFE (59k FFE) in Q2. Financial review H1 2022 Revenue increased by 61% to USD 33.0bn (USD 20.6bn), driven by an increase in loaded freight rate of 67%, partly offset by 7.0% less volumes. The EBITDA margin increased by 15.8 percentage points to 54.0% at USD 17.8bn (USD 7.8bn), and the EBIT margin increased by 16.7 percentage points to 47.3% at USD 15.6bn (USD 6.3bn). Fleet overview, end Q2 2022 Q Q TEU Own container vessels Chartered container vessels Total fleet Number of vessels Own container vessels Chartered container vessels Total fleet 13 Management review I Segments I Ocean A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Total operating costs increased by 19% to USD 15.1bn (USD 12.6bn), driven by increase in bunker cost of 61% due to higher price, increased container-handling costs of 7.0% and higher network costs excl. bunker of 9.9%. Adjusting for the positive impact of foreign exchange rates, operating costs increased by 21%. Logistics & Services Logistics & Services delivered strong Q2 2022 results as the segment continues to improve its ability to deliver end-to- end solutions throughout the entire supply chain. All Logistics & Services product families showed positive revenue progression, especially in Fulfilled by Maersk and in Managed by Maersk. This performance is primarily the result of organic growth from new customer wins, increased share of logistics spend with existing customers and the closure of announced acquisitions. Logistics & Services continues to build more resilient and integrated supply chain journeys through the launch of A.P. Moller - Maersk’s own controlled capacity offering, Maersk Air Cargo. A.P. Moller - Maersk was named a Leader by Gartner in the 2022 Gartner Magic Quadrant for Third-Party Logistics. Financial and operational performance Revenue increased by 61% to USD 3.5bn (USD 2.2bn), driven primarily by higher volumes, especially within Fulfilled and Managed by Maersk. Organic/inorganic USD million Q-A Organic Inorganic Q-A Revenue % % EBITA Organic revenue increased by USD 790m implying 36% rev- enue growth. 71% of the organic revenue growth came from top 200 customers underlining the integrator strategy. The increase in organic EBITA was USD 77m. Inorganically, B2C Europe, Visible Supply Chain Management, Pilot and Senator International contributed with a revenue of USD 544m and an EBITA of USD 21m. Pilot and Senator International were reported for the first time as part of the Logistics & Services financials in May and June, respectively. Logistics & Services highlights USD million Q Q M M M Revenue Direct costs (third-party costs) Gross profit Direct Operating Expenses Selling General & Administration (SG&A) Profit before depreciation amortisation and impairment losses etc (EBITDA) EBITDA margin % % % % % Earnings before interest taxes and amortisation (EBITA) EBITA margin % % % % % Profit before financial items (EBIT) EBIT margin % % % % % Invested capital Gross capital expenditure excl acquisitions and divestments (CAPEX) Operational and nancial metrics EBIT conversion (EBIT/gross profit - %) % % % % % Managed by Maersk revenue Fulfilled by Maersk revenue Transported by Maersk revenue Supply chain management volumes (kcbm) Intermodal volumes (kFFE) Air freight volumes (tonne) 1 2021 Air freight volumes have been restated to exclude pure terminal handling. 14 Management review I Segments I Ocean I Logistics & Services A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Managed by Maersk revenue increased by USD 253m to USD 570m (USD 317m), driven by a 43% increase in volumes in lead logistics to 29,602 kcbm (20,696 kcbm). The increase in volume is both a result of strong organic growth from retail and lifestyle customers as well as the effect of new business wins. Further, Customs Services volumes were up by 193k declarations to 1,400k declara- tions (1,207k declarations). Fulfilled by Maersk revenue increased by USD 402m to USD 882m (USD 480m), primarily driven by contract logistics with additional volume and expanded capacity by 679 sqm since Q2 2021. Revenue from Fulfilled by Maersk was also positively impacted by e-commerce, driven by the acquisi- tion of Visible Supply Chain Management and B2C Europe in H2 2021. Transported by Maersk revenue was up by 50% to USD 2.0bn (USD 1.4bn), driven by an increase in intermodal volumes, improved air freight rates and volume, and higher revenue from extended liability products. Intermodal volumes were up 12% to 1,209k FFE (1,082k FFE) as the result of increased share of customer transportation spend. In Air Freight, higher rates, volumes and the consolidation of Senator International drove the improved performance with volumes up by 45% to 53.5k tonne (36.9k tonne). Revenue also increased driven by the continued strong performance of extended liability products, such as Container Protect and Value Protect. Gross profit increased by USD 329m to USD 892m (USD 563m), driven by an increase in volumes in lead logistics and in the number of declarations handled in Customs Services under Managed by Maersk, volume growth in contract logis- tics under Fulfilled by Maersk, as well as increased volumes in inter modal and higher rates in air under Transported by Maersk. EBITDA increased by USD 121m to USD 337m (USD 216m) due to the higher revenue, and the EBITDA margin was 9.6% (10.0%). EBIT increased to USD 234m (USD 153m), and the EBIT margin was 6.7% (7.1%). Key initiatives in Q2 Logistics & Services focused on the integration of key capa- bilities and further strengthening the integrated logistics offerings to fulfil more of the customers’ needs along their supply chain. In Fulfilled by Maersk, B2C Europe’s logistics products and ser- vices have been further integrated into the e-commerce port- folio and are now rebranded as Maersk. Combining the exper- tise of B2C Europe and A.P. Moller - Maersk will contribute to the strength of the Maersk brand in Europe. The global ware- housing footprint continued to expand, and five new ware- houses (net) were opened in Q2, equal to 178k sqm, adding to a total active capacity of 226 warehouses and 3.4m sqm. In Transported by Maersk, the announced acquisitions of Pilot and Senator International are now finalised and the integration is processing. Logistics & Services reported the financials for Pilot in May and for Senator International as of June. Further, Maersk Air Cargo was launched as the combination of the existing in-house operator, Star Air, and a controlled capacity of eight aircraft that will be pro- gressively deployed and operated from second half 2022 and onwards up to 2024. This new air freight capacity offering will leverage the volumes and customer relation- ship from Senator International to ultimately service more of A.P. Moller - Maersk’s own customers. Merger & Acquisitions The Merger & Acquisition roadmap for Logistics & Services focuses on facilitator type of acquisi- tions to expand capabilities. Logistics & Services announced a number of acquisitions in 2021 and most recently Pilot in Q1 2022. Pilot, consolidated since 1 May, is complementing earlier acquisitions to provide integrated logistics solutions in North America, especially with Perfor- mance Team (B2B ware housing and distribution from 2020) and Visible SCM (e-commerce ware- housing and parcel distribution from 2021). The acquisitions of Visible Supply Chain Manage- ment, B2C Europe and HUUB provide end-to-end e-commerce capabilities that will strengthen the logistics offering within Fulfilled by Maersk. The acquisition of Senator International, closed in June, and the intended acquisition of LF Logistics bring capa bilities, reach and platform within Transported by and Fulfilled by Maersk, respec- tively, while the Grindrod Intermodal Group will complement both offerings. Senator International Grindrod Visible SCM B2C Europe Huub Pilot LF Logistics Fulfilled by Maersk Managed by Maersk Transported by Maersk 15 Management review I Segments I Logistics & Services A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 In Managed by Maersk, TradeLens continues to expand its network and now consists of more than 400 network mem- bers. Similarly, Customs Services continue to grow and has expanded the number of customs and trade consulting pro- ducts available to customers aimed to address customer’s lack of visibility in their international supply chain. A.P. Moller - Maersk also reached an important milestone and was named a Leader by Gartner in the 2022 Gartner Magic Quadrant for Third-Party Logistics, worldwide. This recognition is evidence to the journey of Logistics & Services towards creating end-to-end integrated logistics through solutions that are built to add resilience, agility and flexi- bility to customers’ logistical networks. Financial review H1 2022 Revenue of USD 6.4bn (USD 4.2bn) was driven by increasing revenue in Managed by Maersk services to USD 1.1bn (USD 665m), Fulfilled by Maersk services to USD 1.7bn (USD 937m) and Transported by Maersk services to USD 3.6bn (USD 2.6bn). This increase was the result of intermodal volumes being up 12% to 2,365k FFE (2,119k FFE), mainly due to a higher penetration ratio into existing Ocean customers and by an increase of lead logistics volumes of 36% to 56,092 kcbm (41,380 kcbm), driven by strong growth from the existing customer base and strong commercial traction in landing new business. EBITDA increased to USD 656m (USD 421m), and EBIT increased to USD 417m (USD 292m). When adjusting for the impact of winding down operations and divesting all assets in Russia of USD 52m in H1 2022, EBIT amounts to USD 469m. Organic/inorganic USD million H-A Organic Inorganic H-A Revenue % % EBITA Inorganic revenue accounted for USD 686m (USD 210m) and EBITA was USD 21m (USD 24m). Terminals Terminals is committed to improving performance via invest- ment in efficiency initiatives and automation. In Q2, the ini- tiatives gained traction and, despite global congestion and lockdowns in China, Terminals’ volume exceeded last year by 1.5% (3.0% like-for-like, adjusted for exits and expiring con- cessions), driven by strong growth in USA and Asia. Terminals highlights USD million Q Q M M M Revenue Concession fees (excl capitalised lease expenses) Labour costs (blue collar) Other operational costs Selling General & Administration (SG&A) and other costs etc Total operating costs Profit before depreciation amortisation and impairment losses etc (EBITDA) EBITDA margin % % % % % Profit/loss before financial items (EBIT) EBIT margin % % % % % Invested capital Gross capital expenditure excl acquisitions and divestments (CAPEX) Operational and nancial metrics Volumes – financially consolidated (moves m) Ocean segment External customers Revenue per move – financially consolidated (USD) Cost per move – financially consolidated (USD) Result from joint ventures and associated companies (USDm) - 16 Management review I Segments I Logistics & Services I Terminals A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Further to Terminals commitment to improve per- formance and ease congestion for its customers, Terminals recently announced the expansion of the terminal in Mobile, Alabama. Additionally in the USA, there are major projects to modernise the terminals Pier 400, Los Angeles and Port Elizabeth, New Jersey. The drive to optimise the portfolio continues as the second exit of the year was executed with the sale of Container Terminal Wilhelmshaven, Germany, and preparations have started to hand back the terminal in Itajai, Brazil, where the concession is expiring. Financial and operational performance Revenue increased to USD 1.1bn (USD 969m), driven by stor- age income, CPI-related tariff increases and higher volume. Volume increased by 1.5% (3.0% like-for-like) and utilisation increased to 79% (76%), mainly driven by a continued strong import volume into the USA and above market growth in Asia. Volume from the Ocean segment increased by 4.4% and volume from external customers was on par. Higher storage revenue in North America and mostly CPI-related tariff increases resulted in a revenue per move increase of 13% to USD 341 (USD 301). Cost per move also increased by 13% to USD 265 (USD 234), due to a non-operational one- off and higher operating costs, mainly driven by inflationary labour costs, higher energy costs and higher variable con- cession fees. At fixed foreign exchange rates and volume mix and port- folio mix, revenue per move increased by 17%. On the same basis, and excluding the non-operational one-off, cost per move increased by 9%. EBITDA increased to USD 400m (USD 370m) driven by the strong revenue whereas the EBITDA margin decreased to 35.6% (38.2%) due to the higher costs. EBIT improved to USD 316m (USD 302m) mainly due to higher storage income, partly offset by higher costs. ROIC (LTM) was 7.4% (8.7%) with the significantly better operating performance being offset by the Global Port Investment impairment (Russia exit). ROIC adjusted for the GPI impairment was 13.1%. CAPEX increased to USD 105m (USD 40m), driven by the ter- minal modernisation in Los Angeles, USA, and Callao, Peru. In North America, revenue increased due to volume growth of 7.7% and higher storage income driven by supply chain congestion, partially offset by higher labour costs, higher variable concession fees and higher energy costs due to increased fuel prices. In Europe, despite a 1.2% decrease in volume, revenue improved due to congestion-related storage income and mostly CPI-related tariff increase. The higher revenue was partially offset by higher energy and other operational costs. In Latin America, volume decreased by 8.2%, largely due to lower market volume in Callao, Peru, and reducing volume in Itajai, Brazil, where services are gradually being phased out as the concession is ending in 2022. Higher tariffs, however, offset the full volume drop resulting in higher total revenue. In Asia, volume grew by 7.3%, mainly driven by additional volume due to new services in Pipavav, India, and two new berths in Yokohama, Japan, resulted in a higher revenue, which was partially offset by higher maintenance and repair costs related to cyclone restoration. In Africa and Middle East, volume was at par, with an increase in overall revenue due to CPI-related tariff increases and higher storage income. The higher revenue was partially offset by higher cost per move due to higher variable con- cession, higher energy and higher maintenance and repair works. Results from joint ventures and associated companies The share of profits in joint ventures and associated com- panies was USD 79m (USD 79m). Key initiatives in Q2 Terminals Mobile signed an agreement with the Alabama State Port Authority, USA, to add 32 acres to the current 134-acre container terminal yard. The first stage of this significant investment is expected to be completed in 2023 and the final stage in 2025. As part of the expansion, the terminal will purchase two additional post-Panamax ship- to-shore cranes. This represents the third expansion in the last six years as USA importers expand to meet regional consumer demand and tap into rail services to the Midwest US market. Abidjan, Ivory Coast, is entering the last phase with all equip- ment delivery planned and the organisation is preparing for the first move. Expansions in Gateway Terminals India (GTI), Mumbai, India, and Onne, Nigeria, is steadily progressing as per plan. Terminals closed the transaction with Hapag-Lloyd, which purchased Terminals’ 30% shareholding of Container Ter- minal Wilhelmshaven (CTW), Germany, in May. Regional volume Million moves Q Q Growth (%) North America Latin America - Europe Russia and the Baltics - Asia Africa and Middle East - Total 1 Financially consolidated. 17 Management review I Segments I Terminals A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Financial review H1 2022 Revenue improved to USD 2.3bn (USD 1.9bn), with a 1.4% volume increase and higher storage income in the USA. Like- for-like volume increased by 2.7%, driven by strong import demand in the USA and above-market growth in Asia with capacity utilisation increasing to 78% (75%). Revenue per move increased to USD 351 (USD 299), driven by high storage income and mostly CPI-related tariff increases. Cost per move increased to USD 262 (USD 235), driven by a non-operational one-off, higher labour costs, concession fees and energy costs. EBITDA improved to USD 856m (USD 693m) while EBIT decreased to USD 243m (USD 541m), mainly driven by an impairment of the holding in Global Port Investment in Russia. EBIT adjusted for the GPI impairment was USD 728m (USD 541m), driven by higher storage income, which was partly offset by higher costs. Towage & Maritime Services Revenue was USD 579m (USD 529m) with an EBITDA of USD 81m (USD 95m). EBIT of USD 16m (USD 64m) decreased by USD 48m, mainly driven by an impairment in Hoegh Auto liners due to deterioration of the share price during Q2 and reversal of impairments in Maersk Container Industry in Q2 2021. Towage Financial and operational performance Revenue increased by USD 14m to USD 198m (USD 184m), and adjusted for foreign exchange rate effects, the increase was 15% or USD 27m. Harbour towage revenue was posi- tively impacted by higher volumes and cargo mix in Australia and Europe. Terminal towage revenue increased by USD 5m, adjusted for foreign exchange rate effects, mainly driven by bareboat charters in Angola, two new tugs in Egypt and increased volumes in Australia. EBITDA increased to USD 58m (USD 53m), due to increased revenue, partly offset by higher bunker costs. EBIT increased to USD 34m (USD 31m), mainly driven by increased EBITDA. Results from joint ventures and associated companies The share of profit in joint ventures and associated compa- nies was unchanged from Q2 2021 at USD 6m (USD 6m) and was positively impacted by increased results in Africa Middle East and Asia (AMEA) and Americas considering the exit of activities in Bowen, Australia, in H2 2021. Key initiatives in Q2 Svitzer was awarded a 10-year contract renewal for part of the engagement in Qatar and has ordered new tugs to replace the five existing tugs for this contract. Maritime Services Maersk Supply Service reported a 28% increase in revenue to USD 96m (USD 75m), reflecting increased project activity. However, EBITDA declined by USD 11m to negative USD 2m (positive USD 9m) given increased dry docking costs, lower charter activity and increased bunker costs. EBIT increased by USD 4m to USD 2m (negative USD 2m), mainly driven by reduced depreciation due to impairment losses recognised in Q4 2021 and gain on sale of assets during Q2 2022. Key initiatives in Q2 The contracts for the two vessels working with the Ocean Cleanup in the Pacific Ocean were extended until mid-2023. Towage & Maritime Services highlights USD million Q Q M M M Revenue Profit before depreciation amortisation and impairment losses etc (EBITDA) EBITDA margin % % % % % Profit before financial items (EBIT) EBIT margin % % % % % Invested capital Gross capital expenditure excl acquisitions and divestments (CAPEX) Operational and nancial metrics Number of operational tug jobs (harbour towage) (’) 18 Management review I Segments I Terminals I Towage & Maritime Services A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Financial review H1 2022 Revenue, with an increase of USD 82m, was USD 1.1bn (USD 1.1bn), EBITDA was USD 160m (USD 184m) and EBIT was USD 85m (USD 105m). Revenue in Towage was USD 390m (USD 365m). EBITDA was USD 116m (USD 111m), mainly driven by increased reve- nue, partly offset by higher bunker costs and negative cur- rency exchange rate impact. EBIT was USD 51m (USD 65m), mainly due to the withdrawal from operations in Russia in Q1 2022. Maersk Supply Service reported a revenue of USD 178m (USD 129m) and an EBITDA of negative USD 6m (USD 0m), mainly driven by decreased utilisation of the fleet from lower time-charter activity. EBIT was negative USD 6m (negative USD 21m), driven primarily by lower depreciations because of impairment losses recognised in Q4 2021 and gain of sold assets in Q2 2022. The intended sale of Maersk Container Industry is progressing according to plan, with closing subject to regulatory approvals. 19 Management review I Segments I Towage & Maritime Services A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Executive Board Søren Skou — CEO Patrick Jany — CFO Vincent Clerc Henriette Hallberg Thygesen Board of Directors Robert Mærsk Uggla — Chair Marc Engel — Vice Chair Bernard L. Bot Marika Fredriksson Arne Karlsson Thomas Lindegaard Madsen Amparo Moraleda Julija Voitekute Statement of the Board of Directors and the Executive Board The Board of Directors and the Executive Board have today discussed and approved the Interim Report of A.P. Møller - Mærsk A/S for the period 1 January 2022 to 30 June 2022. The Interim Report has not been audited or reviewed by the company’s independent auditors. The Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and additional Danish disclosure requirements for interim financial reporting of listed companies. In our opinion, the interim consolidated financial statements (pages 21-29) give a true and fair view of A.P. Moller - Maersk’s consolidated assets, liabilities and financial position at 30 June 2022 and of the results of A.P. Moller - Maersk’s consolidated operations and cash flows for the period 1 January 2022 to 30 June 2022. Furthermore, in our opinion, the Management review (pages 3-19) includes a fair review of the development in A.P. Moller - Maersk’s operations and financial conditions, the results for the period, cash flows and financial position as well as a description of the most significant risks and uncertainty factors that A.P. Moller - Maersk faces, relative to the disclosures in the annual report for 2021. Copenhagen, 3 August 2022 20 Management review I Statement of the Board of Directors and the Executive Board A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Financials Condensed income statement Note Q Q M M M Revenue 21,650 14,230 40,942 26,669 61,787 Profit before depreciation amortisation and impairment losses etc (EBITDA) 10,327 5,064 19,411 9,103 24,036 Depreciation amortisation and impairment losses net 1,418 1,087 2,925 2,112 4,944 Gain on sale of non-current assets etc net 37 12 64 19 96 Share of profit/loss in joint ventures and associated companies 42 95 -289 171 486 Profit before financial items (EBIT) 8,988 4,084 16,261 7,181 19,674 Financial items net -203 -186 -497 -416 -944 Profit before tax 8,785 3,898 15,764 6,765 18,730 Tax 164 152 335 302 697 Profit for the period 8,621 3,746 15,429 6,463 18,033 Of which: Non-controlling interests 28 33 60 53 91 AP Møller - MærskA/S’ share 8,593 3,713 15,369 6,410 17,942 Earnings per share USD 466 194 830 333 941 Diluted earnings per share USD 464 193 827 332 938 Condensed statement of comprehensive income Q Q M M M Profit for the period 8,621 3,746 15,429 6,463 18,033 Translation from functional currency to presentation currency -427 111 -464 -106 -364 Reclassified to income statement gain on sale of non-current assets etc net 9 16 9 23 23 Cash flow hedges -41 -8 12 -69 -109 Tax on other comprehensive income 1 2 -9 -7 -7 Share of other comprehensive income of joint ventures and associated companies net of tax - -1 -1 -9 -5 Total items that have been ormay be reclassified subsequently to the income statement -458 120 -453 -168 -462 Other equity investments 31 1 81 2 143 Actuarial gains/losses on defined benefit plans etc - -69 - -69 -23 Tax on other comprehensive income - 13 - 13 7 Total items that will not be reclassified to the income statement 31 -55 81 -54 127 Other comprehensive income net of tax -427 65 -372 -222 -335 Total comprehensive income for the period 8,194 3,811 15,057 6,241 17,698 Of which: Non-controlling interests 13 31 47 50 87 AP Møller - MærskA/S’ share 8,181 3,780 15,010 6,191 17,611 Financials I Interim consolidated financial statements Q2 2022 21 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Condensed balance sheet at 30June June June M Intangible assets 7,844 4,981 5,769 Property plant and equipment 27,667 26,397 27,303 Right-of-use assets 10,723 9,002 9,906 Financial non-current assets etc 2,663 2,933 3,135 Deferred tax 384 272 356 Total non-current assets 49,281 43,585 46,469 Inventories 2,202 1,486 1,457 Receivables etc 18,930 6,425 12,111 Securities - 1 3 Cash and bank balances 9,730 8,106 11,832 Assets held for sale 283 437 399 Total current assets 31,145 16,455 25,802 Total assets 80,426 60,040 72,271 June June M Equity attributable to AP Møller - MærskA/S 51,517 34,269 44,508 Non-controlling interests 1,069 1,013 1,080 Total equity 52,586 35,282 45,588 Lease liabilities non-current 8,354 7,593 8,153 Borrowings non-current 3,932 4,850 4,315 Other non-current liabilities 2,552 1,937 2,122 Total non-current liabilities 14,838 14,380 14,590 Lease liabilities current 2,982 1,871 2,398 Borrowings current 244 239 469 Other current liabilities 9,644 8,024 8,982 Liabilities associated with assets held for sale 132 244 244 Total current liabilities 13,002 10,378 12,093 Total liabilities 27,840 24,758 26,683 Total equity and liabilities 80,426 60,040 72,271 Financials I Interim consolidated financial statements Q2 2022 22 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Condensed cash flow statement Note Q Q M M M Profit before financial items 8,988 4,084 16,261 7,181 19,674 Non-cash items etc 1,113 1,075 3,228 1,958 4,540 Change in working capital -1,210 -886 -2,279 -1,345 -1,610 Cash flow from operating activities before tax 8,891 4,273 17,210 7,794 22,604 Taxes paid -280 -136 -378 -224 -582 Cash flow from operating activities 8,611 4,137 16,832 7,570 22,022 Purchase of intangible assets and property plant and equipment (CAPEX) -1,008 -452 -2,362 -781 -2,976 Sale of intangible assets and property plant and equipment 104 89 147 124 205 Sale of other equity investments - - 20 4 8 Acquisition of subsidiaries and activities -1,535 -10 -1,536 -10 -815 Sale of subsidiaries and activities 3 -29 20 -28 3 Dividends received 82 36 102 95 282 Financial investments etc net -5,552 47 -4,446 -53 -5,049 Cash flow used for investing activities -7,906 -319 -8,055 -649 -8,342 Repayments of/proceeds from borrowings net -631 -982 -647 -1,465 -1,934 Repayments of lease liabilities -762 -453 -1,408 -1,082 -2,279 Financial payments net -59 -13 -211 -96 -258 Financial expenses paid on lease liabilities -124 -114 -242 -228 -459 Purchase of own shares -564 -448 -1,195 -781 -1,956 Dividends distributed -902 -128 -6,847 -1,017 -1,017 Dividends distributed to non-controlling interests -40 -29 -43 -41 -91 Other equity transactions 36 24 27 33 94 Cash flow from financing activities -3,046 -2,143 -10,566 -4,677 -7,900 Net cash flow for the period -2,341 1,675 -1,789 2,244 5,780 Cash and cash equivalents beginning of period 12,084 6,421 11,565 5,864 5,864 Currency translation effect on cash and bank balances -55 -2 -88 -14 -79 Cash and cash equivalents end of period 9,688 8,094 9,688 8,094 11,565 Of which classified as assets held for sale -6 -23 -6 -23 -28 Cash and cash equivalents end of period 9,682 8,071 9,682 8,071 11,537 Cash and cash equivalents Cash and bank balances 9,730 8,106 9,730 8,106 11,832 Overdrafts 48 35 48 35 295 Cash and cash equivalents end of period 9,682 8,071 9,682 8,071 11,537 Cash and bank balances include USD 1.5bn (USD 1.1bn) relating to cash and bank balances in countries with exchange control or other restrictions. These funds are not readily available for general use by the parent company or other subsidiaries. Financials I Interim consolidated financial statements Q2 2022 23 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Condensed statement of changes in equity AP Møller - Mærsk A/S Note Share capital Trans- lation reserve Reserve for other equity invest- ments Reserve for hedges Retained earnings Total Non- con- trolling interests Total equity Equity January 3,513 -767 135 -160 41,787 44,508 1,080 45,588 Other comprehensive income net of tax - -440 81 1 -1 -359 -13 -372 Profit for the period - - - - 15,369 15,369 60 15,429 Total comprehensive income for the period - -440 81 1 15,368 15,010 47 15,057 - Dividends to shareholders - - - - -6,845 -6,845 -43 -6,888 Value of share-based payment - - - - 10 10 - 10 Sale of subsidiaries - - - - - - -30 -30 Purchase of own shares - - - - -1,183 -1,183 - -1,183 Sale of own shares - - - - 17 17 - 17 Capital increases and decreases -121 - - - 121 - 15 15 Transfer of gain/loss on disposal of equity investments to retained earnings - - -14 - 14 - - - Total transactions with shareholders -121 - -14 - -7,866 -8,001 -58 -8,059 Equity June 3,392 -1,207 202 -159 49,289 51,517 1,069 52,586 Equity January 3,632 -432 -6 -42 26,698 29,850 1,004 30,854 Other comprehensive income net of tax - -78 2 -77 -66 -219 -3 -222 Profit for the period - - - - 6,410 6,410 53 6,463 Total comprehensive income for the period - -78 2 -77 6,344 6,191 50 6,241 Dividends to shareholders - - - - -1,017 -1,017 -49 -1,066 Value of share-based payment - - - - 7 7 - 7 Purchase of own shares - - - - -781 -781 - -781 Sale of own shares - - - - 20 20 - 20 Capital increases and decreases -119 - - - 119 - 8 8 Transfer of gain/loss on disposal of equity investments to retained earnings - - -2 - 2 - - - Other equity movements - - - - -1 -1 - -1 Total transactions with shareholders -119 - -2 - -1,651 -1,772 -41 -1,813 Equity June 3,513 -510 -6 -119 31,391 34,269 1,013 35,282 Financials I Interim consolidated financial statements Q2 2022 24 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Note 1 Segment information Ocean Logistics & Services Terminals Towage & Maritime Services Unallo- cated items Elimi- nations Consoli- dated total Q2 2022 External revenue - Inter-segment revenue - - - Total revenue - Profit before depreciation amortisation and impairment losses etc (EBITDA) - - Profit before financial items (EBIT) - Key metrics Invested capital - - Gross capital expenditures excl acquisitions and divestments (CAPEX) - Ocean Logistics & Services Terminals Towage & Maritime Services Unallo- cated items Elimi- nations Consoli- dated total Q2 2021 External revenue - Inter-segment revenue - - Total revenue - Profit before depreciation amortisation and impairment losses etc (EBITDA) - Profit before financial items (EBIT) - Key metrics Invested capital - - Gross capital expenditures excl acquisitions and divestments (CAPEX) Financials I Interim consolidated financial statements Q2 2022 25 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Note 1 Segment information Ocean Logistics & Services Terminals Towage & Maritime Services Unallo- cated items Elimi- nations Consoli- dated total 6 months 2022 External revenue - Inter-segment revenue - - - Total revenue - Profit before depreciation amortisation and impairment losses etc (EBITDA) - - Profit before financial items (EBIT) - Key metrics Invested capital - - Gross capital expenditures excl acquisitions and divestments (CAPEX) - Ocean Logistics & Services Terminals Towage & Maritime Services Unallo- cated items Elimi- nations Consoli- dated total 6 months 2021 External revenue - Inter-segment revenue - - Total revenue - Profit before depreciation amortisation and impairment losses etc (EBITDA) - - Profit before financial items (EBIT) - Key metrics Invested capital - - Gross capital expenditures excl acquisitions and divestments (CAPEX) - USD million Types of revenue Q Q M M M Ocean Freight revenue Other revenue including hubs Logistics & Services Managed by Maersk Fulfilled by Maersk Transported by Maersk Terminals Terminal services Towage & Maritime Services Towage services Sale of containers and spare parts Offshore supply services Other shipping activities Other services Unallocated activities and eliminations - - - - - Total revenue Financials I Interim consolidated financial statements Q2 2022 26 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Note 2 Share capital Development in the number of shares: A shares of B shares of Nominal value DKK DKK DKK DKK DKK million USD million January Cancellation - - June January Conversion - - - - Cancellation - - June All shares are fully issued and paid up. One A share of DKK 1,000 holds two votes. B shares have no voting rights. At the Annual General Meeting of A.P. Møller - Mærsk A/S on 15 March 2022, the shareholders decided on the cancellation of treasury shares, whereby the share capital would be decreased. On 25 May 2022, the Company’s share capital was reduced from nominally DKK 19,376,016,000 by nominally DKK 688,855,000 in total, divided into 133,779 A shares and 535,076 B shares of DKK 1,000 to nominally DKK 18,707,161,000. The reduction in the share capital has been recorded by applying the historical rate of exchange of 551,53 DKK/USD (551,53 DKK/USD). Development in the holding of treasury shares No of shares of DKK Nominal value DKK million % of share capital Treasury shares A shares January % % Additions % % Cancellation % % June % % B shares January % % Additions % % Cancellation % % Disposals % % June % % The share buy-back programme is carried out with the purpose to adjust the capital structure of the company. Shares which are not used for hedging purposes for the long-term incentive programmes will be proposed cancelled at the Annual General Meetings. Disposals of treasury shares are related to the share option plans and the restricted shares plan. From 1 January 2022 to 30 June 2022, A.P. Moller - Maersk has bought back 34,729 A shares, with a nominal value of DKK 35m, and 106,335 B shares, with a nominal value of DKK 106m, as treasury shares from A.P. Møller Holding A/S, which is considered a related party. The dividend of DKK 2,500 per share of DKK 1,000 – a total of DKK 46.8bn is equivalent to USD 6.9bn, excluding treasury shares. Of this, USD 6.0bn was paid to shareholders on 18 March 2022, and the with- holding tax of USD 882m was paid in Q2 2022. Payment of dividends to share holders does not trigger taxes for A.P. Moller - Maersk. Financials I Interim consolidated financial statements Q2 2022 27 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Acquisitions during Q2 2022 Pilot Freight Services (Logistics & Services) On 5 February 2022, the Group signed an agreement to acquire 100% of the shares in Pilot Freight Services, a US-based first, middle and last mile cross-border solutions provider. The acquisition was com- pleted in early May 2022. Pilot has specialised in the big and bulky freight segment in North America. Pilot Freight Services will add spe- cific new services within the fast-growing big and bulky e-commerce segment to the Group, thus increasing cross-selling opportunities. The total purchase price is USD 1.6bn of which USD 597m is related to the settlement of debt. Of the consideration paid, USD 1.1bn is related to goodwill while USD 650m is related to intangible assets, mainly customer relationships. USD 235m is related to trade receivables and USD 174m is related to RoU assets. Liabilities are mainly related to trade payables, lease liabilities and debt settled as part of the trans- action. Goodwill is mainly attributable to commercial and operational future expected synergies, driven from cross-selling, network opti- misations, and improved productivity. From the acquisition date to 30 June 2022, Pilot Freight Services contributed with a revenue of USD 251m and an insignificant net profit. Had the acquisition occurred on 1 January 2022, the impact on the Group’s revenue would have been USD 747m. The net profit impact to the Group would have been insignificant. Acquisition- related costs of USD 15m are recognised as operating costs in the income statement of the Logistics & Services segment, and in oper- ating cash flow in the statement of cash flow. The accounting for the business combination is considered provi- sional as per 30 June 2022, as valuation of intangible assets is not yet finalised. Senator International (Logistics & Services) On 2 November 2021, the Group signed an agreement to acquire 100% of the shares in Senator International, a well renowned German air-based freight carrier company. The acquisition was completed in early June 2022. Senator International will contribute with offerings within air freight out of Europe into the USA and Asia, and thereby add strong capabilities and geographical reach to the integrator vision. The total purchase price is USD 545m. Of the consideration paid, USD 187m is related to goodwill while USD 261m is related to intangible assets, mainly customer relationships. USD 220m is related to trade receivables and the rest is mainly related to other receivables. Liabilities are mainly related to accrued expenses and deferred tax. Goodwill is mainly attributable to commercial and operational future expected synergies, driven from cross-selling, network optimisations, and improved productivity. From the acquisition date to 30 June 2022, Senator International contributed with a revenue of USD 143m and an insignificant net profit. Had the acquisition occurred on 1 January 2022, the impact on the Group’s revenue would have been USD 997m and a net profit of USD 74m. Acquisition-related costs of USD 9m are recognised as operating costs in the income statement of the Logistics & Services segment, and in operating cash flow in the statement of cash flow. The accounting for the business combination is considered provi- sional as per 30 June 2022, as valuation of intangible assets is not yet finalised. Other Grindrod Intermodal Group (Logistics & Services) On 15 November 2021, it was announced that the Group will partner with Grindrod Intermodal Group. The Group will have a controlling interest of 51%. The Grindrod Intermodal Group is a well-known and trusted partner in South Africa that offers a range of logistics and services offerings. The estimated enterprise value is USD 13m. The acquisition is expected to close during Q4 2022. LF Logistics Holdings Limited (Logistics & Services) On 22 December 2021, it was announced that the Group intends to acquire 100% of the shares in LF Logistics Holdings Limited, a leading omnichannel fulfilment contract logistics company in Asia Pacific. The acquisition will further strengthen A.P. Moller - Maersk’s capabilities as an integrated container logistics company, offering global end- to-end supply chain solutions to its customers. The estimated enter- prise value is USD 3.6bn. In addition to the enterprise value, an earn- out with a total value of up to USD 160m related to future financial performance has been agreed as part of the transaction. The acquisition is subject to regulatory approvals and the transaction is expected to close during Q3 2022. Note 3 Acquisitions of subsidiaries Acquisitions during Q Pilot Senator International Other Total Fair value at time of acquisition Intangible assets Property plant and equipment - Financial assets - Current assets - Liabilities - Net assets acquired - - AP Møller - Mærsk A/S’ share Goodwill Purchase price Contingent consideration assumed - - - - Contingent consideration paid - - - - Other adjustments - - - Cash and bank balances assumed - - - - Cash flow used for acquisition of subsidiaries and activities Financials I Interim consolidated financial statements Q2 2022 28 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 The details of the income statement impact are as follows: Operating segment Impacted area Q Q H Ocean Impairments of containers write-down of receivables provisions - - Logistics & Services Impairments of warehouses write-down of receivables provisions - - Terminals Impairments of investment in joint venture - - - Towage & Maritime Services Impairments of tugboats - - - Total income statement impact - - Note 5 Accounting policies, judgements and significant estimates The total commitment across segments is USD 4.2bn (USD 1.9bn), mainly related to investments for new methanol container vessels, wind installation vessels, tugs, aircraft and commitments towards terminal concession grantors. The interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and adopted by the EU and additional Danish disclosure requirements for interim finan- cial reporting of listed companies. The accounting policies, judgements and significant estimates are consistent with those applied in the Annual Report 2021. Change to reportable segments As part of the refinement of A.P. Moller - Maersk’s segment struc- ture, changes to the segment structure were made with effect from 1 January 2022. The changes involve moving the Svitzer activity from Terminals & Towage to Manufacturing & Others. In addition, the Man- ufacturing & Others segment has been renamed Towage & Maritime Services, while the Terminals & Towage segment has been renamed Terminals. Comparison figures for note 1 have been restated as if the change had been implemented in 2021. The reportable segments are disclosed below. The allocation of business activities into segments reflects A.P. Moller - Maersk’s character as an integrated container logistics business and is in line with the internal management reporting. Russia/Ukraine impact Due to the Russian invasion of Ukraine on 24 February 2022, A.P. Moller - Maersk decided to withdraw from doing business in Russia during Q1 2022. As a result, the recoverable amounts of assets in Russia and Ukraine have been reassessed, impairment losses have been recognised, and provisions have been made to cover costs relating to the with- drawal from operations. This negatively impacted the Q1 2022 EBIT by USD 718m. As a consequence of the ongoing process to minimise the financial impact, the Q2 2022 EBIT was positively impacted by USD 94m, mainly related to reversal of impairment losses of USD 45m and reversal of provisions of USD 39m. This mainly as a result of success- fully evacuating more containers than previously anticipated. The H1 2022 EBIT was negatively impacted by USD 624m, of which USD 585m was impairment losses and USD 39m was operating costs. Warehouses in the Logistics & Services segment, the GPI investment in the Terminals segment and tugboats in the Towage & Maritime Services segment have been fully written down. The impact has been classified as non-cash items in the cash flow statement. Note 4 Commitments The reportable segments are as follows: Ocean Global container shipping activities, including strategic transhipment hubs and sale of bunker oil Logistics & Services Integrated transportation, fulfilment and management solutions, including landside and air transportation as well as warehousing and supply chain management offerings Terminals Gateway terminal activities Towage & Maritime Services Towage and related marine activities, production of reefer containers, providing offshore supply service and trading and other businesses Financials I Interim consolidated financial statements Q2 2022 29 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Income statement Q Q Q Q Q Q Revenue Profit before depreciation amortisation and impairment losses etc (EBITDA) Depreciation amortisation and impairment losses net Gain on sale of non-current assets etc net Share of profit/loss in joint ventures and associated companies - Profit before financial items (EBIT) Financial items net - - - - - - Profit before tax Tax Profit for the period AP Møller - Mærsk A/S’ share Underlying profit Balance sheet Total assets Total equity Invested capital Net interest-bearing debt - - - Cash flow statement Cash flow from operating activities Capital lease instalments – repayments of lease liabilities Gross capital expenditure excl acquisitions and divestments (CAPEX) Cash flow from financing activities - - - - - - Free cash flow Financial ratios Revenue growth % % % % % % EBITDA margin % % % % % % EBIT margin % % % % % % Cash conversion % % % % % % Return on invested capital after tax (ROIC) (last twelve months) % % % % % % Equity ratio % % % % % % Underlying ROIC (last twelve months) % % % % % % Underlying EBITDA Underlying EBITDA margin % % % % % % Underlying EBIT Underlying EBIT margin % % % % % % Stock market ratios Earnings per share USD Diluted earnings per share USD Cash flow from operating activities per share USD Share price (B share) end of period DKK Share price (B share) end of period USD Total market capitalisation end of period USD 1 Underlying is computed as the relevant performance measure adjusted for the net gains/losses from the sale of non-current assets, etc. and net impairment losses as well as transaction, restructuring and integration costs related to major transactions. The adjustments include A.P. Moller - Maersk’s share of mentioned items in joint ventures and associated companies and, when applicable, the adjustments are net of tax. Additional information Quarterly summary Additional information I Quarterly summary 30 AMOUNTS IN USD MILLION A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Backhaul The direction of the trade route with the lowest volumes, whereas the opposite direction is referred to as headhaul. CAPEX Cash payments for intangible assets and property, plant and equipment, excluding acquisitions and divestments. Cash conversion Cash flow from operating activities to EBITDA ratio. Cash flow from operating activities per share A.P. Moller - Maersk’s operating cash flow from con tinuing operations divided by the number of shares (of DKK 1,000 each), excluding A.P. Moller - Maersk’s holding of own shares. Cost per move Includes cost (EBITDA less revenue less other income), depreciation and excludes IFRIC12 construction cost. EBIT Earnings Before Interest and Taxes. EBITA Earnings Before Interest, Tax and Amortisation. EBITDA Earnings Before Interest, Taxes, Deprecia- tion and Amortisation. Equity ratio Calculated as equity divided by total assets. FFE Forty Foot container Equivalent unit. Free cash flow (FCF) Comprised of cash flow from operating activities, purchase/sale of intangible assets and property, plant and equipment, dividends received, repayments of lease liabilities, financial payments and financial expenses paid on lease liabilities. Gross profit The sum of revenue, less variable costs and loss on debtors. Headhaul The direction of the trade route with the highest volumes, whereas the return direction is referred to as backhaul. Invested capital Segment operating assets less segment operating liabilities, including invest- ments and deferred taxes related to the operation. kcbm The freight volume of the shipment for domestic and international freight. Cubic metre (CBM) measurement is calculated by multi plying the width, height and length together of the shipment. Loaded volumes Loaded volumes refer to the number of FFEs loaded on a shipment which are loaded on first load at vessel departure time excluding displaced FFEs. Net interest-bearing debt (NIBD) Equals interest-bearing debt, including leasing liabilities, fair value of deriva tives hedging the underlying debt, less cash and bank balances as well as other interest- bearing assets. Return on invested capital after tax (ROIC) Profit/loss before financial items for the year (EBIT) less tax on EBIT divided by the average invested capital, last twelve months. Revenue per move Includes terminal revenue, other income, government grants and excludes IFRIC12 construction revenue. TEU Twenty-foot container Equivalent Unit. Time charter Hire of a vessel for a specified period. Total market capitalisation Total number of shares – excluding A.P. Møller - Mærsk A/S’ holding of treasury shares – multiplied by the end-of-quarter price quoted by Nasdaq Copenhagen. Underlying Underlying is computed as the relevant performance measure adjusted for the net gains/losses from the sale of non- current assets, etc. and net impairment losses as well as transaction, restructur- ing and integration costs related to major transactions. The adjustments include A.P. Moller - Maersk’s share of mentioned items in joint ventures and associated companies and when applicable, the adjustments are net of tax. VSA Vessel Sharing Agreement is usually reached between various partners within a shipping consortium who agree to oper- ate a liner service along a specified route using a specified number of vessels. Technical terms, abbreviations and definitions of key figures and financial ratios. Definition of terms Additional information I Definition of terms 31 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Editors Finn Glismand Henrik Jensen Sarah Spray Design and layout e-Types Produced in Denmark 2022 Board of Directors Robert Mærsk Uggla, Chair Marc Engel, Vice Chair Bernard L. Bot Marika Fredriksson Arne Karlsson Thomas Lindegaard Madsen Amparo Moraleda Julija Voitekute Executive Board Søren Skou, Chief Executive Officer (CEO) Patrick Jany (CFO) Vincent Clerc Navneet Kapoor Henriette Hallberg Thygesen Audit Committee Arne Karlsson, Chair Bernard L. Bot Marika Fredriksson Amparo Moraleda Remuneration Committee Marc Engel, Chair Amparo Moraleda Robert Mærsk Uggla Nomination Committee Robert Mærsk Uggla, Chair Marc Engel Transformation & Innovation Committee Marc Engel, Chair Amparo Moraleda Robert Mærsk Uggla Colophon Colophon 32 A.P. MOLLER - MAERSK INTERIM REPORT Q2 | 3 AUGUST 2022 Interim report (6 months)No audit assistanceParsePort XBRL Converter2022-01-012022-06-302021-01-012021-06-30549300D2K6PKKKXVNN73Reporting class D2022-09-02549300D2K6PKKKXVNN7322756214A.P. 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