Nils Andersen - Group CEO Trond Westlie - Group CFO

Robert Joynson - Nomura Lars Heindorff - SEB Equities Finn Bjarke Petersen - Danske Bank Stig Frederiksen - Nordea Markets Marcus Bellander - Carnegie Investment Bank AB Dan Togo - Handelsbanken Capital Markets Mark McVicar - Barclays Frans Hoyer - Jyske Bank

Okay, good morning everybody and thank you for joining in on this early morning call on the third-quarter results of AP Moeller-Maersk. My name in Nils Andersen and I'm the Group CEO. And I'm here, as usual, with Trond Westlie, our CFO. We'll try to make today's presentation relatively brief, because we were in touch with most of you a couple of weeks ago and leave time for the necessary questions. So I'll just repeat a little bit what I said on October 23, 2015, when we had the downgrade of results. We expect an underlying result for 2015 of approximately $3.4 billion, based on an underlying result in Maersk Line of around $1.6 billion. And that is a result that we're not 100% happy with, but it comes after a third quarter where we've seen oil prices being down 50% and freight rates down 20% compared to the same period last year. And that, of course, put our business under quite a bit of pressure. In spite of that, all business units delivered positive results and I take this as a sign that the work we've done over the last years to focus the business and make us cost and otherwise competitive, across the Group is bearing fruits. Essentially, what is basically driving the change in our forecast is that the fundamentals in the container shipping have deteriorated in the second half of Q3; the rates have dropped quite significantly. So on average, the rates are or were 20% or 19.3% to be exact I believe, below last year's and that became worse during the quarter. So September and October did not give any hopes for an immediate recovery and that's why we adjusted downwards. So the challenge in the container business is not new. We're struggling with all capacity; capacity has grown approximately 9% compared to Q3 last year and the market has only grown 1%. I think the low growth has taken everybody by surprise. At least it was below what we expected and definitely did not meet our hopes for the peak season. The spirit in the Group is good. As I just said before, we're making money in all business units. We think that the work we've done over the last years to become competitive or strengthen our competitiveness across the business units, as well as the focus and the build-up of the strong position in the balance sheet, should enable us to take advantage of this market. And one of the first moves we made of any significance this year was the acquisition of TCB that we expect to complete in the first quarter of 2016. And of course, we hope there will be other opportunities we can publish, but that's so far what we have done. But the strength of the Group is intact and also, the decision we took not to take options for additional vessels in Maersk Line I think reflect or only reflects a new view of the market. In particular, a new view on 2015 became worse than we had expected but also some conservatism going forward. There is absolutely no drama in this. When you take options instead of firm orders, it's because you want to be flexible and, given the market development, we decided to not take the options. But we will continue to invest within our market share and our market-leading positions, but our expectations on future growth is probably just a little bit lower than they were in previous periods. So that's what I wanted to open with and I suggest we go in to page 3. I assume you have read page 2, that of course that all what we say, even now, is subject to uncertainty. We're giving you sensitivities, but the market now, at the moment, is very, very volatile; even the oil price is volatile and it's very hard for us to give you - be exact on what we predict, of course. We have taken some and we've listed on page 3 some of the responses we have taken. Of course, these measures are not something that popped out of the hat following our downgrade; these are things that we've been working with quite a while, but we felt this was a convenient window to publish and create clarity around our plans. And if I start from the top. Maersk Line; we're reducing cost further. We published on Wednesday that we will lay off 4000 people over 2015/2016/2017 and we'll reduce SG&A by $250 million on a running basis. We have also published some network adjustments and, of course, in a situation where rates are really, really low and pressures are high, it's important not to have too much capacity in place and that's what we have eliminated. And I'll come back to that during the presentation on Maersk Line. Maersk Oil also specified its action to meet the 20% reduction target we had at the end of 2016 and it was again mainly clarification but also, you can say, publishing the plans for the still to be done, restructuring. And it means reducing the number of the employees by 1,250 in 2015. And then the plans for meeting the 20% cost reduction objective by the end of 2016. APM Terminals had already launched its Adapt to Market. This is the second time in a few years that we do that and they've taken out quite a bit of cost during the year. Unfortunately, of course, APM Terminals, I'll come back to that, where we're quite exposed to oil exporting markets and therefore also quite exposed to some negative developments in general markets. Maersk Drilling is on track. We initiated a cost reduction plan last year and so far we've reduced the costs by more 10%. And APM Shipping Services published also some further lay-ups and lay-offs, lay-up of vessels and lay-offs of people, on Wednesday and that's of course also meeting this difficult market in supply service. Financial highlights are of course and should be, in line with what we said two weeks ago. We're delivering a headline profit of $778 million and an underlying profit of $662 million, both approximately 50% of what it was last year. And I can say with some confidence that this is really only due to the lower oil price and freight rates. We've taken a lot of initiatives to deliver as much as we can. A ROIC of 7.6%; given the circumstances, probably not a bad figure. And then what we didn't give you two weeks ago were the underlying profit by activity, but you'll see that there's a major decline and that is the impact on the quarter of Maersk Line and Maersk Oil. Maersk Line, for the reasons that I said before and Maersk Oil exclusively because of the oil price. We're having very good production figures and everything actually runs very well in Maersk Oil. We said at the beginning of the year that we had a break even in the oil business, between $55 and $60 and now, we're at an average price of $50 making a small profit. The main change in that is cost reductions plus reduced exploration costs and increased oil production. So there, we have improved our competitive position as well. APM Terminals; a little bit down due to the exposure to the oil exporting markets. Maersk Drilling up due to its good contract coverage. And APM Shipping Services in line with last year which is basically hiding; I'll come back to that in a minute. But basically, improved result in Maersk Tankers and deteriorating results in supply service. Damco and Svitzer are also up but I'll give you the figures on that in a minute. Let's go to page 5. Here you have the details of Maersk Line results and basically, the headline figures are down and a 19% decrease in rates means basically close to $1.2 billion in reduced turnover, so that's the explanation for the drop in turnover. And of course, that drop in turnover we're not able to compensate fully. Oil price is helping us somewhat on the bunker price with $222 per FFE, but essentially it of course runs down to the bottom line. In terms of capacity then, our capacity increased by 6.7% year on year to 3 million TEU but we did see a decline, compared to quarter 2, driven by some of the measures we've taken to reduce capacity in particular from Asia to Europe. We have signed a contract in July for nine 14,000 TEU vessels to be delivered in 2017 and the total order book amounts to 0.4 million TEUs right now. Going to page 6; this is basically a breakdown on how the costs have developed. We have a decrease in total costs of 10% against an increase volume of 1.1%. The unit costs consequently were down by 11%, by $287 per FFE, of which $222 were declining bunker prices. If you then take that out, then of course we did have a reduction in cost also from other factors but that is mainly driven by currency and other things. So if we exclude that bunker price and FX, then we actually had an increase in the unit costs due to lower fleet utilization. And you can see that - that you can see basically that the bunker consumption effectiveness is increasing or is decreasing, so we use now 2.8% more bunker per FFE which is of course negative, but driven by the lower fleet utilization. Maersk Oil results, on page 7. Well, simple figures; an 86% decrease in underlying profit. I have given you the background for that. It's, of course, the lower oil price. But entitlement production was up by 26% basically, of course, helped by Qatar where we have an automatic mechanism, but we also had good production performance across the board and some new fields giving us production, in particularly in the UK. So operationally, actually it was a good quarter. We've cut back on exploration costs; they dropped by 61%. This is in the quarter but also on our yearly expectation, we will now come out with lower exploration costs than we had expected at the beginning of the year. We're expecting a decision on the exploration license or what will happen with the field development of Itaipu and Wahoo, by the end of 2015. We're not operators and of course involved in the process, but needless to say, with the present oil prices it's not easy to develop these fields. Apart from that, the project maturation progress is doing well. We have development plans in place for Johan Sverdrup and Culzean and they were sanctioned by the Norwegian/UK authorities in Q3, so that was positive. And the Al Shaheen development is also going ahead, actually slightly ahead of plan. Going to the APM Terminals result on page 8. An underlying profit of $175 million, a bit down from last year; still delivering a good ROIC of 11.6% but again, down from last year. The throughput declined quite significantly by 8.7% compared to last year. Of that, half was due to divestment and the other reason is basically West Africa, Russia and Brazil. But of course, APM Terminals is also impacted by the fact that we have, in terms of volume, quite a high activity centered around the Asia to Europe trades, so we're impacted by the weakness in this trade. The EBITDA margin declined 2.1% and that is broken down, as you can see here, in the bullet point tree, 1% underlying operation; 0.5% to foreign exchange; and basically some minor things; divestment giving a slight loss because some of these were not consolidated in the top line; and then we had some construction revenue that was passed through. Revenue improvement and cost savings gave us approximately $50 million. But of course, it underlines the pressure we're under, given that we still, in spite of that, have a decline in the results, due to the mix and the pressure in the oil dependent markets. I've already commented on the agreement to acquire Grup Maritim TCB, with 11 terminals and we're quite excited about that. But of course, there's a lot of hard work to make it pay and in the short term it will have a negative impact on our ROIC, until we finalize the investments and get things running at full speed. Maersk Drilling's result and that is of course a positive point in today's figures, up quite nicely compared to last year. And that doesn't reflect the market. It reflects the fact that we have a better contract coverage than the rest of the industry. And that we're reducing cost and that enables us to maintain a ROIC of approximately 9%. When the rig contracts run out and they will, then of course we're faced with the same market as our competitors and we'll have to work very hard to sustain profitability in this sector unless the oil markets improve. But there are still contracts to be had, so we had - we've signed - in Q3 we signed two new contracts and four contract extensions, in total around $1.1 billion and with the new rates that is of course quite a bit of activity. So things look reasonable, but we will, as I just said, run into increasing challenges as our order coverage or contract coverage thins out during 2016 and 2017. And then the last piece I should highlight essentially is APM Shipping Services. I've given you the details on some of it, but we lower result for Maersk Supply Service; not surprising, given the market here. Maersk Tankers is lower, but that is because we had some extraordinary profits last year. And the underlying - you can say the truly underlying result is actually up. Damco has improved a lot and that is up from $38 million minus last year to $18 million. And that's very pleasing, we're pleased with that. Of course, it is a start and we shouldn't be over enthusiastic about it. There's still a lot of work in Damco to be done before we have a fully satisfactory operation. And Svitzer was delivering progress in results, from $22 million to $30 million; pleasing. A good nice result from Svitzer this quarter. And then I'll hand over to Trond, who'll take you through the financials.

Thank, you, Nils; and good morning from me as well. I'm going further on slide 11, where we look at the invested capital and the returns. And the invested capital is - at the end of this quarter is basically at the same level as it was last quarter, with the exception that we have sold off ESVAGT. And that's basically the only change of significance that has happened during the quarter. This quarter, we have a return on 7.6%. That relates to a year-to-date return of more than 10%, but of course it is affected by both Maersk Line and Maersk Oil, with - which is giving a 5.2% and 2.1% return. But considering also that terminals, drilling and shipping services is basically delivering returns of above or just under 10% return. And that actually shows that almost $20 billion of our invested capital is actually giving a return at the higher threshold than the 10% level. And of course, Maersk Oil and Maersk Line, with $26 billion in invested capital is challenged, due to the market circumstances. One specific thing in other businesses; you see that it has reduced as a result of ESVAGT, but of course the return this quarter is influenced by the gain in ESVAGT, as well as the mark-to-market changes in Danske Bank shares. That has improved slightly in the third quarter. Going then to page 12, starting on the top left, on the cash flow. We started the year with a net debt of $7.7 billion and we're basically at $7.9 billion. But as you can see, it has happened quite a bit of elements. The EBITDA is $7.5 billion; then slightly changes in working capital; paid taxes as $1.3 billion. Gross CapEx is at $5.5 billion so far this year; and the divestments is at $5.7 billion and that contains also the sale of the Danske Bank shares that we did in the second quarter. And of course, the ordinary and the additional extraordinary dividend adding up to $6.2 billion. And that leaves us the net interest-bearing debt of $7.9 billion at the end of the third quarter which is slightly better or slightly less debt than in second quarter of approximately $900 million. On the top right, you see that the portfolio management over time are not going to allude more than just stating the $5.7 billion; and also the - on the bottom left, on the $5.9 billion in CapEx - sorry, $5.5 billion in CapEx. Nothing new on the bottom right slide on the development of the dividends. It's just to show the continuation of dividend going the right way. Going then to slide number 12, starting on third-quarter numbers. We're delivering a revenue of slightly above $10 billion, down $2 billion from last year. And it's basically rates on Maersk Line and oil price that drives this. And Maersk Line is coming down with $1 billion; and Maersk Oil at approximate - slightly higher than $800 million contributing to that. EBITDA landing at $2,245 million, as a result of the pressured market. And the earnings before interest and tax at $1,204 million. Finance costs coming down to $127 million, also influenced by mark-to-market on Danske Bank, but also the effect of the average lower interest rate that we have. Taxes at $300 million, leaving a profit for the period at $778 million. That leaves us an earnings per share this quarter of $36 million; and as mentioned earlier, a return on invested capital. Just to highlight a few numbers on the year-to-date nine-month numbers. Revenue above $31 billion, and a reported profit of $3.436 billion so far this year. That is actually giving an earnings per share for the first nine months of $157 per share; and return on invested capital of 10.5%. Cash flow from operating activity for the first nine months is just short of $6 billion, so we have still a good cash conversion. And cash flow for capital expenditures in the table is $142 million-plus; but remember that includes the sale of the Danske Bank shares, so the gross CapEx is still $5.5 billion. Going then to the page 14, on the outlook. The outlook is the same as we given you on October 23. So we expect an underlying result of around $3.4 billion. And we have slightly adjusted our capital expenditure expectations to be around $7 billion from previously around $8 billion. Maersk Line; the same announcement as in October 23, that we expect an underlying result of around $1.6 billion. And we have revised our expectation of the market to that seaborne container transportation, expected increase with 1% to 3% for 2015. Maersk Oil; we continue to expect a result significantly below 2014, but we have lowered our expectation for the oil price for the remainder of the year. On the entitlement production, it's now - we expect around 295,000 barrels a day and we have reduced our expectation of expenditure on exploration costs to be around $500 million for 2015. On APM Terminals, we maintain our expectation of a significant result significantly below 2014. For Maersk Drilling we maintain the expectation of a significant higher underlying result than 2014. And that is also the same for APM Shipping Services. In saying this, the sensitivity guidance and also considering the announcement of October 23, we do see these numbers expectation are subject to considerable uncertainty. And, as a result of that, we have given you the sensitivities or some sensitivity factors for the rest of 2015. And with that, I'll leave the closing remarks to Nils.

Well thank you, Trond. And basically, I think we have covered everything. So I would suggest that we go directly into question and answers. And we'll try to answer them as well as we can.

[Operator Instructions]. First question comes from Robert Joynson from Nomura. Please go ahead.

A few questions from me; I'll give them to you one at a time. First of all on Maersk Line. You've already communicated the closure of four services which have been initiated over the past couple of months. Could you just tell us please what will happen to those vessels, i.e., will they be idled in the near term or will they be transferred to other services?

It will be a mix of idling and returning to time charter partners.

And the second question on Maersk Line. Just referring back to the efficiency program that was announced on Wednesday, i.e., it was mentioned that the SG&A run rates would be reduced by about $150 million for 2016. Could you just provide some color on roughly how much of that will come from headcount reductions? And also some color on what the likely redundancy costs for that would be in 2016 as well, please?

Yes, the main part of the savings will be headcount reductions. And there will be some, of course, redundancies to be paid. But you notice from Maersk Line's release that they expect quite a significant part of the redundancies to happen through natural attrition. And, of course, that sounds like a lot, because it's a 15% reduction and fortunately, we don't have a general attrition level at that level over a couple of years. But we have a quite high attrition level in the Group shared service centers and that will help us do a larger part than normal through natural attrition. But there will be some redundancy costs, but nothing that is not covered within our guidance.

And just a final question on Maersk Oil please. The revised exploration spend guidance is around $500 million which implies around $147 million for Q4. That would be quite a sharp reversal compared with the downward trend that we've seen during the past few quarters. Could you just provide some color on why you expect the exploration spend to be comparatively high in Q4 compared with the first nine months of the year? Thank you.

There is no specific reason. Maersk Oil tried to estimate what exact drilling activities they will do during the quarter. And generally, there are some - they, of course, never hit it completely. So we'll see when we come to the end of the quarter.

And our next question comes from Lars Heindorff from SEB. Please go ahead.

A few questions from my side as well. Regarding Maersk Line, I think one of the key questions that was raised here the other day, in connection with the announcement of the cost-cutting plan, was that you're going to reduce capacity, but still want to grow at least in line with the market in terms of volumes and I just wonder if you could give us a bit of color about how you're going to achieve that?

Yes. We have decided not to take some options. And the reason why you divide an order with a shipyard into firm orders and options is, of course, that you want to see how the market develops. So when we're coming to the situation now that we believe that the market - or we know the market in 2015 will grow with a lower rate than we expected at the beginning or the middle of the year. And also have a somewhat conservative view on immediate freight rates. It actually is natural to not take the options. It just reflects that there's nothing that has changed to the positive since we decided to take the option. So there's no drama in this. It's not a reflection of earnings or whatever, it is just that we think that we can order these ships slightly later. And fit them into a lower growth expectation for the market. We're not changing our goal to grow at least in line with the market, to defend our market-leading position. But given lower growth expectations, we think the capacity orders that we have in place now are good for now.

We still see a lot of your competitors even this week are ordering new and larger vessels. So if you cut back on capacity while others increase, I'm just curious to find out how you expect to see that utilization which is basically what you're indicating, will go up going into next year.

We've grown our capacity year to date by 6% this year and we had a volume growth of 1%. So that gives us some flexibility in terms of the immediate future and we don't need more capacity. I can't comment on competitors, but they may have different growth expectations than us or different plans for their market share development than we have. Our experience is, if you sail with a network that is too large for your need, you have a hard time making money in this industry. And we don't want to push that position too hard. But rest assured that we'll be ready to take or to fulfil our market share goals with the capacity we have ordered.

And regarding your CapEx guidance which is now down. I don't know if you could give us any indication about the outlook for 2016. Maybe more specifically, do you have any contractual obligations in terms of CapEx that you just [indiscernible] stay at these levels for 2016 as you expected for 2015?

Could you repeat that? I couldn't hear what you were saying exactly.

It's regarding your CapEx. Do you have any contractual obligations going into 2016 that suggest that it will remain at the same level as we're going to see or you expect for this year?

Well, just to make it very clear, we're not in a CapEx cutting mode. We will adapt our orders for ships to the markets that we see or we expect. But we're not cutting CapEx, per se. We're willing to go into M&A activities and so on. So we're not on that at all. And, of course, we have placed orders that means that our cash flow and CapEx will continue into next year, but that will not be the driver of CapEx alone. We don't feel under pressure. We have a very strong balance sheet and we will do the investments that we find right. And we'll give you much better guidance on that when we come out with the annual result for 2016.

And our next question comes from Finn Bjarke Petersen from Danske Bank. Please go ahead.

Two questions, the first one, to follow up on the CapEx side. You have reduced CapEx by $1 billion. Could you say something about where you have reduced your CapEx?

Well, part of that is, of course, not going into the Triple-Es and some other ship commitments and there are odds and ends that, of course, have been elements of challenge during this quarter as a result of some postponements and some cancelations. So it's more - I guess the biggest element of this is the element of not going into new ship contracts, but other than that, it's odds and ends, basically.

Okay. In Maersk Line, it's obvious that you of course had a negative development in your consumption per container. When do you expect to get that fix back on track in the reduction in the consumption per TEU?

The only reason why we have an increase in [indiscernible] in bunker consumption per container is that we grew capacity faster than demand grew. So adjusting our capacity to the market is the first step and that is what is needed to improve that situation.

And our next question comes from Stig Frederiksen from Nordea Markets. Please go ahead.

Just one quick one on the exploration costs going forward. What run rate do you think we should look at? You are talking about, of course, inorganic, more focus on that. You have also mentioned earlier that you still need to have some kind of exploration to become an oil - still staying an oil company when you look at the pipeline. Should we expect further reduction from the level here going into the coming years?

Well, we had been on a pretty high level of exploration expenses if you go back the last six or seven years. And we're taking that down because we believe that, right now, the best way to grow our reserve base could be some successful acquisitions. How that changes in the future, I don't know, but I think it's unlikely that we return in the short term to the high level of exploration we had before. It was, you could say, an over-investment in order to catch up on the reserve side.

And then, just finally on Maersk Line. The incremental; what to expect here for Q4. Looking at what you need to do in Q4 for Maersk Line to reach your guidance, should we assume that in your guidance, you have included improved load factor based on the initiatives that management are taking in Maersk Line in Q4?

We need to - if you take the accumulated earnings so far this year, we need to make $150 million in the last quarter for Maersk Line. And whether we make that - of course, yes, we're reducing costs and adapting capacity but, of course, also the rates will influence it. So we're very keen to see that result as well, but we hope we'll get at least in line with the guidance. And for the Group, we need a little more than $300 million profit in the last quarter to make the Group guidance. Of course, we hope to make more, but there's also a risk to the figure, as Trond pointed out a bit earlier.

And our next question comes from Marcus Bellander from Carnegie. Please go ahead.

One question from my side. When it comes to oil M&A and the environment there, you've previously suggested that sellers and buyers have rather different price expectations. Has there been any change there in the last couple of months?

Well, I think there has been some transactions, so obviously sellers and buyers are meeting. The level of transaction in the industry at the moment is quite high. We have not done any transactions but we're still optimistic that things will materialize.

And our next question comes from Dan Togo from Handelsbanken. Please go ahead.

A couple of questions. Firstly, on Maersk Line. You have previously indicated that your spot exposure was around 25%/26%; if I go back and look at your presentations back then, 25%/26% at the Group level. Where are you in terms of spot exposure in Maersk Line today? And if that has changed which trade lanes explains the difference? Thanks.

I can't comment on that because we're, of course, in the middle of contract negotiations and we have to see where it goes. So fundamentally, probably no change. We will know when we see how many contracts we close and at what level. And that goes both for the European trade and for the U.S. trades that are generally closed around May.

Okay and then another question. Because, of course, to me it's not so much the capacity that is the worry to keep up with the market, it's more coinciding, taking 4,000 people out of an organization of a little more than 20,000 and still grow in line or more than the market. How will you make that work? That sounds like quite a challenge.

Well I think it's important to underline here that the 4,000 people and the change plans are not something that comes out of blue air or something we pull out of a hat because we didn't meet our expectations in Q3. These are plans that are based on quite a lot of activity in the past years and quite a lot of investments into digitizing the business. And with increasing digitization, you also need less people for handling of documents and so on. So this is a very important driver. So it's more you can say making public our plans, both externally and internally, that have been some time in the making.

Okay. And then just one question remaining. As you mentioned, $50 per barrel as a break even as it is right now, but if you exclude Qatar, where would you be in terms of break even on your oil price?

The break even excluding Qatar will most likely go up, because we have fixed costs and, of course, you take quite a sizeable oil production out. But, of course, we will also adjust things if Qatar should not be extended. And that's basically all I can say for now. Qatar is not the only profit maker in Maersk Oil. And, on a Group level, in this year's result, Qatar's contribution is not overwhelming. So we'll have to pass that bridge when we come to it.

And our next question comes from Mark McVicar from Barclays. Please go ahead.

I just have one question. Looking at it at Group level, do you think the cost reduction programs that you've announced in all the different businesses will be enough to keep those businesses profitable, assuming no pickup in current market conditions? And if things get worse in 2016, a weaker oil price, further freight rate deterioration, is there a plan B?

Well, that's a pretty broad question, I would say. But if you take Maersk Line and Maersk Oil, yes, we believe that we will be able to stay profitable. And the reductions we made in the other oil-related businesses, supply service and drilling are quite significant and will be successfully executed. But of course, we don't have a magic formula to stay profitable, irrespective of activity level and rate levels. So if the rate drops to zero and we don't have any business, yes we will be making a loss. So I think that's just a matter of fact. I think what we take some pride in is that in a year where freight rates are down significantly, historic lows and we have half the - seen the oil price halving, that we're still delivering $3.4 billion of profit. I think that's very respectable. The present run rate is of course low and 2016 will be a challenging year, no question. But delivering that kind of profit under these circumstances, I think all in all, is a reflection of the fact that we're very competitive.

Certainly. But presumably, you have a second round of cost reduction plans, if needed yes? I guess this must be a continuous process.

This is definitely a continuous process; thank you for throwing that bridge at me. But also, I think it's important to underline that what we're doing right now, of course Maersk suppliers' activities are reflecting an immediate situation with lay-ups. But for Maersk Line, this is a consequence of a long journey in making our - in automating and digitizing our administrative work. So it's not something that comes from one day to the other and it's definitely not reflecting a panic situation or short-term reaction to a drop in earnings.

[Operator Instructions]. And our next question comes from Frans Hoyer from Jyske Bank. Please go ahead.

I notice your comments on the market share development. It looks like on a year-to-year basis, Line has gained a very slight market share in the third quarter. Would it be fair to say that on a sequential basis, Maersk Line lost a bit of market share in Q3?

I can't answer that question. I don't know what sequential basis means.

Q-on-Q relative to Q2, 2015.

That's what I mean. We probably gave some market share indications in Q2. I haven't got those in fresh memory. But we're not looking at market shares on a quarter-on-quarter basis. And with the present market situation, where rates are at where they are, it's not a necessity for us to take market share. We want to build our market share long term, based on superior customer delivery. That is the strategy.

You mentioned the last conference call, this point about perhaps moving away from the contract market because the rates available are loss making and then relying more on the spot market. Was that already a factor for you, perhaps in the third quarter?

No, to my knowledge, we're not closing any contracts of significance in Q3. And it wasn't a comment on the specific situation right now. It was just a repetition of what Soren Skou said a couple of years ago, when he said that if you can't get the right rates in your contracts, then you'll rely more on the spot market which of course still stands.

Yes well, particularly now I would have thought.

As I said, I have no comments on today's situation.

All right. The other point you mentioned on the 23rd was that that had been a gradual erosion during Q3 and the result in Line in September had been particularly poor. Now we know - I don't know whether that was particularly on the rate front or on the volumes front or whether there was something on the OpEx side of things especially that kind of disappointed in September.

Rates.

Yes, okay. May I add one more question?

Yes you may, but just let me clarify. When I say rates, it's because rates determines our profitability much more than volume. Of course, the volumes in September and also in October, have disappointed because we've not seen the peak coming through. And that is impacting rates as well. But if you take the mathematical answer, of course, it's the rates that impacts the profitability mostly.

Final question on the ROIC on slide 11. The 7.6% ROIC for the Group is - I'm right in thinking that's a 12-month trailing average isn't it?

No, well, it's an annualized figure over the third quarter.

But how can I understand that - have you taken the underlying net income for Q3, Q2, Q1 and Q4 and divided that by the average invested capital over the period? Or is it a kind of snapshot, where you take the ROIC, the underlying net income for the quarter, divide by the invested capital and then normalize that for the full year?

Well, I actually do think it's the latter, but when it comes to that kind of details, I think you should take that with investor relations, to make sure that all the details come into the right order.

We have no further questions on the phones, so back to you speakers.

Well, I'll just close by thanking you for participating in the second telephone conference within two weeks. So thank you for your patience and thank you for a lot of good questions. We look forward to talking to you again after - when we publish the full year and hopefully not before. Yes, we'll see how things go. It's a tough market out there, but the Group is in good shape, competitive and we're very enthusiastic about the opportunities that these markets also offer and we shouldn't forget that. Thank you very much and have a great day.