Søren Skou - Group Chief Executive Officer Claus Hemmingsen - Group Vice Chief Executive Officer Jakob Stausholm - Group Chief Financial Officer

Christopher Combé - JP Morgan Chase & Co., Casper Blom - ABG Sundal Collier Norge ASA Robert Joynson - Exane BNP Paribas Johan Eliason - Kepler Cheuvreux Jørgen Bruaset - Nordea Markets Mark McVicar - Barclays Capital Marcus Bellander - Carnegie Investment Bank Neil Glynn - Credit Suisse Søren Skou: Good morning, everybody, and thank you for joining us on this Earnings Call in relation to Maersk’s 2016 Annual Result and Report. My name is Søren Skou, I am the Group CEO; and with me today is Claus Hemmingsen, Group Vice CEO; and Jakob Stausholm, our Group CFO. It is our intention with the presentation to hit the highlights on each of the slides and allow as much time as possible on questions. So turning to Slide 2, I have to as usual remind you that the report includes forward-looking statements and invite you to read our disclaimer in that respect. So before we turn to the financials, just very briefly an update on the strategy, I mean it’s not a long time since we have the Capital Markets Day, so it will be brief with effect from the January 1, five businesses Maersk Line, APMT, Damco, Svitzer and MCI have financially been consolidated into our Integrated Transport & Logistics division. We expect for this year to generate around USD 150 million in synergies in 2017 out of the up to USD 600 million or 2 percentage points of ROIC improvement that we reflect and we have also highlighted that, implemented a very tight capital discipline as promised at our Capital Markets Day in December. We are moving forward on the Hamburg-Süd acquisition. We are progressing well with the due diligence as planned and we continue to expect to be able to have final agreement signed early in Q2 2017 and close the deal towards the end of the year subject to regulatory approvals. For the Energy division, we are continuously working on finding sustainable structural solutions. As earlier stated, we will not give any progress update on the roadmap for finding structural solutions as we will return the news once and when we have identified actual solutions for each of the four businesses. Now to the financials for 2016. We reported an underlying profit of just over USD 700 million. We believe that's within our latest guidance, including the impairments of total USD 2.6 billion after tax primarily related to Maersk Drilling and Maersk Supply, we reported a net loss of USD 1.9 billion for the year 2016. Cash flow came in at breakeven as our capital expenditure was USD 5 billion below our earlier guidance of USD 6 billion mainly due to delay in delivery of a drilling rig and lower CapEx in APMT. As a consequence of the weak financial performance and as a tool to defend our investment grade rating which we are committed to. The Board of Directors have proposed a reduction in the dividend for 2016 to DKK 150 per share, it was DKK 300 per share in 2015 to be approved at the AGM on March 28. Let me turn on to the fourth quarter, we reported a loss of USD 2.7 billion that was driven entirely by the impairments of USD 1.1 billion in Maersk Supply and USD 1.5 billion in Maersk Drilling. The impairments reflects what in our view is a very poor outlook for the businesses, the significant overcapacity and we also believe reduced long-term demand expectations both in a Deepwater Drilling segment for Maersk Drilling and for the Anchor Handling segment in Maersk Supply Service. The underlying profit was a loss of USD 63 million in the quarter, with Maersk Line posting an underlying loss of USD 155 million and Maersk Oil reporting an underlying profit of USD 250 million. That includes however, also reversal of abandonment provisions of USD 93 million. Despite the weak underlying earnings, our cash generation was strong in Q4 with a free cash flow of USD 522 million leading to a minor decrease in the net interest-bearing debt from Q3 to Q4. I would now give the word to Jakob Stausholm. He will walk you through the Transport & Logistics numbers, and thereafter Claus Hemmingsen will walk you through Energy numbers and then I’ll be back with some closing comments. Jakob?

Thank you, Søren, and good morning to all of you. Our emerging Transport & Logistics business had a tough year, last year. We just broke even with an underlying earnings just below USD 100 million. The vast majority of our Transport & Logistics business are of course Maersk Line and APM Terminals that both hit by low global demand and overcapacity. But as you can see from the graph on the underlying profit at the variances we have in - partly in terminals, but mainly in Maersk Line. So I will put the emphasis on diving deep into the Maersk Line performance. Maersk Line is of course very exposed to the freight rates. We saw recovery from the second quarter to the third quarter and – but we have not seen a recovery from the third quarter to the fourth quarter and I'll dive into that and explain a little bit around that and when we are hitting the inflection point. We actually saw a recovery over the quarter in the rates improving quite a lot from the beginning to what see of the quarter. So let me turn to the next page and talking about the Maersk Line’s performance. A couple of key points, first of all, when you look at the profit and loss statement with an underlying reported profit of USD 155 million that is unsatisfactory, it slightly less than we had expected. It is at a moment very difficult to predict precisely profit months-on-months, simply because we believe at an inflection point in the changes. And the inflection point really starts from the graph you see in the slide with the supply and demand growth. What you can see if you go one-year back, we hit a low point in the demand. We have slowly, but surely seeing a recovery in demand and actually Q4 in some pretty strong with a global demand of 4%. What you also can see is that the supply overhang has been very, very significant. People had expected higher demand and therefore we have had imbalances in a way you could say the last six or eight quarters we have been working with the fundamentals against us. Now fourth quarter is a change here because what we see now is that the net addition on a nominal capacity is going down significantly much less new deliverables and record high and scrapings has led to that suddenly demand exceeds supply. And the encouraging sign is that it looks like this will continue in a few quarters to come at least. So we believe we are at an inflection point. The next point, I would make is we announced a year and a half ago at the Q2 2015, a growth strategy. We wanted not just to grow with the market we want to grow more than the market and we have executed in that strategy. So further emphasis that in the announcement of the changes on the September 22 last year, where we said deliberately that we wanted to win market share. You see that full-year, our volumes are up 9% and Q4 versus Q4 last year, and our volumes are up 12%. This basically means hopefully at a point of inflection that we are getting into next year from a very strong position with a lot of volumes and I should say and I'll show you that in a moment with record low unit cost as well because operationally we have done well high utilization and low unit cost. The fourth quarters though are likely to disappoint. If you compared to competition, it's going to be difficult to hit the 5% gap to competition that we have as a longer-term target that has a lot to do with our trade mix compared to how the market has developed. I'll show you that in a moment. But overall it's important to say that even if the trade mix might not fit perfect, the rate development in the fourth quarter we think that we are strategically well-positioned and certainly entering 2017 from a strong point both on unit cost and volumes. Moving to the next page, Page 8, and this is a new disclosure that we have started giving you here to show you the development in freight rates on East-West, North-South and in our Intra-regional businesses. It is important to say that we – and you can see in the freight indexes that the big East-West trades that are characterized are being probably more commoditized than the North-South. That's where we have seen so far the main improvements. We haven't really seen it in North-South yet, and it's very much to do with a significant overhang initially of capacity in East-West that has led to a lot of cascading into the North-South route. So that hits us pretty hard and we can see that there are certain particularly Asian carriers that has probably on average got more benefit in the fourth quarter from the improving situation also following the bankruptcy of Hanjin on the Pacific. Now moving on to Page number 9, the unit cost, there were some questions around how was that developing at the third quarter because our mindset is of course continuous improvement. We have a deflationary mindset. The cost leadership remains our key priority. And I am pleased to show you here that actually in the fourth quarter 2016, we recorded the lowest unit cost ever at fixed bunker price, slightly higher in absolute terms than the second quarter, but that's because the bunker price have gone up significantly, it shows that we continues to execute on our strategy with growth and growing more volume than growing our capacity having a high utilization, roundtrip utilization. So in conclusion with Maersk Line, disappointing results, but at an inflection point, we see encouraging signs from 2017 that’s why we feel comfortable with the guidance of improving the results with at least USD 1 billion from Maersk Line in 2017 compared to 2016. Moving on to APM Terminals, APM Terminals had an underlying profit of USD 91 million in the fourth quarter. It was down compared to the same quarter last year and in general APM Terminals is like Maersk Line hit by lower demand. So we have seen a cyclical reduction in the performance from APM Terminals, partly because of our exposure to oil exposed economies, but also partly because of the industry. What is important here to see is actually the business model works in that sense opposite to Maersk Line that has seen significant reductions and even losses, we remain fairly profitable. Overall like in the fourth quarter, it was 4.4% and that is with the burden of a lot of ongoing investments in new terminals at the moment. If you look at the operating – the return on invested capital from our operating assets then the return is actually 7.8% at a cyclical low point in the industry. So we feel we have a robust business here, but it's still a disappointing result that has potential to improve upon, but there are no easy recovery here for APM Terminals, with a new strategy of focusing on the assets we have and with taking out cost, we can see a slow gradual improvement over the years, also exploiting the synergies with Maersk Line. Moving on to Page 11. Damco had a slightly better quarter than previous quarter, but it's still insignificant. The major part of Damco’s role in the Transport & Logistics business is to find the way its developed value propositions together with Maersk Line and leverage the whole Transport & Logistics. But overall, as you can the return to black is consistent in Damco. Svitzer had slightly lower results than the same quarter last year and slightly lower result than the year before. There was a couple of special cost here particularly at some start up cost in Argentina that can explain the difference. And with those words, I’ll hand over to Claus to take you through the Energy in numbers.

Thank you very much, Jakob and I will comment briefly on the business units in the Energy division and we are on Page 12. So starting off with the underlying profit, you will see here that the underlying profit in Maersk Oil and Maersk Drilling improved in 2016 to USD 497 million and USD 743 million respectively. While we saw at the same time, Maersk Supply Service reporting an underlying loss and also profit in Maersk Tankers deteriorating due to very weak markets. I will take you through the development in each of the business units in Energy division in more detail in the following slides, but before doing so, let me also just highlight what has already been mentioned that we have taken the consequence of the significant over-supply and long-term reduced demand expectations for both Maersk Drilling and Maersk Supply Service and therefore, recognized in quarter four here an impairment of a total of USD 2.6 billion pretax, USD 1.5 billion in Maersk Drilling and USD 1.1 billion in Maersk Supply Service. That is the effect of the markets and the effect of the situation we see coming out of 2016. As a final comment before going into the business units, I'll just also reiterate what Søren already mentioned that we do not today give an update on the progress, but we do continue to work on the objective of the Energy division to identify individual structural solutions to separate out each of the four Energy businesses from A.P. Moeller-Maersk AS and come with those solutions before the end of 2018 and that can include mergers, joint ventures, listings of the businesses either individually or combined. Turning to Page 13, and having a look at Maersk Oil, then Maersk Oil continued with the positive earnings development in quarter four with an underlying profit of USD 250 million due to a higher oil price that reached USD 49 per barrel in quarter four and further initiatives to reduce cost and also reduction of abandonment provisions of a total of USD 93 million. Our production in Maersk Oil in the fourth quarter of 276,000 barrels per day were lower than expected and the full-year production were also below our guidance as we realized 330,000 barrels versus the guidance of 320,000 to 330,000 barrels. The lower production was mainly driven by Qatar, which are impacted by the higher oil price and with higher oil price we get lower entitlement production, but it was also impacted by lower production in the UK from the maturing fields. We do expect in 2017 a production level of 215,000 to 225,000 barrels per day and after the exit of Qatar which happens in July 2017, we would be at 150,000 to 160,000 barrels per day for the second half of the year. Operating expenses in Maersk Oil excluding the exploration costs were reduced again by 19% in the fourth quarter and compared to the 2014 baseline, now the total cost in Maersk Oil – operating cost in Maersk Oil has been reduced by 36% significantly above our own target of 20% to 25% reductions. Also in line with the strategy, our exploration costs were kept low and in the fourth quarter they reached USD 62 million. As a result of the higher production efficiencies that were achieved in Maersk Oil and the lower operating expenses, the breakeven price remained below USD 40 per barrel in 2016. For 2017, we targeted breakeven price excluding Qatar between USD 40 and USD 45 per barrel. It is important to highlight that given the sensitivity to earnings even minor changes to cost of course will impact the breakeven price level. Also as part of the strategic focus, Maersk Oil has signed agreement to divest interest in non-operated assets in the UK and Norway. The divestments are still pending approval from authorities and they will have very limited impact on our financials going forward. The last thing I would like to mention on the Maersk Oil is that in respect to the Tyra field in Denmark, we are in constructive dialogue with the Danish government and we do expect to reach an agreement soon that will safeguard the rebuilding of the Tyra field. Turning to Maersk Drilling on Page 14, Maersk Drilling reported an underlying profit of USD 16 million very close to breakeven which we had also guided for after Q3. The lower revenue is due to early termination of contracts and also more rigs being idled which of course negatively impact our earnings in the quarter. We continue the effort to reduce cost and Maersk Drilling has now achieved the total cost saving of more than 20% compared to the 2014 baseline. Maersk Drilling continued with a very strong operational uptime of 99% for the jack-ups and 98% for the floating rigs contributed to efficiency drives and in spite of the cost efficiencies also being achieved. Despite that weak outlook, which also resulted in the announced impairments, Maersk Drilling, they still have a strong backlog compared to the average of the industry with a revenue backlog of USD 3.7 billion and for 2017 alone a coverage of 56% of the rigs. If we turn to Page 15, where we have Maersk Supply Service and Maersk Tankers, and then Maersk Supply Service in fourth quarter recognized an underlying loss of negative USD 23 million due to the weak market conditions and the very low utilization of our vessels. Lower operating cost from fewer vessels and operation and reduced running cost did result in a decrease in cost of overall USD 64 million. And also here we have already mentioned the impairments. Maersk Supply Service by the end of 2016 had a 11 vessels in layoff. They divested 10 vessels during the year and a further reduction of the fleet of additional 11 vessels are planned or the cost of the next 15 months. With that by also think that Maersk Supply Service is taking the lead in trying to adjust the demand and supply of the industry with the recycling of older tonnage. Turning to Maersk Tankers, Maersk Tankers posted an underlying loss of negative USD 13 million in the fourth quarter. That was also due to continued weak market conditions and very low rates. Focus on our commercial performance and cost efficiency mitigated some of the negative effects from the lower rates. For the full-year average time charter equivalent earnings decreased by 17%, which was far less than the general market rate decline. For comparison, the spot market declined by more than 40% year-on-year in 2016. So that concludes fast and brief review of the four business units in the Energy division and I will hand back the word to Jakob to go through some of the financial slides.

Thank you, Claus. So with all the changes we are going through in A.P. Moeller-Maersk, cash generation and cash usage is critical for us to focus at. And we have significant cash generation from all our businesses as you would be able to see from Page 16. One of the challenges we have been faced with is that too many of our business units has basically invested more than generated cash flow and has constrained our free cash flow. We talked about that at the Capital Markets Day and part a lot has actually happened since then. We gave you some guidance and since then we have through investment committees worked very, very hot on getting very detailed plan to give us absolutely full comfort that we can deliver what we have set on the investment levels. And today we can confirm that it is actually a better picture because we set USD 6 billion at the Capital Markets Day in December for 2016 and USD 5.5 billion to USD 6.5 billion for 2017. We ended much lower in 2016 in the fourth quarter. Part of it was CapEx being faced into 2017 including a drilling rig to the value of USD 420 million. So you could say by repeating the guidance of USD 5.5 billion to USD 6.5 billion we are actually reducing and overall in the five quarters from fourth quarter 2016 to 2017. We are now to the tune of a USD 1 billion lower than a Capital Markets Day. So the capital discipline is a very much on. And if you move to the next page, Page 17, we say a strong financial position. We are in a strong financial position and that is important to us. You heard us at the Capital Markets Day talking about our commitment to remain investment grade. We really believe that that is in the interest of the company and we will do what it takes to [ring] there. The first part is to be restricted on the uses of capital. And another important part that the Board has supported the Company with is in the discussion of dividends. We were already alluding to it that we have a dividend policy and our dividend policy that stands, but it also refers to the underlying profit. The underlying profit is as you know a much lower for the Company USD 711 million last year and therefore, the Board has proposed a lower dividend than the year before taking the dividend per share from DKK 300 to DKK 150 is still a decent payout. And we think given all the uncertainties in the changes with the separation of Energy businesses and the acquisition of Hamburg Süd that this is a very helpful move to remain a financially strong. We are also well financed as you can see here with a good maturity of our net debt portfolio. So I think basically what we are saying is we are reconfirming or strengthening a little bit our position from what we laid forward to you at the Capital Markets Day in December. Let me just finalize here on Page 18. I don't intend to go through it, but here you have the consolidated financial information for Q4 and 2016. It's probably better to take questions from that than trying to explain every single word. So I would like to hand back to you Søren. Søren Skou: Thank you, Jakob. In 2017, our projects are going to be exactly like we laid them out at the Capital Markets Day in terms of executing on the plan. We are going to drive the synergies out of the Transport & Logistics businesses. We are going to take cost down particularly in APMT and Damco, but certainly also continue the cost in Maersk Line and we aim to close the Hamburg Süd transactions. And as far as the Energy business is concerned, the main work of course will be around finding the sustainable structural solutions to each of the businesses. Before I get to the guidance for the year, let me just say that in my view, we end our 2017 in a much stronger position that we ended 2016 despite the very poor result in 2016. If I start with Transport & Logistics and Maersk Line, we grew share organically in 2016 more than 9% in a market that grew 2%. That may or may not sound like a big number, but in absolute terms, it means that we grew our volumes by 900,000 FFE. It's almost half of Hamburg Süd we are talking about. So that was good growth. On top of that, we are of course targeting now to close the transaction or the acquisition of Hamburg Süd, which would add further to our growth. We believe that is a sensible strategy in a market where prices are increasing. We will have more volumes definitely going to help future results. Adding to that, our cost that Jakob explained is at lowest point ever, unit cost on record and we maintained in the third quarter the margin gap to our competitiveness where you know we have a target of 5% or better to the average of the industry. Finally, I would say that the industry is consolidating APL cost. APL has been merged into CMA cost. China shipping has merged. UAC is in the process of closing with Hapag. Three Japanese carriers becomes one. Hamburg Süd has been announced by us to be acquired and of course, Hanjin has disappeared altogether from the market seven carriers out of 16 or 17 so-called global carriers have or will disappear. That's also a positive development for the industry. And then finally on Transport & Logistics, I believe we have a strong plan that will help us drive synergies both when it comes to commercial synergies and when it comes to cost synergies as we had outlined as in some detail at the Capital Markets Day. On the Energy side, obviously we are facing very, very tough situations in oil services and we are going to have to deal with that as best as we can, but we are quite happy with the fact that our oil company is profitable quite a lot actually and has a breakeven operating margin now at below USD 40, which is also given today's oil price are at pretty good place to be. And that is really what leads us to the guidance for 2017. First of all, we expect a better result underlying in 2017 than we had in 2016. That guidance is very much anchored in the guidance for Maersk Line where we say we expect an improvement in excess of USD 1 billion in the underlying profit compared to 2016 for the reasons that I just outlined. We see global demand growing 2% to 4% and that is likelihood going to be more or at least not less than capacity we will grow next year. There's a very good development capacity at least in the first three quarters next year. On top of that, we noticed of course the order book is record low. No ships of significance have been ordered since the third quarter of 2015. Idling levels are record high and remain record high despite freight rates having gone up. So we are seeing maybe what could be a newfound capacity discipline in the industry. And then as far as the Energy division is concerned as a whole, we expect an underlying profit around USD 0.5 billion with Maersk Oil being the main contributor. I think that's it for now and we would be ready to take your questions. Thank you.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Christopher Combé from JP Morgan. Please go ahead. Sir, your line is open. Christopher Combé: Good morning. Just three questions from my side. First of all looking at Maersk Line guidance, how much would you describe in relative terms to revenue versus unit costs versus USD 150 million in synergies targeted for Transport & Logistics. Second question, fuel unit costs was very impressive, but fuel unit costs performance was flattish year-on-year in Q4. Søren Skou: Excuse me, Christopher we have a little bit hard time hearing you. Can you try again? Sorry, the second question. Christopher Combé: Sure. The second question is whether or not we should expect ongoing fuel unit cost performance improvements over 2017 given the fact that Q4 was sort of a flattish performance. And then lastly, can you please tell us which quarter as you expect to take delivery of your newbuilds in 2017 and does that CapEx offset the drill rigs, which is still then to 2017? Thank you.

So thank you, Christopher. I mean the guidance is very much driven on two things. First of all Søren quite elaborately explained we're coming into the year with a lot of volumes and a very little and you can see the sensitivities in the guidance statement, very little should happen to the freight rate to have a huge impact. That is the over shadowing driver of our guidance. The unit cost I wouldn't call it flattish, I think if I were you I would look towards the unit cost at fixed bunker price. Because yes, it's flattish because we have seen an increase in the bunker cost, but the real underlying performance is driven by our unit cost at fixed bunker and we aim to continue to improve that. We cannot promise that to happen quarter-on-quarter, but we should do better next year than we did last year. And then finally, I think I only partly captured what you've said, but yes, we are reducing the CapEx, part of it is doing less and part of it is delaying things and there are vessels that we are delaying to taking later delivery of both in the Energy business and in the Transport & Logistics where we delayed until 2018. But quite frankly the way we look at it both things are helpful for the Company and we are doing it – for example, we have managed to delay, taking delivery of some of our 14K vessels at no cost and operationally it actually fits us quite okay. So we save the CapEx for a year and it doesn't have operational impact. Thank you. Christopher Combé: Thank you.

Our next question comes from the line of Casper Blom from ABG. Please go ahead, sir. Your line is open.

Yes, thanks a lot. A couple of questions regarding the Maersk Line and first of all, regarding the higher bunker cost? Can you talk a little bit about how you were recovered these from your clients, and any type of delay in catching up there? And I mean I recall that your prices went down very quickly when the bunker was declining so is that all the case now and when things move to the other direction? And secondly, if you could give some sort of flavor to the contract negotiations that you've been doing on an Asia/Europe and maybe also sort of first live on Asia/U.S. Our customers reacting to this time what’s freight rates are higher. And then finally, a question regarding the Energy side, we saw the other day that [Søren] saying that they want to sell the stake in DUC. And do you have any comments to how that might impact your future or probably transaction in that area? Thank you. Søren Skou: Thank you. Yes, so if we start on Maersk Line, we also look at it this way. We have about half of our business being long-term contracts. So that's three months and longer up to one-year. For those contracts, we have bunker adjustment closes and they adjust with a delay. But I think as a rule of thumb, you can think about this three months delay either up or down. For the other half of the business that which is spot, so that is real spot or monthly contracts. They have with supply and demand that that sets the price and it's included and whatever bunker impact is included, so and in terms of contract negotiations then one of our reasons for why we are guiding a result improvement in Maersk Line of more than USD 1 billion is of course that we are closing contracts at substantially higher levels than we did last year. We have contracts expiring at various points of the year, but the real big once is around return of the year. So in December, January, we closed most of the Asia/Europe contracts and in the Pacific contracts are closed mainly around the May 1, of course this lots of exceptions to that as well. But those are the two big dates, and Asia/Europe significantly high contract rates and we are also quite positive in terms of how Pacific will develop. We don't have any – I'm not going to give any specific numbers, but it is closing at much higher levels.

In terms of potential sheltering in North Sea and we have said that we of course looking at all options and we are in the energy space, but I cannot comment or speculate on the impact of that deal or what we are looking at. So I’m sorry about that.

[That’s okay].

Our next question comes from the line of Robert Joynson from Exane. Please go ahead, sir. Your line is open.

Hi, good morning, everybody. Three quick questions for me, first of all just following up on my colleagues question on the contract rates, I appreciate the contracts less relevant for the North-South, trade lines in the East West. But could you maybe provide some flavor on repricing of contracts on the North South trade routes as well? That's question one. Question two, just on utilization rates. You mentioned at the capital markets dive at the Maersk Line, the utilization rate was 93% in Q3, and presumably it was similar to Q4. Could you maybe comment on how high that number could realistically go, presumably you'll never get to 100%? Also could you maybe provide some color on the optimal utilization rate. Again I assume that that wouldn’t be 100% on a cost perspective. And then just a final question on APM Terminals, in Africa and Russia where the terminals have suffered from lower oil price. You said that import volumes remain under pressure, but are you seeing any signs of volumes have now at least stabilized even if that's still negative on a year-on-year basis, have they stabilized in absolute terms? Thank you. Søren Skou: Yes, Robert. First of all North-South contracts, I think the guidance we can give is we have a very, very limited contract portfolio in the North-South trades. It's mainly related to brief a container. So commenting on North-South contract rates is not really – it doesn't have any significant financial implication for us because of the small volumes covered. In terms of head-haul utilization, it's a good question and one that we – one there is a lot about ourselves. We have actually achieved record high utilization numbers and also probably numbers that are higher than we expected we would be able to reach. We continue to of course get a bigger and bigger network and that does give us more and more opportunity for optimizing the network and that is a partly the reason or maybe even the main reason for why we are continuing to be able to slightly increase the head-haul utilization. 100% utilization over an extended period of time, we don't believe is possible and may not even be desirable from a cost point of view because we probably have to do a lot of things in order to actually achieve that. So I would say that what’s potential from where we are today is in all likelihood not that enormous. But of course, head-haul utilization is one thing and the other thing that we're working hard on is of course, the roundtrip utilization where we are more in the 70% range. There of course, we are challenged by the difference in trade flows, but we are – we have improved by taking more back-haul cargo and that is quite valuable for us we believe. And then in terms of APMT’s business in West Africa, in Russia and for that matter also I think East Coast of Latin America, I think it's fair to say that we have stabilized with the possibly exception of Angola, but the big Nigeria, Brazil, Russia and so on volumes are not dropping anymore. We are starting to see small increases from a low base.

That's very helpful. Thank you, Søren.

Our next question comes from the line of Johan Eliason from Kepler Cheuvreux. Please go ahead. Sir, your line is open.

Yes. Thank you. My first question would be on the unit cost. You announced it’s your purchase agreements with Hamburg Süd already starting as of April. Will that have a significant impact to your unit costs you think? And then I understand you have pushed out some deliveries with a shorter rate that you currently have in the market, will that be an additional positive for your unit costs? And then on CapEx, you highlighted some delaying vessels et cetera, have you done anything to the CapEx profile of APM Terminals. And then finally just on the – transships for the other income, there was a big loss in the quarter, what was that? Thank you.

Sorry, yes. Hamburg Süd, I don’t think we can say that Hamburg Süd volumes on the East-West will have to improve our unit cost, but it will of course give us a source of income because there will be a slot buyer on our East-West services. The charter rates are part of the reason for why unit costs are falling. The charter market continued to be extremely weak driven by the fact that 7% of the global container fleet is currently idle or laid up and that's those of the ships that are mainly driven, owned by the what we call Chinese providers, but what many people think of us, of course is leasing company. So we continue to expect a low charter market for this year and we would benefit from that. In terms of APMT then we have started to adjust the CapEx profile of APMT as we said we would do at the Capital Markets Day. Quite clearly the focus in APMT is to drive cost out, reduce unit cost, increase utilization and improve productivity and we're not looking to go out to let’s say as we call it plant new flak sales in developing new container terminals over the next couple of years. The industry and APMT is impacted by excess capacity and low demand growth and therefore, our focus in the coming years will be on asset utilization and cost and not starting new CapEx programs. With that being said, of course, we have important terminals that we still have under construction and they will be adding to our CapEx in the coming years.

You asked one last question to me that was question number four, maybe that's the reason I couldn't hear, but maybe you can repeat it.

Yes. I guess noticed that in your associated or joint venture income that was a big loss for other businesses, so I was just wondering what that was?

What company are you talking about?

It was under other businesses on allocated share of profit or loss in associated companies you have a loss of USD 134 million.

So it depends a little bit whether you look at the total result or the underlying result. If you look at the total result in the other column there we have an impairment charge related to our outliner ownership. And if you look at the underlying result, we had primarily a loss related to the devaluation to the Egypt currency in the fourth quarter.

Okay. Thank you.

Our next question comes from the line of Jørgen Bruaset from Nordea Markets. Please go ahead. Sir, your line is open. Jørgen Bruaset: Thank you very much for taking my questions. First of all on the synergies in Transport & Logistics, you said that you expect to see USD 150 million in 2017. Could you just put that into context for me, so we start included in the guidance where you say underlying profit above USD 1 billion for the division? Søren Skou: Yes, it is. It is included in the guidance. Jørgen Bruaset: Okay. And if you look at the guidance for the Energy division, could you also provide some more granularity, so you say around USD 0.5 billion, first of all what should we read into the wording around is that plus minus 10% or plus minus 25%. And also how should we read the earnings contribution from everything ex-Maersk Oil in that. Søren Skou: I don't think we're going to be expanding on our guidance today. We say quite clearly that we expect around USD 500 million and the main contribution being from Maersk Oil which as you could see from the numbers made about USD 0.5 billion in 2016. Jørgen Bruaset: Okay. And finally, just on the volume outlook in Maersk Line, as alluded you still target to capture organic market share. Should we expect the volume growth to be in sort of the high single-digit level we've seen in 2016 or should we expect this to pull back more into the low single-digit, but it's still above market growth. Søren Skou: We first of all have as a plan to grow market share as we said very clearly at the Capital Markets Day, grow organic market share every year. And on top of that, we are growing to acquisition as well. Sustaining the current level of growth of 9%, 10%, we were 12% in the fourth quarter over an extended period of time is unlikely for the whole year, but we are entering the year with a lot of momentum. Jørgen Bruaset: Okay. Thank you very much.

Our next question comes from the line of Mark McVicar from Barclays. Please go ahead, sir. Your line is open.

Good morning. Thank you very much. I have three questions. I'll do them just so one at a time. In the Annual Report, you saw a recent table from Alphaliner that says that the plan deliveries essentially of the fleet in both 2017 and 2018 will be just a little bit under 7%. So are we right to the assuming that to achieve balance in the market will require further scrapping and further layout? Søren Skou: You're certainly right and assuming that we have – when we talk about the development in supply and demand that we are considering in a continued high level of scrapping, yes.

In fact we recorded the highest scrapping rate ever in January of this year. So that's how things are developing right now.

The second one, just maybe the quicker questions, can you just talk us through how you get to the impairment numbers? So the rigs and supply – but it's a straight forward DCF will be some other techniques?

So as you know the accounting rules, we have a decent split of cash generating units. We look at the market value, whatever that market value is because that's really not a lot of traded and then we look at the value in use. Claus and I, and our organizations, we have just very, very carefully looked at our contract portfolio, our five years' financial plans and a longer-term perspectives and taking it all into consideration, looking at how many new contracts have you had the last year. How was the utilization in the industry? Then we have made certain assumptions and build an MPV and there we have – it is mainly the Deepwater segment comes to the conclusion that we needed to make an impairment.

Okay, that’s great. And my final question is that you said that exploration costs will still be around about the same in 2017 as they were in 2016? Could you give us some idea of where the main projects will be?

With the main projects that where we have exploration cost is clean in the UK, but there are also smaller cost around in various other projects. So there are various activities, but it's very, very low and of course we also developing our portfolio in East Africa where there also some operating cost.

That's great. Thank you very much.

Our next question comes from the line of Marcus Bellander from Carnegie. Please go ahead, sir. Your line is open.

Thank you. Two questions for me if I may. First, I'd like to dig a little bit deeper into the average freight rate development in the quarter and I appreciate the increased transparency that Jakob gave, but I still struggle to understand why your average freight rate is declining quarter-on-quarter I think when I look at North-South rates; they seem to be roughly flat. Asia/Europe up quite considerably and Asia-Pacific up strongly. So maybe if you could help us understand the dynamic little bit better?

Yes, I think I mean basically the main explanation here is how you recognize revenue. So you sell certain things and you put a box on a ship at a given freight rate, but then you only recognize it over the time it sales, that’s the IFIS rules. So it takes a little while from – when you make a transaction with a rate till you get it into your revenue and there's no doubt that some of the rate increases we have seen towards the second half of the fourth quarter. We will only get that in the first quarter.

Okay, but I mean rates started raising in September, even before on that…?

On the East West, yes, but we have actually seen a quite negative development on the North South pretty deep into the second half of the year.

Okay, I understand. Thank you. Second question regarding Maersk Oil or the Energy division, you say that you aim to complete that sort of separation by end 2018. I think in September last year you said give yourself 24 months. Have you given yourselves a few more months and if so, why?

No that's very sharp, we said in the September 22 that we gave ourselves 24 months and that is what we are standing by. It's very close to 2018. But anyway what we are saying is that we will be announcing the solutions by that time, 24 months later, but not necessarily that we will have executed if you like on all four business units. That entirely depends on market conditions and the opportunities that presents itself, but we are working diligently on finding the solutions and being able to communicate them within the 24 months as of this September announcement.

Okay. And maybe follow-up on that Søren Skou was saying in an interview, I think with Bloomberg news at a separate lifting of the whole energy unit now was the most likely outcome. What has changed or why is that the most likely outcome there? Søren Skou: Yes. I’ve certainly also seen the headlines that was from that interview, but actually if you see the whole interview and you will agree with me that’s a very sharp angling of the interview. I mean as you all know there are really three ways to separate the businesses, we can sell them, we can list them separately or we can merge them into some other company and all of those three ways of separation is in our playbook. We don't believe that there's one solution that is going to fit all four companies and for now we're keeping all options open.

Excellent. Thank you.

And our last question for today comes from the line of Neil Glynn from Credit Suisse. Please go ahead, sir. Your line is open.

Good morning, everybody. If I could ask two questions then the first one, as volumes are obviously strong and you’ve mentioned that Hamburg Süd volumes are coming. But given the utilization on head-haul certainly, can you become more selective in terms of what volume you carry in 2017 given the supply demand dynamics or you still very much focused on gaining as much share as possible? And then the second question with respect to the management incentivization, disclosure is somewhat limited relative to the rest of the transport sector certainly. So just interested in terms of whether it’s possible to confirm how is the structure have been reviewed in light of the portfolio review and if you can help give us some understanding as to the key trigger points in terms of profitability or returns and timing or at least when can we expect a little bit more color on that to help us understand the picture?

So if I could start with the question around market share in Maersk Line and gaining share, I mean clearly in 2016 we were off the view that we needed to grow organically, we wanted to come out of this price fall that we saw starting in the second quarter of 2015 and ending probably around the third quarter of 2016. We wanted to come out of that in a position of strength that makes sense in as much as we have the lowest cost in the industry to actually use that in such a situation in particular when it became clear that market probably had turn then we aim to get our let's say fair share or more than fair share of the engine volumes as well. So we continue to want to grow market share. I don't think we want to grow quite as fast as 9%, 10%, 11% or 12%, but as I said to an earlier question, we are entering 2017 with relatively good momentum and you're probably going to see good year-on-year volume growth numbers when we get to the first quarter, but that is not a pace that we want to keep up and I don't think it's realistic to keep up for the rest of the year.

The other question you raised, I just may not be sure of it, it's incentive short-term, incentive long-term, incentive how we construct that, that was your question?

Yes. I mean clearly there's been a big change; obviously as a company, I'm just interested in terms of how the Board actually reviews your own incentivization packages in that context. Has there been a significant change, but also I think over time certainly be helpful to understand where the real trigger points in terms of incentivization are i.e. whether they are the group getting back to covering its cost of capital or whether there's cash flow dynamics to incentivization packages given the range of color we have elsewhere in the transport sector?

It's a good question and I can in broad terms explain you how we're thinking, but obviously, incentives schemes are to be decided by the AGM, but what we have done there last year as we have done quite a lot of analysis of what went right and what went less well over the last couple of years, and we do look at scorecards where we are trying to get in the right metrics that will achieve all the things we have just been sitting and talking about. So it is about earnings, it is about profitability, it is about growth, and it is about achieving the synergies. We are really, really homing in on achieving the synergies. We need to get these five businesses to work seeing this together as one business, so we're building that in. And finally the last thing and you heard me talking quite a lot about that also incentivizing capital discipline. We need to be able to run our business with less CapEx in the future. We're still working on further things on longer-term incentive scheme where we just basically want to align the management as much as possible with the shareholders, but I can't say more at this point in time.

Understood. Thanks for the color. End of Q&A Søren Skou: All right. In that case, I think we can conclude this presentation and question-and-answer session. Again, thank you for joining us and we look forward to talking to many of you over the coming days and months and hear you back here again in a quarters time. Thank you.