Søren Skou - Chief Executive Officer Morten Engelstoft - Chief Executive Officer-APM Terminals Søren Toft - Chief Operating Officer Vincent Clerc - Chief Commercial Officer

Edward Stanford - HSBC Bank Plc. Dan Togo Jensen - Carnegie Investment Bank Robert Joynson - Exane BNP Paribas Lars Heindorff - SEB Mark McVicar - Barclays Bank PLC Casper Blom - ABG Sundal Collier Holding ASA Finn Bjarke Petersen - Danske Bank Søren Skou: Good morning all, and thank you for listening into our Q3 Earnings Call today for Maersk. My name is Søren Skou, I'm the CEO, and I'm joined today by Søren Toft, our Chief Operating Officer; by Vincent Clerc, our Chief Commercial Officer; and the CEO of APMT, Morten Engelstoft. As always, I encourage you to read our disclaimer concerning forward-looking statements. Now before I dig into the financial highlights of Q3, I just want to talk a little bit about the transformation that we are going through. A number of important things happened during the last quarter. We announced in September the reorganization of Maersk Line and Damco, so that we – 1st of January, will be fully organized as one integrated company to be able to execute on the strategy of becoming the integrator of container logistics. We also continue to have solid development on our digital initiatives, our customer transactions are now in Ocean, by and large, digitized. More than 90% of our customers’ soft-serve price quotes now online. We launched our instant price quote app during the quarter and we also have a progress for instance, trade lanes, which we expect will release its general availability release during the months of December. Our customer satisfaction is on the increase. That's very positive. Maersk Drilling is on track to be demerged in 2019. We have management in place, company has been funded, and the company is ready to operate as an independent company from 1st of January, so that we can execute on the demerger as planned next year. Now let me turn to the highlights for the third quarter. There are really three main headlines for me. First of all, a quarter of solid growth on the topline. Secondly, while we are not happy with the absolute level of returns, we do have good earnings momentum. And finally, we had a quarter with strong cash flow generation. And let me just briefly talk to each of those three key messages. In terms of solid growth on the topline, we grew 31%, as you can see to $10.1 billion. And that is of course much driven by the acquisition of Hamburg Süd. But also when we look out excluding the Hamburg Süd transaction, we see good growth. 7% year-on-year in Ocean growth, driven by higher volumes and rates. 8% year-on-year growth in Logistics & Services, which is quite good, but also hiding a story that we are actually growing a lot in supply chain management, 16% year-on-year. And our turnover in the forwarding part of the business is slightly declining as we focus on profit. And finally, we have 5% growth on the topline in Terminals & Towage driven by 7% growth in our Terminal business. Overall, this means that our non-Ocean business organic growth 15% versus organic growth in Ocean of around 7%, and that's exactly what we set out to do grow non-Ocean faster, significantly faster than the Ocean. In terms of my second message around earnings momentum, then we delivered a growth in the EBITDA of 16% compared to last year. Obviously that was a quarter that have significant impact from cyber, so that may not be a fantastic result for us, but we do, I believe, have strong earnings momentum this year. We are up – the EBITDA of $1,138 million this quarter is up 70% compared to the first quarter, where we were at $669 million. And it was also up 29% compared to the second quarter where we were at $883 million. The EBITDA improvements are driven by stronger freight rates, good control of costs and improving margins both in Logistics & Services and also in Terminals & Towage. And then we have solid progress and it's helped for earnings that we have solid progress on Hamburg Süd synergies and we are as you have seen upgrading synergy expectations to more than $500 million in this quarter. And then finally, the final and third message I want to touch upon is the cash flow generation. We had in the quarter cash flow from operations of $700 million – free cash flow from operations of $700 million and also a cash conversion of 95%, which was good. Combined with sale of Total shares, it means that we can deleverage the company by $2 billion during the quarter. We are also communicating that this quarter that we expect future investments to be lower and about $2 billion to $2.5 billion for 2019. And by that, I mean gross CapEx expectations. If you look at the journey we have been on since 2016, we have significantly reduced our committed future investments. At the end of second quarter 2016, we were at $5.3 billion committed investments in what is today now the continuing business that was reduced to $4.1 billion a year ago in the end of Q3 last year and now $2.4 billion. So that leaves us with a lot of flexibility in the coming years, and I do expect also continued reductions in the net interest-bearing debt for that reason in the coming quarters. Now, let me turn to the actual numbers as you have seen them. I just want to on this page to highlight the fact that our underlying earnings are flat driven by higher depreciations of Hamburg Süd and higher taxes, but otherwise, I believe I have covered most of the points on this slide. As you can see, we only invested – we have CapEx of $400 million during the quarter and that’s the journey that brings down the committed CapEx that is playing out. You see our reduction in guidance for CapEx. And we now only have $1.1 billion of committed CapEx to next year 2019 and 2020. We have added $80 million of CapEx because of scrubbers, so that is relatively a nonevent in this respect. Then turning to our net interest-bearing debts. The free cash flow, including the sale of Total shares of $2 billion has allowed us to deleverage from $14.3 billion during the quarter to $12.4 billion. And we will expect to continue to deliver in the coming quarters. On the consolidated financials information, I just want to highlight a few details. Financial costs are well below the same quarter last year. It's really driven by dividends from Total. And again, on the tax side, taxes are up a lot, again driven by taxes on dividends. And then finally, the profit loss or the profit from discontinued operations of $169 million, I just want to make sure that it's clear that we are not depreciating on our drilling rigs and supply ships and hence, the relatively strong results. Finally, before I turn it over to Søren Toft, I just want to touch briefly on our financial metrics from our transformation metrics, if you will. Revenue growth up 31%, non-revenue up 15% to $3.155 billion, strong cash conversion, CapEx low at only $400 million and return were low and too low and clearly a progression since the third quarter last year. So with that, let me turn over to Søren Toft. Søren Toft: Thank you, Søren. Turning into the Ocean segment. We can see that revenue for the quarter was up 32% and even excluding Hamburg Süd revenue was up 7%. This was mainly driven by a higher freight rates, a better cargo mix, and then also slightly higher volumes. We saw that also a spillover into EBITDA which increased 16%, and obviously also here, partly offset by the higher bunker price, which we could not fully compensate for, but we have certainly made a much better strides in the third quarter. Other revenue increased, also because we managed to collect more demurrage and detention, we benefited from commercial synergies from Hamburg Süd. And we've seen more disruptions in Q3 in the overall network. So we will see a negative side effect of that in the cost, but overall this is a positive development for us. Importantly, we have been able to grow the volume this quarter, but continue to deliver on the promise of reducing capacity. We reduced capacity 2.7%, meaning that we also improved our utilization for the quarter. We did see a worsening reliability in the Ocean performance Maersk Line and Hamburg Süd are the number one and two in the industry for the quarter. We're very pleased with our relative progression. We're not yet pleased with our absolute progression and this has our attention for the coming quarters. Finally, I also want to say in line with Soren Skou that we will continue the capital discipline in Ocean also in the coming quarters as we look ahead. If we then look at the unit cost, then for the quarter we managed, when we clean for all the effects and the fact that last year we were not yet the owners of Hamburg Süd we managed to reduce our cost base by 0.6%. When we compare quarter-over-quarter, so quarter two over quarter three, it’s correct, we had an increase of about 1.5 mainly because we delivered slightly lower volumes that we expected mainly on backhaul out of the United States where we also did appropriate cargo mix, because we saw an increase in the third quarter on a time charter prizes, we have a very short book and that spills over there. We had a few one-offs. But I think what's most important to see is that when we compare these numbers, and I know there are many of them. Then in the Q1, 2018 we were the owners of Hamburg Süd but we had not yet the opportunity to you say influenced the network, drive the changes, reduced the capacity and so on and so forth. So what we really look at is the run rate from Q2 onwards and there we can see that in Q2 and Q3. We are on a run rate of between 1% to 1.5% year-on-year unit cost reductions and we also expect that to continue into the fourth quarter. On fuel costs we're very pleased with the progression not on price, but on efficiency where we managed to reduce it also in the coming quarter. We're satisfied whether performance and is an important metric for us as we also look into 2019 and 2020 were an average the fuel price will increase. If we look at capacity then one of the points that we mentioned continuously that we would work on was to optimize the network and do something about capacity. We are now fully integrated the Hamburg Süd fleets into the Ocean network we're fully integrated the equipment fleet and in this quarter managed to reduce our deployed capacity by 2.7%. We have done that mainly by returning chattered capacity and maybe as an interest for you, we are actually today of deploying around 730 ships in the overall Ocean network compared to 780 at the point that we took over Hamburg Süd. It's our ambition to reduce this number a little bit further and keep a stable around the 4 million TEU. We have been proactive looking into fourth quarter by taking out a string on Asia, Europe. That will not help our nominal capacity as we are reporting here. Because these large ships are mainly laid up, but it will help our deployed and offered capacity in the market and thereby drive a higher utilization. So in short, we continue, we expect to continue to reduce the capacity slightly going to fourth quarter. So that we land around the 4 million TEU mark and we expect that capacity is what will be stable plus, minus a little bit when we look into 2019. We have a network of more than 700 ships. So I cannot guide on this down to the last 5,000 or 10,000 TEUs, but the 4 million TEU mark is what we're aiming for and what we absolutely believe we will delay. Looking into Hamburg Süd, then what we can say is that we are progressing very well on the integration. Synergies are contributing positively to the overall revenue in the overall EBITDA of both the Ocean segment and Terminals & Towage segment. Synergies are materializing faster than what we expected in the network, in the procurement, and in the terminals. We recorded a slightly lower EBITDA this quarter versus quarter two. It's mainly because we had a few one-offs in quarter two and mainly because volumes also in Hamburg Süd were a little bit weaker as expected. Looking into quarter four, we are seeing a strong trend on volumes and general expect to land, the year strongly and we generally expect still to deliver an EBITDA of Hamburg Süd in 2018 that's higher than 2017. And then finally, we are raising the guidance and the synergies to minimum $500 million for 2019. Let me turn the word over to Vincent Clerc.

Thank you. Thank you, Søren. And for us, obviously the third quarter has been very much in the same line of colors as what Søren talked about in his introduction. Good progress, but still some ways to go for us to be satisfied. We have since the second quarter and throughout the third quarter, focused enormously on margin improvement and the yield optimization to make sure that we can weather the increase in fuel price that we have witnessed since the beginning of the year. And we can see some of the results of this already coming through compared to last year, our freight rate increased by 5.5% and compared to the last quarter, they increased by 4.8%. This was due to the implementation of the emergency bunker surcharge, but also having the normal contracts, bunker adjustment factor get the amended for the third quarter on the July 1. But also in some trades, some rate recovery that that we have seen come through during the peak season. Excluding the positive effect from a higher rate from Hamburg Süd who came with a portfolio of higher rates, due to their exposure to the north-south straight, our fright were up 2.5% compared to last quarter, which is still in excess of the bunker cost increase that we saw a quarter-on-quarter. However, the bunker cost, if we look at it year on year, we're 47% higher than they were in the Q3 of 2017. That represents $127 per FFE. And if we look at it year-on-year, we've been managed to increase our freight rate by $100 per FFE. So good progress, but we are not yet fully compensated for the increase that we have had in fuel costs and that remains a key focus area going forward. If you look at the last quarter, we actually managed to fully compensate the rates that we have taken there. So there is clearly a shift in the market towards the recovery of these costs and as usual, with a bit of a lag in our capacity to push these costs towards our customers. If we exclude Hamburg Süd, our volumes grew 5% a year-on-year, I have to remind you that this has to be seen in a benchmark for last year for Maersk alone that was impacted by the cyber attack, adjusted for the negative impact of the cyber attack on volumes in Q3 2017. We assess our volume growth on a comparable level to be 2.7%, which is slightly below the 2.9% we have assumed and we believe the market has been um, has been growing. So in line with the guidance, we believe a satisfactory performance on volumes albeit a bit lower than what we would have – than what we anticipated and as Søren mentioned on the unit cost, but still in line with the guidance that we had to the market that we would be slightly below market growth. I just want to note that on the freight rates in the table here, the intra-Latin America rates, jumps a lot year-on-year and this has to do with the high presence that Hamburg Süd had in some of the longer corridors in the Americas, and the fact that the rates in those corridors are much higher than what we see on average in intra-Europe and intra-Asia. Moving on to Logistics & Services, here to actually some good progress, and the mix of different things happening. So let me try to get through this for you. Revenue increased by 7.5% to $1.581 billion positively impacted by especially volume growth on supply chain management, but also increased in cost as we have had also to face a fuel cost increases on the inland side, which we have been able to pass on to our customers. This is a segment, as Søren mentioned, there is of high strategic importance to us and where we also reorganizing right now to accelerate the growth, but we see also that margins as a result of the as a result of the efforts that we have put in place are improving. They are partially offset by higher IT spent as we get a larger pipeline online, as part of our growth or the growth that we will see materialize in the coming quarter. For startup supply chain management contract, but also, as I mentioned, a lot of the revenue growth on inland is due to fuel prices, which we have actually passed onto our customers. But which is not generating an improvement in the average margin. Please bear in mind also that this is a segment which was heavily impacted by the cyber attack and probably more heavily than any other segment for us. The growth in supply chain management is actually something that that we take a lot of encouragement from and that we look at as a confirmation or an early confirmation for the direction that we're taking as a company. We saw volumes increased 10% driven by both the new customers that we have acquired end of last year and beginning of this year coming online. But also volume growth from existing customers. Gross profit is up 12% to $290 million supported by SEM and some of the other activities that are linked to supply chain management such as warehousing and distribution. The margin in Ocean and Air increased by 17% and 12% there as Søren mentioned, we have seen actually a decrease in our presence as we have really focused on restoring margins to something that we think is satisfactory. We see the positive effect on margin and we have had in the process to Süd some business. Our EBIT conversion has improved to 14.7% versus 7.9% a year-ago and also has improved from the second quarter of last year where it was at 8.4%. And that has a lot to do with the fact that – despite the fact that the growth is still a bit subdued on the total numbers, we are changing the mix of the makeup of the revenue that we have in this segment towards the more core products that we have and where we can get more margin. With that, I will leave it to Terminals & Towage with Morten Engelstoft.

Thank you, Vincent. Let me give a few highlights from our Terminals & Towage segments. Our revenue overall increased by 4.7% and on an EBITDA level we had a 19% percent improvement compared to a year-ago. And this was supported especially by a volume development well above the markets and by an increase in terminal utilization, which I will elaborate further on in just a moment. And then Q3 last year, of course, also for terminals to some extent was impacted by the cyber attack. Our EBITDA margin improved by 2.5 percentage points compared to last year, again, due to strong volumes and utilization. Let me for the sake of good order also mentioned that our margins in Q3 actually fell slightly compared to earlier quarters this year. And there are three main reasons for that. First of all, we are spending more money right now on the new terminals that we building as we're getting closer to completion. So as an example, in Marine and Costa Rica, we have had the first two, three vessel calls in now before the actual opening that we will have in February next year. But we have more or less employed at the full organization they're already. Secondly, we have had some extra costs this quarter in connection with the implementation of a new term or system in some locations. And finally, the margins in our Towage business has been under some pressure in Australia and Europe due to both the rate of exchange development and stronger competition. Going a bit further into the volume developments, we have had volume increases as I mentioned well above the markets. Overall, we had a volume increase of 6.9% in moves, but since we compare to last year had divested our terminals in Seeburger and in Tacoma, our actual increase on a like-for-like basis was 10.4%. We continue to see very strong support from Maersk line and Hamburg Süd of more than 16% live-for-like and also our other customers had volume increases above the market at 7%. Revenue per move was up on a consolidated basis, mainly due to a mix effects from more business in North and Latin America as well as higher revenue from our land site customers whilst our costs per move was flat compared to third quarter last year, but up compared to last quarter, a supported of course by the stronger volumes and utilization, but also impacted by the same mix effects that I just talked about and higher costs in the terminals under construction. And to illustrate the mix effect a quarter-on-quarter, our cost per move was up by $8 compared to last quarter, but our revenue per move was up by $15. The result from our joint ventures, which are not part of our EBITDA, it was a $53 million this quarter, well above last year, which was impacted by an impairment and up slightly compared to last quarter. And let me then finally give a couple of comments on Svitzer, our Towage business overall. Our activity increased both in Latin America and with our new Towage business in Bangladesh being fully operational in Q3, which together with an improved number of idle tugboats have increased the EBITDA per tugboat this year compared to last year. So that was it from my Terminals & Towage, so Søren over to you, again. Søren Skou: So thank you, Morten. Very briefly on manufacturing and others, we saw a quarter which grew significantly in revenue as we compared to Q3 last year, now included the bulk activities that we have bought from Hamburg Süd. They contributed very strongly on the revenue line, but they came in with negative EBITDA. And as we have also said previously, we are currently in the process of divesting these activities. On the container manufacturing side, really it's a tale of two stories. We have a drive business or drive manufacturing business that's not doing very well, very, very weak fundamentals and also impacted significantly by rate of exchange in this quarter and reefer business that is really a highlight for us where we've had the highest ever a third party sales where profitability is strong and improving. And for that reason we have also decided to scale back production in the dry facility in China, during December, really as a result of that. So we are not pleased with the performance in this segment. We know why and we're doing something about it. And then I will just take briefly Maersk Drilling and Maersk Supply Service, as I've already said in my introduction, the listing of Maersk Drilling is well on track and we expect that to happen during 2019 you will note in the numbers that we have made a fair value adjustment of a positive fair value, adjustment of $445 million during the quarter due to the improved market outlook for mastery learning. And we now carry the company in the books or the invested capital at $5 billion at $5 billion. Also, as I said, when we look at the results here, we have to remember that that we're not depreciating on the on the assets. And then when we moved to mass supply service, the company is a reports a significant increase in revenue 23% and also the EBITDA is up, but it's from very, very low levels. And of course this industry is still much challenged, and we have for that reason, made a fair value adjustment, negative fair value adjustment of $400 million during the quarter so that the invested capital in Maersk Supply Service now is $600 million. We continue to work on finding a solution for Maersk Supply Service, how we can separate out the company. But it seems unlikely we will be able to have that concluded before the end of the year. Now turning to guidance, as I'm sure you will all have noticed, we are narrowing our guidance from $3.5 billion to $4.2 billion to a new guidance of $3.6 billion to $2.4 billion. What that really means is that we expect the fourth quarter to be much of a repeat of the third quarter, a solid topline growth, good earnings momentum. Last year, we made $844 million EBITDA and to reach the lower end of our now guidance, we need to make $900 million and $1.3 billion to hit the high end. So we expect good earnings momentum, and finally, also we expect another quarter of strong free cash flow in the fourth quarter. So with that, I believe we are getting ready to questions.

[Operator Instructions] The first question comes from the line of Edward Stanford from HSBC. Please go ahead.

Good morning, everybody. Three questions please. First, you indicated you're making some investments in scrubbers. Many of your competitors are doing so too. What number of ships you think you will have with scrubbers by 2020? Do you first see some pricing difficulties on the Asia Europe groups between those with and without scrubbers? That's the first question. The second question, you continue to sell Total shares, you continue to say shareholders will receive the majority of the remaining shares. What can they look forward to receiving? And finally, could you just talk about how you view the Damco forwarding business going in future, in terms of the way you've split it off and perhaps now deemphasizing it? Søren Skou: Yes. This is Søren Skou here. First, let me take the Total share issue and then I’ll turn over to Vincent and Søren Toft. So what you can expect is that we do exactly what we have said that we're going to do that we're going to distribute or demerge Maersk Drilling during 2019. By that we mean we're not going to raise any capital, we list the company and give the shares to our shareholders. And then you can expect that we will distribute a material part of the value from the Total, excuse me, from the sale of Maersk Oil to the shareholders through either a dividend or share buyback or distributing the actual shares in some combination to be decided. We have also said that we expect that when we have announced the demerger of Maersk Drilling, we will be able to provide a line of sight to the rest of the distribution of proceeds from the energy transactions.

So can I just ask that – I supposed I'm trying to get at what's the starting point to this in terms of the majority of the Total shares? Is that the shares that remain after you have sold? Søren Skou: No, no. The starting point is the original transaction. So at the original transaction we sold Maersk Oil for $7,450,000,000, $2.5 billion was debt or cash and then the rest that's the starting point for the material discussion.

Okay. Thanks.

And for Damco, so what Damco has to do now is continue the focus that they have on margin, so that they become competitive on cost and competitive on the business that they can sign up. And we believe that the changes that we have made now to the organization by giving them a full focus on Damco, full focus on freight forwarding both air and ocean and having really that play alone and not having to worry about selling 4PLs and supply chain management will give them the focus that they need to manage their cost more aggressively than they have so far. Manage their margin positively and from there on they can start to move on a growth trajectory and prosper. But it's really important that the initial focus is on restoring margins and having a business where growth is actually your friend, if I'm going to put it that way. On scrubbers, let me just add, before we talk about scrubbers from Søren Toft, on the pricing, we have communicated what our bunker adjustment formula is going to look like. And the discussion with customers will be around that bunker adjustment formula, not a discussion around the number of scrubbers or how this is being impacted. We have no visibility on that at this stage anyway. So we have given the formula already to the market. We have had initial discussions with customers. So far the discussions have actually been quite positive. All the people we talked to are aware of the change coming and are aware of the materiality of the change and that's something needs to happen. So these discussions will be ongoing in the contracting season this year, during next year, and in the contracting season the following year as well. Søren Toft: And let me just compliment Vincent by saying that the vast majority of the fuel that the industry and that we will burn will be 0.5, so we really need to make sure that the compensation reflects the 0.5, which the industry will burn. Yes, we are looking at some scrubbers. We're not going to give a detail number of how many scrubbers it is. But as I said, the vast majority of the consumption will continue or will be 0.5 and that's what our bunker formula really reflects.

Thank you.

And the next question comes from the line of Dan Togo from Carnegie. Please go ahead. Your line is open.

Thank you. Question on the high unit cost we saw here in Q2. I understand it’s a function of weaker volume and also on the cost side probably, but could you be more specific on which markets have been impacted by weaker volumes vis-a-vis Q2? And also on the cost side, are you seeing any inflation here in terms of terminal costs, et cetera? Søren Toft: So Søren Toft here. Very quickly, I mean on the volume side, as I said, it's mainly on what we call backhaul, mainly out of the U.S. where volumes have been both weaker and we have cargo mixed out of some volume. And the irony is that the volume out of the U.S. runs on a relatively short round trip with five or six shifts, so it was actually the cargo, the carriage, the lower unit cost if you wish. So there's also a little bit of mix effect where it's very important that we talk profits at the end of the day and not so much mix effects on unit cost. Secondly, we have seen a higher time charter prices in Q3. As we're looking at it right now, time charter prices are again coming a little bit down as per the normal, you would say quarterly fluctuations. And finally, a couple of things. I mean there's been a lot of network disruptions that has made us – you could say invoice and collect more demurrage detention, but it hits adversely in the terminal cost in terms of storage or monitoring cost or you could say misconnection cost. So those are really the underlying elements.

The latter part that you mentioned here Søren is that easing now going into Q4? Søren Toft: Well, you could say typically Q4 is the time where we have a worse weather, so we cannot yet say that that part is easing. But what we can say is that we have good momentum going into Q4. We have taken proactive steps on capacity with Asia, Europe, which helps our actual utilization and we will continue to take proactive steps on capacity depending on how the markets will develop.

Okay. Thank you. And then just a quick question on Hamburg Süd and the increased synergies you see here, can you be a bit more specific into what exactly the $100 million lift is relating to? Søren Toft: Yes, I mean it's really across the board. We are seeing more opportunities in optimizing the network then our original case, and obviously now that we have the detail flows, we can do that. We have actually retained more or less all of the Hamburg Süd volume, so the fact that we retained all volumes obviously spills through in the overall synergies. We're seeing better synergies in the APM Terminals and we also done a little bit of a better job than what we expected on procurement. So it's a good range across the board.

Thank you.

And the next question comes from the line of Robert Joynson from Exane BNP. Please go ahead. Your line is open.

Good morning, everybody. Three questions from me please, but maybe let's take them one by one. So the first question just on the CapEx guidance for 2019, it's obviously good to see the guidance reduced. But if I look at the capital commitments that you build vessels which are provided in the notes, they stand just over $400 million for 2019. So I guess the guided range for next year basically implies $1.6 billion to $2.1 billion of CapEx for assets of the new ships, but we still feels like quite a high range. Could you maybe just provide some detail on what that CapEx on assets other than new ships is comprised of? I'm thinking in particular in terms of CapEx on terminal investments, new containers and so forth. Søren Skou: Yes, Robert. This is Soren Skou here. So we have for next year total committed CapEx at this point of just 800 million, 400 for ships and then the rest is containers. We're still building on five terminals, Abidjan, Tema, Tangier, Vado, and Moin. We have a little bit of Scrubber investments $80 million as you can see and then we have some investments in equipment in our hub terminals around the world service the Maersk Line network. So that's the committed – that's how the committed investments breakdown. The $800 million. We're going to need more CapEx if you will for upgrading equipment on the terminals. We're going to need some CapEx probably for containers and general maintenance stuff.

Does the figure include any CapEx for the secondhand vessels? Søren Skou: No.

Okay. The second question then is just on M&A. It's now almost a years in Hamburg Süd was consolidated and evidently the integration is going reasonably well. Could you maybe just talk about your current thinking with respect to future M&A in the container shipping space? Søren Skou: Perhaps, I should say before I get to the M&A discussion reiterate and repeat again that we're not planning to order. If you're trying to get whether we were planning to order a lot of large ships next year. Then the answer is no. We're not planning to order any large ships before at the earliest 2020. So let me just repeat that for the sake of good order. In terms of M&A then we have acquired Hamburg Süd, we are well into the integration. We are quite happy with that transaction we acquired the company for just over 4 billion and we're going to have a good EBITDA on that this year and see a showing good progression on synergies. So that was a good transaction for us, but we're not planning to do any acquisitions in the ocean space in 2019 if that's your question. We have a now a market share which is certainly on the long haul rates north of 20% and that gives us the scale that we need – we believe to have a competitive cost structure and the other advantages from that. So there's not a strong need for us to do something on M&A in the Ocean space.

Okay. Thank you. And then the final question on sailing speeds, we all know that fuel costs will be increasing significantly the next year or so going into IMO 2020. Could you maybe just talk about the implications for sailing space i.e. will be optimal sailing speed be lower giving the higher fuel costs and does Maersk Line have any plans in that respect to actually reduced sailing speeds over the next year or so? Søren Toft: And so this is Soren Toft. I think as a general notion you can expect and what you should expect is that as bunker prices increase and also as the average vessel sizes over the years have increased and will continue to increase, the speed will go down. And as I said earlier, we have solved one of the two issues we've had unreliability one was a relative position in the industry. The other one was the nominal delivery to our customers. We are not satisfied with what we're delivering to our customers. And there's a very good correlation between improving that, reducing sailing speed and becoming a more reliable.

Okay. Thank you very much.

And the next question comes from the line of Lars Heindorff from SEB. Please go ahead. Your line is open.

Thank you very much. First regarding the tax payment, the tax rate in the quarter was fairly high, you mentioned yourself that it's partly caused by dividend tax on some of its Total shares. Could you provide guidance in terms of range for tax rate for the full-year? Søren Skou: I don’t think so Lars. This is Søren Skou here. I mean the fundamental business we have today is – has a very low tax rate because of tonnage tax and so on. We have a little bit of a complexities now because of the Total shares, but that will be a long situation for us, so I can't give any more guidance on that.

Okay. And secondly regarding Ocean business, you’re now starting up the new AE2 loop again on Asia Europe and I don’t know if you can shed some light on is this caused by competitive reasons? Or do you simply believe that volumes are strong enough for the trade to accommodate the loop again?

Vincent here, so what we're doing now is, as you mentioned rightfully, we're starting again A2, because we're seeing a demand pick up ahead of Chinese New Year, which is a, which is quite normal for this time of year and we're meeting that demand as we go into the peak season.

Okay. Are you planning to remove it again after the peak season, because I mean when you look at most of the volumes you see at the moment growth in trending downwards?

So, it's difficult for me to guide on what we're going to do after Chinese New Year at this stage because this is obviously something that we constantly review. If we feel that demand will not be there for the capacity, then we will withdraw it again. And if we see that the pickup after Chinese New Year is strong enough to justify that we deployed a string, then we will deploy it. I mean we have – this is part of the constant reviews that that we're having. We had the clear expectations that we saw a slowdown of demand here, over the third quarter on Asia Europe, which we met right away with the reduction in capacity. And as we see capacity – as we see demand pick up again, here in ahead of Chinese New Year, we meet that demand by deploying capacity and we can continue actually to attack to demand a like that as we move forward and that that has been our strategy. That's how we have to that flexibility to improve the asset utilization, and keep our costs as low as possible.

Okay, all right. Thank you.

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

Good morning. I have two questions. First question really I read with interest the market update section of the Q3 report, where you say you think global container trade is likely to grow in the lower parts of 2% to 4% in 2019. And then you go on to site that the work you've done, says that the tariffs, it could reduce that grows by between 0.5% and 2% during 2019 and 2020. When you put all those together and you're going through your planning process, what do you think net market volume growth is likely to be next year, less than 2%?

No. Vincent, here Mark. What we believe is the following, as the tariff start to come into effect in January, we are likely to see – we expect to see, a significant slowdown in demand of imports into the U.S. a lot of customers have actually accelerated their purchase orders to get them into the U.S., before. The tariff, so as we see a stronger, a stronger demand, now we expect to see a lot as the tariff comes into effect while everybody is trying to figure out how they will – how they were structured, their supply chain going forward. So we have here what I would call it an assignable cause for lower demand. And the way we're dealing with this on the Pacific is we will deal with it by productivity, taking capacity out, around Chinese New Year to make sure that we have right sized our network for lower demand and can keep ourselves in line with what our customers expect. The rest of the trades are mostly unaffected by trade attention yet. So when we say that we expect growth in the lower part of the bracket, it is mostly because we're building in the impact that we expect the trade war to have here at the beginning of the year.

Okay. So the lower part 2 to 4 include the expectation from – the hit from tariffs? Søren Skou: Yes. Yes. And let me just restate also that the fact that we're underweight market share wise in the Pacific is actually something that that comes in quite handy right now.

It should know. Second question, could you just clarify why you continue to hold on to the Total shares and why not just sell them, put the cash on the balance sheet and then wait for the rest of the mass rating demerger process to happen? Is there any – other than it's not a bad place to have money? Is there any particular reason to hold the shares not cash, particularly as I'm assuming the rating agencies the full value for stock versus cash. Søren Skou: So Mark, this is Soren Skou here. We have sold by now I believe $1.7 billion, 1.8 billion worth of Total shares and I think you can expect those to see us continuing in that direction. We have held onto a number to the Total shares because we think it's a good company. They pay a high dividend and we've also seen a good progression in the share price compared to when we did the transaction. But we are moving in the other direction now.

Okay. So we can expect – to just say a gradual sell down over the course of the next six, nine months or something like that? Søren Skou: Yes, I'm not going to give any more guidance than what I just did.

Okay. That’s great. Thank you both very much.

And the next question comes from the line Casper Blom from ABG. Please go ahead. Your line is open.

Thanks a lot. Just a first of all, just a follow up here. So I think you said that you were retaining most of the volumes from – all the volume from Hamburg Süd. Have you sort of now gone through contract negotiations with all of the clients that you took over so that you can sort of now conclude that there were no significant loss of a client here? And then secondly on volumes, you mentioned that the unit cost here is impacted by volume is maybe not being as strong as you were hoping for. And I think latest data show that there's been a little bit of pickup again and volumes on Asia, Europe. Is that something that you can recognize? That's all for me.

Hi, Casper. Vincent here. Let me start with the Asia, Europe. I think it builds on also the answer that I had the early on and why A2 is coming back. We have seen also following the golden week in China, a rebound in demand. After actually a deceleration in the third quarter, which was part of why the volumes were a bit lower in the third quarter, but we've seen a good rebound of volumes here in the fourth quarter. And that's also supporting the redeployment of the A2. So I can confirm that we have seen this. With respect to the Hamburg Süd volumes. Hamburg Süd has done – the Hamburg Süd team has done a fantastic job as actually retaining their business through the integration of the two companies, through the integration of the networks here in the second quarter and we can see that their customers are still with them and the volumes keep on coming as we expected them to. We have not gone through a full contract negotiation cycle with all the long-term contracts that they have since we have had this, a lot of the contracts are actually to be negotiated I would say in the next three months. And that will be the final milestone that we need to have. But with the discussions that we have with our customers throughout the year here. This is not something where we expect a big surprises to come out of this round that we have yet to have.

Okay. If I may just follow-up, what would that mean that let's say you are very successful in the renegotiation of these contracts. Could we entitle it ended up actually seeing further upside to the synergies that you've just upgraded?

No, I think at this stage we had – what we had not built in an expectation of losing a lot of volumes that we have made the architecture of how we have kept the brand and kept the organization and kept the separate value proposition was actually a tradeoff that we took to make sure that we would have a high retention and actually we're seeing this come through and that is part of the upgrade also that that Søren Toft mentioned and Søren Skou mentioned also on what we expect the synergies to look at.

That's very clear. Thank you.

And last question comes from the line of Finn Bjarke Petersen from Danske Bank. Please go ahead.

Yes, good morning. A question to the unit cost on your Slide 12, I’m just wondering if we look at the change from Q3 2017 to Q3 2018, each 1.1% and then we take our Hamburg Süd and the Forex that you are talking about in this slide – on the same slide, then we end up with a reduction of 2.3%. But you are improving your volumes excluding Hamburg Süd by 5% organically in the quarter. So it seems a little bit on the lower side while you're doing on the unit cost. Could you explain how it develops a year-on-year excluding Hamburg Süd?

Well, as Vincent talked as we said then the factors that are impacting the unit cost. They are the other volumes we planned and Vincent said that too, we had a cyber attack. So we planned to move a bit more volume in quarter three than we did, but we saw weaker demand fundamentals and we also deselected some cargo for the right reasons. On top of that, we saw time charter prices going up, and we have had some disruption costs, but we have collected that through higher demurrage and detention collections. I think it's also important to look at this not too much a quarter-by-quarter because there's a lot of noise in the numbers. And that's why I see it earlier also that when we look at the run rate post Q1 where we really, you would say, got our handle on the overall Hamburg Süd network of ships and containers. We have a run rate in Q2 and Q3 that resets costs between 1% and 1.5% and we expect that we can continue that going into Q4. That's really, I think the key message that we want to share on the cost development.

I still got problems to understand that because you were talking about a run rate between Q2 and Q3. We’re up 1.5%. Is that positive runways or how should I understand it?

I think Q2 to Q3, a development that's what I see, and that's mainly because time chatter prices have gone up. It's because we had a couple of positive one offs in Q2 that we don't have in Q3 and then it's volume related compared to plan. That's what it is. But it's important to look at it over not only a quarter, but over the longer period. And we will also share this information when we get into Q4, So do you have that perspective on the numbers.

Okay, thank you. End of Q&A

I now hand back to Group CEO, Søren Skou. Søren Skou: Yes. So just a few final remarks on Q3, it was a quarter where we believe we had solid progress on our transformation. We had lots of topline growth while we are not happy with the absolute level of earnings. We have earnings momentum, now especially listen, so bear week start to the year and we had a very strong cash flow generation and Q4 with the guidance we've given is likely to look very, very similar topline growth earnings momentum and strong cash flow. And if we give and when we deliver that then we also have a good momentum going into the first quarter of 2019. So with that, again, thanks for listening today.