A. P. Moller - Maersk

Transcription

1 CREDIT & CORP BONDS RESEARCH Investment Research 8 February 217 A. P. Moller - Maersk Post-results Q4 16: Difficult quarter leverage flattish q/q A. P. Moller Maersk (APMM) posted a loss in Maersk Line and also an underlying loss of USD63m at a group level in Q4 16. Despite this, leverage was flattish q/q and we do not expect any rating action on the back of the results as APMM guides a significant improvement in the vital Maersk Line of more than USD1bn in 217. Uncertainty regarding the separation of the Energy business units remains high but APMM s 216 report repeated its commitment to stay investment grade. Bonds are trading wider than the BBB- industrial curve, which gives some downside protection. However, with uncertainty on the structural split, we stay side-lined and keep our Marketweight recommendation on APMM. Maersk Line loss-making in Q4 16 APMM reported a relatively weak Q4 16, with EBITDA of USD1.5bn (down 8% y/y) due mainly to lower EBITDA from Maersk Drilling, which was affected by a lack of revenue from early terminations and more rigs being idle. The other main business divisions delivered EBITDA that was relatively unchanged y/y. Maersk Line once again posted a net loss (USD146m in Q4 16 versus USD-182m in Q4 15), reflecting a 7% decline in average container freight rates and a 12% increase in the cost of bunker fuel on the back of a volume increase of 12% y/y. As we estimate global container demand has grown around 4% in Q4 16, Maersk Line has been acting aggressively in a depressed market, putting pressure on profitability at least short term. Marketweight Sector: Industrials, Transportation Corporate ticker: Equity ticker: B DC Market cap (USDm): 31,771 Ratings: S&P: BBB / NO Moody's: Baa2 / NO Fitch: NR / NR Analysts Brian Børsting brbr@danskebank.com Jakob Magnussen jakja@danskebank.com Reported net debt to EBITDA was flattish at 1.65x in Q4 16 and adjusted net debt to EBITDA of 2.4x is below the maximum 2.5x leverage S&P sees as commensurate with a BBB rating. As the container industry improves, leverage for APMM should decline in 217, at least until the closing of Hamburg Sud in late 217. ey figures Profitability 1, 8, 6, 4, 25% 2% 15% 1% DKKm Q4 15 Q3 16 Q4 16 y/y q/q Total sales 9,125 9,177 8, % -3.2% EBITDA (rep.) 1,628 1,887 1,54-7.6% -2.3% EBITDA (adj.) 2,113 2,362 1, % -16.2% Net income -2, , % % FFO (rep.) 1,383 1,471 1, % -14.7% FFO (adj.) 1,739 1,821 1,65-7.7% -11.9% Equity 35,739 35,29 32,9-1.2% -8.9% Net debt 7,974 11,276 11, % -.9% Net debt (adj.) 18,68 2,37 21,9 12.5% 3.5% Ratios Q4 15 Q3 16 Q4 16 y/y q/q EBITDA margin 18% 21% 17% -1pp -4pp Net debt/ebitda.9x 1.6x 1.7x.8x.x Adj. net debt/adj. EBITDA 1.7x 2.3x 2.4x.7x.1x FFO/net debt 95% 42% 41% -54pp -1pp Adj. FFO/adj. net debt 48% 3% 29% -2pp -2pp Adj. Total debt/total capital 38% 4% 43% 4pp 3pp Net debt/total capital 16% 22% 24% 7pp 1pp 2, 5% % Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Net sales EBITDA(Rep) EBITDA margin Financial metrics 4, 2. 35, 3, , 2, 1. 15, 1,.5 5,. Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Net debt Equity Net debt/ebitda This document is intended for institutional investors and is not subject to all the independence and disclosure standards applicable to debt research reports prepared for retail investors 1 Important A. P. Moller disclosures - Maersk and certifications are contained from page 8 of this report

2 Q1 1 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 1 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 1 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 1 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Quarterly development In Q4 17, Maersk Line generated 23% of group EBITDA, while Maersk Oil generated 48% of group EBITDA. Group EBITDA development (USDm) EBITDA distribution 4,5 4, 3,5 3, 2,5 2, 1,5 1, % 8% 6% 4% 2% % -2% Maersk Line Maersk Oil APM Terminals Maersk Drilling Maersk Supply Service Maersk Tankers Damco Svitzer Note: Excluding other businesses and unallocated, etc. Maersk Line Maersk Oil APM Terminals Maersk Drilling Maersk Supply Service Maersk Tankers Damco Svitzer Note: Excluding other businesses and unallocated, etc. Operating cash flow (USDm) Operating cash flow distribution 3,5 3, 2,5 2, 1,5 1, % 8% 6% 4% 2% % -2% Maersk Line Maersk Oil APM Terminals Maersk Drilling Maersk Supply Service Maersk Tankers Damco Svitzer Note: Excluding other businesses and unallocated, etc. Maersk Line Maersk Oil APM Terminals Maersk Drilling Maersk Supply Service Maersk Tankers Damco Svitzer Note: Excluding other businesses and unallocated, etc. Guidance for 217 For 217, APMM is guiding underlying profit above 216 (USD 711m). The Transport & Logisticss division expects underlying profit above USD1bn. This is due mainly to an at least USD1bn improvement in Maersk Line (216 USD-384m). Hence, the company guiding for profit of at least USD.6bn. The remaining businesses (APM Terminals, Damco, Svitzer and Maersk Container Industry) in the Transport & Logistics division expect underlying profit around USD5m on par with the 216 result. The Energy division expects an underlying profit around USD.5bn, with Maersk Oil the main contributor. In our view, the profit contribution from Maersk Drilling & Supply Services will be very low and we believe it could be loss making. We expect gross capex to be USD bn in 217. The main uncertainties relate to container freight rates, as a change of USD1 per forty foot container would result in a change in the underlying result of USD1.1bn. APMM gave no further information regarding the acquisition of Hamburg Sud or the separation of the Energy business units in connection with the 216 annual report. 2 A. P. Moller - Maersk

3 Valuation and recommendation APMM is currently rated BBB /Negative Outlook by S&P and Baa2 /Negative Outlook by Moody s. In our view, the pressure on earnings, leverage and uncertainties regarding the separation of the Energy businesses is the reason bonds are trading wider than the BBB- industrial curve. Should APMM be downgraded to BBB- (S&P currently includes a one-notch uplift due to diversification but this would be removed should APMM decide no longer to be majority owner of Maersk Oil or Maersk Drilling), credit investors would be looking at a company that is close to high yield with significant container industry exposure, which is very volatile in terms of earnings and cash flow. However, we note that APMM stated at its most recent capital markets day that it wants to remain investment grade even in times of pressure on container earnings. In this respect, we note that in connection with the 216 report, APMM slashed its dividend in half from USD3 per share to USD15 per share, which reduces the dividend cash outflow to around USD5m versus USD1m. In our view, this is a clear way to show its commitment to the investment grade rating. We believe this is a strong pledge but uncertainty regarding the separation of the Energy businesses remains and, until this is resolved and the balance sheet of the remaining Transport & Logistics unit (A. P. Møller - Maersk A/S) is visible as an investment grade rated company, spreads are unlikely to tighten significantly in our view. Overall, we see value support at current spread levels but, with uncertainty high, we believe this is fair. A significant improvement in the container industry in 217 would support earnings and should strengthen credit metrics in 217 and improve sentiment, although this would be offset by the acquisition of Hamburg Sud for an estimated EV of USD4.-4.5bn (closing expected end-217). Valuation (EUR) Mid Spread (EUR)* (Baa2/BBB) FRN '21 (NOK) 9 (Baa2/BBB) 1.5% '22 8 (EUR) (Baa2/BBB) 1.75% '21 7 (Baa2/BBB) 3.75% '18 (EUR) 6 (SEK) (Baa2/BBB) 3.375% 1 '19 (EUR) Source: Bloomberg, Danske Bank Markets (Baa2/BBB) 2.85% '23 (NOK) (Baa2/BBB) 2.875% '2 (USD) (Baa2/BBB) 2.55% '19 (USD) (Baa2/BBB) 4% '25 (GBP) (Baa2/BBB) 3.3% '26 (NOK) (Baa2/BBB) 3.75% '24 (USD) (Baa2/BBB) 3.875% '25 (USD) Industrials BB+ Industrials BBB- Industrials BBB Industrials BBB+ YTW** * Z-spreads. Discount margin for floaters. Swapped to indicated currency. ** Years-to-worst Note: Fair value curve(s) based on Danske Bank Markets' (mid) peer group of European issuers 3 A. P. Moller - Maersk

4 Company summary Company description Employing more than 8. people across the globe, Denmark based A.P. Moller-Maersk Group owns the world's largest continaer shipping line and has sizeable interest in habour terminals, oil drilling, tankers and oil and gas production and exploration. This diversified set of activities is complemented by a favourable geographical spread with operations in 13 countries. EBITDA breakdown, segments Maersk Drilling, Other, 5%, % 8% APM Terminals, 9% Maersk Line, 35% Maersk Oil, 43% Key credit strengths Key credit challenges Significant size and leading market positions. Highly diversified operations. Stable ownership structure. Proven conservative approach to capital structure. High cyclicality in individual business areas. High capital-intensive business exposure. Exposure to volatile commodity prices and freight rates. Potential M&A activity. Significant decline in oil price affects net profit and asset values negatively. Debt maturity profile USDm Debt Maturity Profile as of Q Main shareholders Name Votes (%) Capital (%) A.P. Møller Holding A/S 51.% 42.% A.P. Møller og Hustru Chastine Mc-Kinney 13.% 8.8% Den A.P. Møllerske Støttefond 6.% 3.% ROY Drawn debt Corporate bonds Undrawn revolving facilities Selected outstanding bonds Isin Cupon Currency Maturity /Call Seniority Rating XS % EUR 18/3/221 Sr Unsecured Baa2/BBB XS FRN EUR 18/3/219 Sr Unsecured Baa2/BBB XS % EUR 24/11/222 Sr Unsecured Baa2/BBB XS % EUR 28/8/219 Sr Unsecured Baa2/BBB XS % EUR 24/11/217 Sr Unsecured Baa2/BBB Rating migration A- BBB+ Industrials BBB- BBB- BB+ Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Moody's S&P Relative valuation Mid Spread (EUR)* (Baa2/BBB) 1.8% '21 (EUR) 6 5 (Baa2/BBB) FRN '19 (EUR) (Baa2/BBB) 3.4% '19 (EUR) (Baa2/BBB) 1.5% '22 (EUR) Industrials BBB YTW** * Z-spreads. Discount margin for floaters. Swapped to indicated currency. ** Years-to-worst Note: Fair value curve(s) based on Danske Bank Markets' peer groups of European issuers Source: Company data, Bloomberg, Danske Bank Markets [all charts and tables] 4 A. P. Moller - Maersk

5 Summary tables Income statement (USDm) Total sales 58,976 47,386 47,569 4,38 35,464 Operating expenses -46,47-36,13-35,65-31,234-28,697 EBITDA 12,568 11,373 11,919 9,74 6,767 EBITDA adjusted 15,333 13,763 14,17 11,16 8,79 Non-recurring items , Depreciation and amortisation -5,34-4,628-7,8-7,944-7,265 EBIT 8,85 7,336 5,917 1, EBIT adjusted 8,892 7,918 6,462 2, Net interest Other financial items (net) Pre-tax profit 7,331 6,62 5,311 1, Tax -3,297-2, ,54 Net income 4,34 3,777 5, ,897 Balance sheet (USDm) Fixed assets 43,844 41,293 44,671 43,999 41,496 Goodwill 4,94 4,788 2,918 1,922 3,62 Associates 6,28 6, Other non-current assets 3,792 3,666 4,191 4,58 4,4 Working capital assets 7,623 5,88 5,216 4,257 4,676 Cash and cash equivalents 2,444 3,571 3,886 4,769 4,157 of which restricted cash 1, 1, 1, 1,2 1,2 Other current assets 3,473 8,877 7,123 1,992 2,31 Total assets 72,396 74,59 68,844 62,48 61,118 Total assets (adj.) 83,923 82,828 76,635 69,783 68,493 Total interest-bearing debt 18,246 15,743 12,325 12,743 15,335 Total interest-bearing debt adjusted 31,671 25,823 21,833 22,249 24,841 Net interest-bearing debt 15,82 12,172 8,439 7,974 11,178 Net interest-bearing debt adjusted 3,227 23,252 18,947 18,68 21,884 Working capital liabilities 6,138 5,379 5,277 5,15 4,91 Other current liabilities 3,48 5,1 2,913 3,141 3,817 Other non-current liabilities 5,28 5,774 6,14 5,77 4,975 Total equity 39,324 42,513 42,225 35,739 32,9 Total equity and liabilities 72,396 74,59 68,844 62,48 61,118 Total equity and liabilities (adj.) 83,923 82,828 76,635 69,783 68,493 Cash flow statement (USDm) EBITDA 12,568 11,373 11,919 9,74 6,767 Tax paid -3,697-2,823-3,289-1,473-1,155 Other cash flow from operations ,21 Funds from operations (FFO) 8,313 8,657 8,51 7,587 4,591 FFO (adjusted) 1,271 1,464 1,54 9,12 6,16 Change in working capital Operating cashflow (CFO) 7,621 8,99 8,761 7,969 4,326 CFO (adjusted) 9,579 1,716 1,314 9,394 5,751 Capex -6,318-4,971-6,263-1,362-4,355 Divestments /acquisitions of businesses Free operating cashflow (FOCF) 1,33 3,938 2,498 6,67-29 FOCF (adjusted) 3,261 5,745 4,51 8,32 1,396 Dividend paid ,53-1,279-6, Share buyback Free cashflow (FCF) 359 2, ,457 Other investing activities Debt repayment -4,18-2,567-4,876-1,574-1,68 Funding shortfall -3, ,24-1,95-3,65 New debt 3, ,988 2,821 2,977 New equity Other financing activities , Change in cash -38 1, A. P. Moller - Maersk

6 Summary tables Adjusted ratios (USDm) Sales growth -1% -2% % -15% -12% EBITDA margin 21.3% 24.% 25.1% 22.5% 19.1% Adj. EBITDA margin 26.% 29.% 29.5% 27.3% 24.6% EBIT margin 13.7% 15.5% 12.4% 4.6% -.6% Adj. EBIT margin 15.1% 16.7% 13.6% 5.9%.8% EBITDA interest coverage 8.8x 9.4x 6.8x 6.5x 4.8x Adj. EBITDA interest coverage 6.9x 7.7x 6.2x 5.8x 4.6x EBIT interest coverage 5.9x 6.2x 3.7x 1.9x.5x Adj. EBIT interest coverage 3.8x 4.2x 2.9x 1.4x.4x FFO interest coverage 6.x 7.2x 5.1x 5.6x 3.5x Adj. FFO interest coverage 4.8x 5.9x 4.6x 4.9x 3.3x CFO interest coverage 5.5x 7.4x 5.2x 5.8x 3.3x Adj. CFO interest coverage 4.5x 6.1x 4.7x 5.1x 3.2x Net debt/ebitda (reported) 1.3x 1.1x.7x.9x 1.7x Net debt/ebitda 1.x.9x.6x.7x 1.3x Adj. net debt/adj. EBITDA 2.x 1.7x 1.4x 1.7x 2.5x Debt/EBITDA 1.5x 1.4x 1.x 1.4x 2.3x Adj. debt/adj. EBITDA 2.1x 1.9x 1.6x 2.x 2.9x Debt/EBITDA (reported) 1.5x 1.4x 1.x 1.4x 2.3x FFO/net debt 52.6% 71.1% 1.7% 95.1% 41.1% Adj. FFO/adj. debt 32.4% 4.5% 46.% 4.5% 24.2% Adj. FFO/adj. net debt 34.% 45.% 53.1% 48.2% 27.5% FFO/debt 45.6% 55.% 69.% 59.5% 29.9% Adj. total debt/total capital 44.6% 37.8% 34.1% 38.4% 43.6% Net debt/total capital 27.4% 2.9% 15.5% 16.4% 23.6% Adj. net debt/adj. total capital 42.6% 34.% 29.6% 32.2% 38.4% Quarterly overview (USDm) Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Net Sales 9,125 8,539 8,861 9,177 8,887 EBITDA 1,628 1,597 1,779 1,887 1,54 Adj. EBITDA 2,113 2,72 2,254 2,362 1,979 EBIT -2, ,177 Net Income -2, ,677 Capex -1,533-1,86-1, FFO 1, ,35 1,471 1,255 Total debt 12,743 15,38 15,529 15,421 15,335 Net debt 7,974 1,91 11,633 11,276 11,178 Adjusted net debt 18,68 2,941 21,164 2,37 21,9 Equity (incl. minorities) 35,739 35,84 34,718 35,29 32,9 Ratios: Net debt to EBITDA.9x 1.3x 1.6x 1.6x 1.7x Adj. net debt to EBITDA 1.7x 2.1x 2.3x 2.3x 2.4x FFO to net debt 95% 54% 45% 42% 41% Adj. FFO to net debt 48% 35% 31% 3% 29% 6 A. P. Moller - Maersk

7 Fixed Income Credit Research Thomas Hovard Head of Credit Research hova@danskebank.com Henrik René Andresen Credit Portfolios hena@danskebank.com Gabriel Bergin Strategy, Financials gabe@danskebank.com Brian Børsting Industrials brbr@danskebank.com Bendik Engebretsen Industrials bee@danskebank.com Katrine Jensen Financials katri@danskebank.com Louis Landeman TMT, Industrials llan@danskebank.com Jakob Magnussen Utilities, Energy jakja@danskebank.com Jonas Meyer Shipping mey@danskebank.com August Moberg Industrials & Construction aumo@danskebank.com Niklas Ripa Credit Portfolios niri@danskebank.com Mads Rosendal Industrials, TMT madro@danskebank.com Haseeb Syed Industrials hsy@danskebank.com Find the latest Credit Research Danske Bank Markets: Bloomberg: DNSK<GO> 7 A. P. Moller - Maersk

8 Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ( Danske Bank ). The authors of the research report are Brian Børsting, Senior Analyst, and Jakob Magnussen, Senior Analyst. Analyst certification Each research analyst responsible for the content of this research report certifies that the views expressed in the research report accurately reflect the research analyst s personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report. Regulation Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske Bank is subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority (UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation Authority are available from Danske Bank on request. Danske Bank s research reports are prepared in accordance with the recommendations of the Danish Securities Dealers Association. Danske Bank is not registered as a Credit Rating Agency pursuant to the CRA Regulation (Regulation (EC) no. 16/29); hence, Danske Bank does not comply with or seek to comply with the requirements applicable to credit rating agencies. Conflicts of interest Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high-quality research based on research objectivity and independence. These procedures are documented in Danske Bank s research policies. Employees within Danske Bank s Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to Research Management and the Compliance Department. Danske Bank s Research Departments are organised independently from and do not report to other business areas within Danske Bank. Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions. Danske Bank, its affiliates, subsidiaries and staff may perform services for or solicit business from A. P. Moller - Maersk and may hold long or short positions in, or otherwise be interested in, the financial instruments mentioned in this research report. The Equity and Corporate Bonds analysts of Danske Bank and undertakings with which the Equity and Corporate Bonds analysts have close links are, however, not permitted to invest in financial instruments that are covered by the relevant Equity or Corporate Bonds analyst or the research sector to which the analyst is linked. Danske Bank, its affiliates and subsidiaries are engaged in commercial banking, securities underwriting, dealing, trading, brokerage, investment management, investment banking, custody and other financial services activities, may be a lender to A. P. Moller - Maersk and have whatever rights as are available to a creditor under applicable law and the applicable loan and credit agreements. At any time, Danske Bank, its affiliates and subsidiaries may have credit or other information regarding A. P. Moller - Maersk that is not available to or may not be used by the personnel responsible for the preparation of this report, which might affect the analysis and opinions expressed in this research report. Danske Bank is a market maker and a liquidity provider and may hold positions in the financial instruments of the issuer(s) mentioned in this research report. As an investment bank, Danske Bank, its affiliates and subsidiaries provide a variety of financial services, including investment banking services. It is possible that Danske Bank and/or its affiliates and/or its subsidiaries might seek to become engaged to provide such services to A. P. Moller - Maersk in the next three months. Danske Bank has made no agreement with A. P. Moller - Maersk to write this research report. No parts of this research report have been disclosed to A. P. Moller - Maersk. No recommendations or opinions have been disclosed to A. P. Moller - Maersk and no amendments have accordingly been made to the same before dissemination of the research report. Risk warning Major risks connected with recommendations or opinions in this research report, including a sensitivity analysis of relevant assumptions, are stated throughout the text. Expected updates Post-Results: This research report will be updated on a quarterly basis following the quarterly result statement from A. P. Moller - Maersk. Scandi Handbook and Scandi High Yield Handbook: These research reports contain updates on selected companies and are published annually, usually in April and June, respectively. Completion and first dissemination The completion date and time in this research report mean the date and time when the author hands over the final version of the research report to Danske Bank s editing function for legal review and editing. The date and time of first dissemination mean the date and estimated time of the first dissemination of this research report. The estimated time may deviate up to 15 minutes from the effective dissemination time due to technical limitations. See the final page of this research report for the date and time of first dissemination. Financial models, valuation and/or methodology used in this research report Calculations and presentations in this research report are based on standard econometric tools and methodology as well as publicly available statistics for each individual security, issuer and/or country. We base our bond valuation conclusion on an estimation of a fair business and financial risk profile of the issuing entity. By combining these risk profiles with market technical and bond-specific issues such as documentation and structuring, we arrive at an overall bond risk profile. We compare the bond spread to those of peers with similar risk profiles and on this background, we estimate whether the bond is attractively priced in the market. We express this view with either an Overweight, Marketweight or Underweight recommendation. This signals our opinion about the bond s performance potential compared with relevant peers in the coming six months. More information about the valuation and/or methodology and the underlying assumptions is accessible via Select Methodology under Credit Research Methodology. 8 A. P. Moller - Maersk

9 Recommendation structure Investment recommendations are based on the expected development in the credit profile as well as relative value compared with the sector and peers. As at 31 December 216 Danske Bank Markets had investment recommendations on 17 corporate bond issuers. The distribution of recommendations is represented in the distribution of recommendations column below. The proportion of issuers corresponding to each of the recommendation categories above to which Danske Bank provided investment banking services in the previous 12 months ending 31 December 216 is shown below. Rating Anticipated performance Time horizon Distribution of recommendations Investment banking relationships Overweight Outperformance relative to peer group 6 months 36% 24% Marketweight Performance in line with peer group 6 months 5% 37% Underweight Underperformance relative to peer group 6 months 14% 4% Changes in recommendation in the past 12 months: Date New recommendation Old recommendation None Validity time period This communication and the communications in the list referred to below are valid until the earlier of (a) dissemination of a superseding communication by the author, or (b) significant changes in circumstances following its dissemination, including events relating to the market or the issuer, which can influence the price of the issuer or financial instrument. Investment recommendations disseminated in the preceding 12-month period A list of previous investment recommendations disseminated by the lead analyst(s) of this research report in the preceding 12-month period can be found at www- 2.danskebank.com/Link/researchdisclaimer. Select DCM Research recommendation history Recommendation history. Other previous investment recommendations disseminated by Danske Bank Markets, Debt Capital Markets Research are also available in the database. General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for informational purposes only. It does not constitute or form part of, and shall under no circumstances be considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options, warrants, rights or other interests with respect to any such financial instruments) ( Relevant Financial Instruments ). The research report has been prepared independently and solely on the basis of publicly available information that Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this research report. 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In addition, the research analysts of Danske Bank who have prepared this research report are not registered or qualified as research analysts with the NYSE or FINRA but satisfy the applicable requirements of a non-u.s. jurisdiction. Any U.S. investor recipient of this research report who wishes to purchase or sell any Relevant Financial Instrument may do so only by contacting Danske Markets Inc. directly and should be aware that investing in non-u.s. financial instruments may entail certain risks. Financial instruments of non-u.s. issuers may not be registered with the U.S. Securities and Exchange Commission and may not be subject to the reporting and auditing standards of the U.S. Securities and Exchange Commission. Report completed: 8 February 217 at 14:58 GMT Report disseminated: 8 February 217 at 16:15 GMT 9 A. P. Moller - Maersk