Following are excerpts from the transcript of a CNBC interview at Davos by Steve Sedgwick with Nils S. Andersen, CEO of Moller-Maersk.
SS: Right, well it was a very difficult end for 2015 for the Danish global conglomerate, Moller-Maersk. The group issued a rare profit warning saying its benchmark shipping division would slash global headcount by at least 4,000 jobs by the end of next year. Shares in the group down roughly 25% since that announcement, but I'm delighted to welcome to the show now Nils Smedegaard Andersen, who is the CEO of Moller-Maersk. Nils, it's great to see you and I was speaking to you earlier off camera about what you do, and you're in the perfect storm, in many ways. If I look at trade, there you are, Moller-Maersk, if I look at slowdown in the oil markets, there you are, Moller-Maersk, as well. And yet this lower oil price, and we were talking about it with Karen in the studio just now, has been a boost for many, many industries, hasn't it? And that's an important point that needs raising.
NA: Yes, I think, obviously we are in shipping and oil at the same time, so it is a bit of a perfect storm, but if you do your homework well, and we think we've done that-, so we think we're prepared to take some advantages of it, and actually the lower oil price is a boost to the European economy. You are seeing the economy in Europe growing, in spite of us not having made an awful lot of structural changes to the countries' economies, so I think there are a lot of hidden pluses of these lower oil prices, but of course every change, and it's always like that, every change is having its victims, and today we are in the middle of a supply shock in the oil market, we need to see how we can bring down supply, we need to see how hopefully a better economy can bring up consumption somewhat.
SS: Yes, and because it's the consumption side, we talk a lot about Iran, we talk about supply, we talk about the US and Russia, but it's the consumption side which I think, it's surprising at how slow it is to pick up. I mean, again, China's slowing down in its consumption growth, as well. Why is that?
NA: Well, the emerging markets in general are suffering, you know. The Chinese government have said years ago that they want to change the nature of their economy in a way where they would rely less on investment. That means less imports of raw materials, it spills over to the raw material exporting countries, which are primarily developing markets. So the circle, in that way, is impacting everything negatively, but on the other hand you have the US growing nicely, and you have Europe that are picking up growth as well, so things are not quite as black as people paint them.
SS: Yes, what about this global trade slowdown, as well? It's one of the big indicators that everyone's very, very worried about. You have a great handle on this, as well. How big a slowdown in global trade are we seeing at the moment?
NA: Well, global trade is still growing. We think last year it grew about 1%, but it's of course much less than the growth rates we've been used to. The main culprit of that is that the growth, or the trade from Asia, primarily China, to Europe, was actually falling last year, on the background of several things, but there are some structural things like the change in the exchange rate between the RMB and the Euro. Your Euro devaluated a lot, so the economy of the export out of China became less competitive, and then we think there was a lot of stock at the beginning of the year in Europe, so trade to Europe last year was the main culprit of this slowdown, but of course we also saw issues in the big oil exporting countries like Nigeria, Angola, Russia and Brazil. Of course, if you don't get paid for your export, you can't import as much.
SS: Nils, you've got the biggest ships out there, I've been on one of them, I think we chatted on one of them, as well. The VLCCs, you've got the biggest, most efficient fleet, is that going to insulate you, or do you need to see more tie ups again in the interim? I mean, you tried the big P3, I think it was called, and that got thwarted by, I think it was the Chinese, amongst others, as well. Do you need to see more consolidation, and even bigger ships, to ride out this storm?
NA: I think no doubt consolidation is good for the industry and it is happening slowly. Our strategy for the last five, six years, has been to make sure we are cost competitive. We have brought in bigger ships, at the moment I don't think that we'll see any development on that, but we are very competitive and we try to make sure that we make money even when times are tough, and so far we have been successful at that.
SS: And I've just got to ask you, post COP21, is your industry doing enough? I know people look at other industries, but is the shipping industry doing enough to transform itself?
NA: I think if we look at the climate, I think for our company we can say yes, we brought down the emission of CO2 from 2007 to today by 40%. Our target by 2020 is a 60% reduction per container transported, so I think that is a very, very strong statement.
SS: Sure, and Nils, we're asking everyone on our very swanky swagger-o-meter about European performance. Europe has been in a bit of a mire for years, so we've come up with this idea, so where you think Europe is actually, is it at a standstill? Are we actually losing steam? In fact it's very nautical, this theme, for you, or are we at full speed? Where do you think?
NA: I think we probably won't be able to grow much more with the structures we have in the economies. I think Europe is actually doing quite well at the moment, but we should. I mean, we have quantitative easing, we have record low Euro, almost, at least for many years, and we have very, very low prices for our main import, which is energy.
SS: So Europe should be in a sweet spot?
NA: Europe is in a sweet spot now, and it's up to the industries and the governments here to take a good use of that.
SS: Nils, it's really nice to see you today, my friend.
NA: Nice to see you.