2020 Annual Report - Maersk

1 M ller - M rsk A/S Esplanaden 50, DK-1098 Copenhagen K / Registration no. 227562142020 AnnualReportTable of contentsThe Annual Report for 2020 of M ller - M rsk A/S (here-inafter referred to as Moller - Maersk as the consolidated group of companies and M ller - M rsk A/S as the parent company) has been pre pared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and further requirements in the Danish Financial Statements in presentation and comparative figuresFrom Q1 2020, as part of the refinement of Moller - Maersk s segment structure to align with the internal management structure and demarcation between the reportable segment activities, a number of changes have been made, see note 23 Significant accounting policies.

2 Com-parison figures have been otherwise stated, all figures in parenthesis refer to the corre sponding figures for the same period prior statementsThe Annual Report contains forward-looking statements. Such statements are subject to risks and uncertainties as various factors, many of which are beyond Moller - Maersk s con-trol, may cause the actual development and results to differ materially from expectations contained in the Annual Directors Report4 At a glance5 Highlights6 Key activities in 20207 Message from the Chairman and the CEO 11 Financial review13 Full-year guidance for 202114 Five-year summary16 Market update20 Our business21 Business model22 Strategy26 Customer interview28 Sustainability32 Risk management36 Performance37 Performance overview38 Ocean42 Logistics & Services44 Terminals & Towage48 Manufacturing & Others49 Governance50 Corporate governance55 Board of

3 Directors58 Executive Board 59 Remuneration60 Shareholder information63 Financials 64 Consolidated financial statements 2020112 Parent company financial statements 2020136 Statement of the Board of Directors and the Executive Board137 Independent Auditor s Reports141 Additional information142 Quarterly summary2144 Company overview 1147 Stock exchange announcements148 Definition of terms149 External financial reporting for Moller - Maersk21 Part of Financials 2 Part of the Directors Moller - Maersk s ambition is to have net-zero CO2 emissions from ocean operations by 2050 For more than a century, we have built partnerships with customers, enabling them to prosper by facilitating global OUR BUSINESS MODELC over photoIn Alaska, sisters Claire and Emma (pictured) launched a clothing brand, Salmon Sisters, based on their upbringing and work as fishermen.

4 Container ship-ping helps bring their catch (and clothing) to customers around the world and sus-tain the unique lifestyle of their remote Moller - Maersk Annual Report 2020 ContentsDirectors ReportThe progress towards becoming the global integrator of container logistics accelerated in 2020At a glanceHighlightsKey activities in 2020 Message from the Chairman and the CEO Financial reviewFull-year guidance for 2021 Five-year summaryMarket updateOur Moller - Maersk Annual Report 2020202020192018201720165,7124,9983,5462 ,579202020192018201720162020201920182017 201638,89039,25731,18927, ,66214,95314,97111.

5 420At a Moller - Maersk is an integrated container logistics company, connecting and simplifying trade to help customers grow and succeed. With a dedicated team of over 80,000 employees, operating in 130 countries, we go all the way to enable global trade for a growing world. Moller - Maersk comprises four business segments with the consolidated key results presented : 2018 presented as if IFRS 16 had been implemented in 2018, for comparison purposes. For 2016 and 2017, lease liabilities are not included in net interest-bearing debt. Consequently, comparatives for EBITDA and net Interest-bearing debt for the period 2016-2017 are not comparable with the period increased by USD 850m, despite lower volumes in Ocean and gateway terminals due to the negative impacts from interest-bearing debt decreased by USD , mainly driven by increased free cash flow, partly offset by share buy-back, dividends and CO2 efficiency improved (year-over-year) compared to 2019 driven by both technical and operational improvement initiatives.

6 1 Percentage improvement in Energy Efficiency Operational Indicator (EEOI) relative to 2008 baseline. A more exact calculation was implemented in 2020, and comparison figures have been cash flow increased by USD , reflecting a continued capital discipline and higher cash flow from operating activities, lower gross CAPEX and a continued high cash increased by USD , with improvements across all segments and with Ocean improving the most by USD 2, (USD million) 39,740 Net interest-bearing debt (USD million) 9,232 Relative CO2 reduction1 (percentage) (USD million) Free cash flow (USD million) 4,648 8,2262,340-295-1, Moller - Maersk Annual Report 2020 Directors ReportAt a glanceHighlights Progressing on the strategyThe transformation towards becoming the global integrator of container logistics accelerated in 2020 and all transformation metrics improved further.

7 The metrics relate to growing the Moller - Maersk logistics business and improve earnings in infrastructure and logistics, while gen-erating free cash flow to ensure a strong balance sheet and to create value for the shareholders of Moller - Moller - Maersk significantly improved the free cash flow and generated a cash return on invested capital of ( ), based on stronger cash flow from operations, lower gross CAPEX and slightly lower invested and logistics revenue (excl. freight forwarding) increased to USD (USD ), mainly due to increased revenue in logistics from warehousing and distribution, due to acquisitions, and supply chain management despite headwinds from gateway terminals, given impacts from improvement in profitability Revenue increased to USD (USD ) and the continued focus on a tight cost con-trol, profitability and stronger rates led to a 44% increase in EBITDA to USD and a margin of ( ).

8 The strong improve-ment was mainly driven by strong cost savings in Ocean focusing on agile capacity deploy-ment, lower bunker costs and an increase in short-term freight rates. Logistics & Services improved EBITDA 110%, supported by margin optimisation in intermodal and increased prof-itability in warehousing and distribution facil-ities in North America, mainly driven by acqui-sitions. Gateway terminals reported an improvement in EBITDA despite of a decline in volume, as a result of lower improved to USD (USD ) reflecting an improvement in the margin to ( ), while underlying profit was USD (USD 546m).

9 Guidance for Moller - Maersk expects earnings before interest, tax, depreciation and amortisa-tion (EBITDA) in the range of USD , before restructuring and integration costs and free cash flow above USD The outlook for 2021 is subject to uncertain-ties related to COVID-19, bunker fuel prices and freight rates given the uncertain macroe-conomic cash flow improved due to significantly higher earnings and reduced CAPEXF ollowing the strong earnings development and a cash conversion ratio of 95% (104%), cash flow from operating activities was USD (USD ). CAPEX was USD (USD ), and free cash flow was USD (USD ).

10 CAPEX discipline remains a key focus area, reflected in the accumulated CAPEX guidance of USD for 2021-2022. Digital momentum2020 has been a year that has reinforced the customer interest for Moller - Maersk s digital offerings. Maersk Spot continued to gain significant traction during the year and the use of the Maersk App increased by 300%. Twill has increased weekly volumes which was 13 times larger compared to the same period the previous year and new dig-ital solutions such as Maersk Flow, NeoNav and the Transformation Management Sys-tem platform in the logistics business were launched to further enhance customer expe-rience and & Services EBITDA (excl.)