14 ★ FINANCIAL TIMES Friday21 February 2020
COMPANIES
O L I V E R R A L P H
INSURANCE CORRESPONDENT
Activist hedge fundElliott Management
has revealed a stake in Dutch insurer
NN Group, as it continues to build its
presenceinEurope.
Yesterday, Elliott said it had built a 3
per cent position in NN, the largest
listedinsurancecompanyintheNether-
lands. It is co-ordinating with Dieter
Wemmer, a veteran of the insurance
industry and the former chief financial
officer ofAllianz, who has also bought a
stakeinNN.
ElliottattractedattentionintheNeth-
erlands for itsbitter — and ultimately
unsuccessful — battle o try to forcet
paint makerAkzo Nobel nto takeoveri
talks in 2017. Elsewhere in Europe, it is
waging high-profile campaigns at AC
Milan football club and French wines
andspiritsgroupPernodRicard.
The activist fund said in a statement
that there was a “material and sustaina-ble value-creation opportunity” at
NN. It added: “Elliott and Mr Wemmer
have engaged in a constructive dialogue
with NN Group’s management and look
forward to continued private engage-
ment.”NN’ssharesroseabout3percent
inresponsetothenews.
A person close to Elliott said it was
likely to push NN for cost cuts, disposals
of non-core businesses, a less conserva-
tiveapproachtoitsinvestmentportfolio
and more use of longevity reinsurance,
which would protect against the cost of
unexpected increases in life expectancy
andmakeearningsmorestable.In response, NN said it had “an active
investor relations programme which
means NN holds regular meetings and
callswithitskeyshareholders”.Itadded
that it had met Elliott — as it did other
shareholders — but would not comment
on what was discussed in the meet-
ings. The company is due to update
investorsonitsstrategyatacapitalmar-
ketsdayinJune.
NN,whichhasamarketcapitalisation
of €13bn, was spun out of Dutch bank
ING fter the financial crisis. Since then,a
it has consolidated its position in its
domestic market with the acquisitionsofDeltaLloydandVivat.Italsohasbusi-
nessesacrossEuropeandinJapan.
Last year its then chief executive Lard
Friese left to join local rivalAegon. NN
replaced him with internal candidate
David Knibbe, who had been in charge
ofitsNetherlandsoperation.
NN said in its annual results last week
thatitwouldmovetoincreasedividends
and buy back at least €250m of shares
per year. Its shares rose 11 per cent in
response. Elliott’s only other public
investment in the European insurance
sector is a stake in Saga, the UK-based
specialistintravelfortheover-50s.R I C H A R D M I L N E
NORDIC AND BALTIC CORRESPONDENT
AP Moller-Maersk aid that the coro-s
navirus would hit its earnings this year
as the world’s largest container ship-
ping company warned of a “very, very
weak February and weak March” due
to the deadly epidemic.
Soren Skou, Maersk’s chief executive,
said “visibility is low and a lot lower
than we would like due to coronavirus”
as the Danish group said its earnings
before interest, tax, depreciation and
amortisation this year would be well
belowanalystexpectationsat$5.5bn.
However, Mr Skou added that on cur-
rent trends the coronavirus “will not
have been a huge event for us”. He said
he expected a “sharp rebound” in global
trade in April, May and June as Chinese
factoriesstartedrunningagain.
Maersk is a bellwether for global
trade, transporting more than one in six
containers by sea, and is forecasting
another weak year for demand after a
turbulent 2019 hit bytrade tensions
between the US and China, as well as
overcapacity in the shipping industry
andanexpensivenewfuel.
Mr Skou trumpeted the fact that,
despite the trade friction, Maersk’s
ebitda last year increased14 per cent to
$5.71bn, just below analysts’ forecasts.
Analysts had expected ebitda this year
to rise to $5.94bn, but Maersk warned
its own outlook of $5.5bn was subject to
considerableuncertainty.
MrSkousaidthenumberofnewcoro-
navirus cases had peaked at the start of
February and if that continuedhe
expected the number of infections to
startfallinginabout10days.
“Right now, we estimate factories in
China are operating at about 50 to 60
per cent capacity. We think it will be 90
percentbyMarch2,”MrSkousaid,add-
ing that this “would be a good scenario
forus”.
But he cautioned that there were
“thingsthatcangowrong”,adding:“The
risk we fear is that there are 250,
migrant workers that have to return to
Africa and other countries, and they
might bring the virus to countries that
areill-equippedtodealwithit.”
Maersk estimated that global con-
tainer demand— a proxy for trade
growth—wouldincreaseby1percentto
3 per cent this year, in line with 2019’s
1.4percent.
That is well below the double-digit
rises enjoyed before the 2008-09 finan-
cial crisis as well as the 3.8 per cent
bumpin2018.
The Danish group estimated trade
spats reduced container demand by 0.
percentto1percentlastyear.Maersk said its own container ship-
pingbusinesswouldgrowinlinewith,or
slightlybelow,themarket.“Ineedtoget
my returns up more than I need to get
mymarketshareup,”saidMrSkou.
He added that after a significant
reductioninMaersk’sdebtthecompany
had “firepower” for acquisitions. It
bulked up its land-based logistics busi-
ness on Wednesday with the $545m
acquisition of US warehousing group
PerformanceTeam.
But he conceded that “we still have a
lot of work to do on improving our
returns in the coming years” after
return on invested capital jumped from
0.2 per cent in 2018 to 3.1 per cent last
year. This is well below the long-term
targetofmorethan7.5percent.B RYA N H A R R I S — SÃO PAULOPetrobras as said it is at least twoh
years away from making a serious push
into renewable energy, putting Brazil’s
state-owned oil companyat odds ithw
the direction of many other majors as
they grapple with concerns over cli-
mate change.The Rio de Janeiro-headquartered
group said it is in a period of “transfor-
mation” and its focus was instead on
becoming more competitive and deliv-
eringgreaterreturnstoinvestors.
“The pressure we have is to deliver
more results to our shareholders,”
Andrea Marques de Almeida, chief
financial officer, told the Financial
Times.“Ibelieveaftertwoyearsmoreof
hard work the company will be more
competitive and will be ready to decide
what will be the competitive areas in
renewablesforPetrobras.”
The comments contrast with
the rhetoric from many of Petrobras’
rivals, particularly in Europe, which are
investingmoreinrenewableenergy.
Although spending is still largely
focused on legacy fossil fuels, groups
such asRoyal Dutch Shell nda BP rea
investing in wind and solar-power
projects as well as low-carbon start-ups
as they prepare for the energy transi-
tion.Last week BPpledged to cut its
greenhouse gas emissions o net zero byt
2050 or sooner, with new chief execu-
tive Bernard Looney warning that the
oil company had to “reinvent” itself as
theworldshiftedtocleanerenergy.
Petrobras, which is Brazil’s largest
company, currently spends $70m a year
on research and development in renew-
able energy. However, analysts have
warned that itsslow transition ot onlyn
creates reputational risks but could
jeopardiseitsfuturecompetitiveness.
The group instead is focusing on
extracting oil from the ultra-deep “pre-
salt” deposit off Brazil’s coast. Last year
ithitaproductionrecordof3mbarrelsa
day. “Petrobras understands a lot about
offshore. That is where we feel comfort-
able,”saidMsAlmeida.
But she added that the company was
spending $100m a year on improving
carbon capture at its rigs and facilities,
and had set targets to reinject it under-
groundtokeepitoutoftheatmosphere.
“In the last 10 years, we were able to
capture 9.8m tonnes of CO2 and reinject
it,” she said. “We have a goal of 40m
tonnesofCO2reinjectionby2025.”
On Wednesday, Petrobras reported
record profits of R$40bn ($9.3bn) for
2019,upfromR$25bnthepreviousyear.
Its debt pile fell to $87bn, from $111bn a
year earlier, Ms Almeida said. Petrobras
wantstoreducethistobelow$60bn.Insurance
Elliott reveals stake in Dutch insurer NN
Activist US hedge fund
continues to build its
presence in Europe
Oil & gas
Petrobras still
two years from
big push into
renewables
Transport
Maersk warns coronavirus impact will dent earnings
A host of big companies cut earnings
forecasts yesterday and warned of the
impact of the coronavirus epidemic.
Foxconn, the Apple supplier,
expected annual sales to suffer from
disruption to manufacturing in China.
The warning from the world’s largest
contract electronics maker is the
clearest sign yet of the impact of the
virus on the global tech supply chain.
Ping An, the Chinese insurer,
warned of a decline in its life business— an example of the effect on services
that involve face-to-face interaction.
Air France-KLM xpected flighte
cancellations and low demand to bring
a €150m-€200m hit to earnings. The
group based its estimate on the
suspension of China flights for
February and March and the
assumption they would resume in
April.Accorexpected a revenue hit of
at least €5m in China, where 200 of its
370 hotels remain closed.
Yum Brands, owner of KFC and
Pizza Hut,Procter & Gamble, the
consumer goods company, and
Schneider Electric f France also saido
they would be affected.Corporate contagion
Big businesses braced
for performance hitMaersk, which transports more
than one in six containers by
sea, is forecasting another weak
year for demand— Edgar Su/ReutersContracts & Tenders Legal Notices
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UK: +44 20 7873 4000 | Email: [email protected]FEBRUARY 21 2020 Section:Companies Time: 2/202020/ - 17:37 User:cathy.pryor Page Name:CONEWS3, Part,Page,Edition:USA, 14, 1