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Asia Today ISSN 1861-4604 Wednesday, February 21, 2018

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Maersk Line says it will continue to serve Russian market despite economic factors

Russian economy has been hit hard by the fall in oil prices

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MOSCOW, Russia - Denmark's A.P. Moller-Maersk, the largest shipping conglomerate in the world, said its four subsidiaries operating in Russia would continue to operate as planned despite the recent sharp drop in the oil price and the rouble's collapse.

The Russian economy has been hit hard by the fall in oil prices, which have exacerbated significant pressure already levelled by sanctions imposed by the United States, European Union, United Kingdom, Canada and other western nations over Russia's alleged support for rebels in eastern Ukraine.

However, A.P. Moller-Maersk has indicated that its four Russia-active subsidiaries would continue their activities regardless - a marked departure from Maersk's usual business model that ceases any loss-making endeavours in order to focus on profits.

The shipping giant did confirm that the collapse in the value of the rouble had affected its bottom line, despite cheaper oil prices.

"The Group's business with Russia amounts to some two to three percent of our total revenue," A.P. Moller-Maersk wrote in a mail to Reuters. "In the current situation, where Russian purchasing power and foreign trade is negatively impacted, our shipping business in Russia is also affected."

The world's largest container shipping company Maersk Line, port operator APM Terminals, logistic company Damco and the world's biggest tugboat operator Svitzer are all active in Russia.

Fears of a full-blown Russian economic crisis are leading investors to build up negative bets on European companies exposed to the country, such as brewer Carlsberg and Finnish tire-maker Nokian Renkaat.

In addition to its four subsidiaries active in Russia, A.P. Moller-Maersk also owns a 37.5% stake in Russian port operator Global Ports, which it bought in September 2012 for US $2.3-billion.

Global Port's London-listed shares have dropped by 73% since the deal and have fallen further in the wake of the rouble crisis.

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