Thank
you very much. And once again, a warm welcome to all of you. We're happy to see that so many of you are here today. We see it as a sign of great interest in AP Miller MASK AS and our transformation. Nevertheless, I stand here as chairman with mixed emotions about the results I'm going to present to you today for 2018.
Financially, 2018 was not a satisfactory year, a downgrade of our expectations for the year and a profit before tax of 1,000,000 out of our 1,000,000,000 revenue are simply not satisfactory. But 2018 was also a year of sound progress in delivering on our long term strategy and transformation. It was necessary and expected but also essential if we are to achieve the desired financial results in the future. Before I move on to the review of 2018, I'd like to start with a brief look back at the journey we've been on since 2016 when we fundamentally changed our strategy. Why did we change our strategy in 2016?
Our new strategy was significantly motivated by the development in the company in the years 2012 to 2016. Both our revenue and earnings were declining in those years. In fact, total revenue fell by more than 28% from 2012 to 20 18 from $49,500,000,000 to $35,500,000,000, while our profit before depreciation and interest fell by more than 46% in the same period from $11,800,000,000 to $6,800,000,000 In 3 out of the 5 years in that period, our investments exceeded our operating income. Many of these investments were made when oil prices peaked. So when oil prices collapsed in 2014, we were facing great challenges.
And that forced us to make significant depreciation in the following years. Although our individual businesses were among the best in their respective industries, top quartile, as we called it back then, our overall business did not generate a satisfactory profit and return. And given the low oil prices, the historical conglomerate benefits had disappeared and turned into risk. In other words it was high time to revise strategic direction and find a way to reinvent AP Mueller Maersk. This recognition prompted the board in Tuesday 19 to ask the new management to prepare a new strategy for AP Miller Maersk AS.
A strategy containing a complex separation of our energy and energy related businesses and a radical transformation of AP Miller Mesh into an integrated transport and logistics company. The strategy process and transformation of AP Miller mask are based on 3 key strategic principles. Firstly, we must seek out markets with growth potential to grow our revenue again. Secondly, we must master the most profitable part of the market to deliver a better return on invested capital And thirdly, we must develop our business to win and become the largest to ensure long term profitable growth. Looking back at energy companies, in 2016, it was clear that they had no chance of living up to these strategic principles.
In particular, it was difficult to see how they could become among the largest in their respective markets. On the other hand, It was clear that we had and create the basis for a profitable business in the long term. Management thorough market analysis and dialogue with our customers clearly show that our customers have needs that were not met. They experienced the industry as complex. Often it required more than 20 different suppliers and hundreds of physical documents to move a container from the factory to the final destination.
Our core customers are not experts in logistics. NIKE, Walmart and Tesla are some of our 70,000 customers. They want a supplier that can cut through the complexity and see the container safely through all parts of its journey arriving on time. Our command of all aspects to deliver And we're also able to operate with the lowest unit costs because we have the largest transport network in the industry. Our strategy work comprised a thorough analysis of the value chain in container transport and logistics.
The the logistics chain consists of a number of transport legs and services, a container is moved from the factory over land to a terminal where it is loaded on border containership. It is then transported to the next port where it is reloaded at the terminal and shipped to the terminals typically a warehouse. The graphics here show the size of the global market and the profitability of each part They also show our current market share and the growth of each segment. It's no surprise that AP Miller mask is the largest in shipping. That's what we call ocean.
This is also the part of the value chain with the largest market today, but it's also the part of the value chain with the lowest return on invested capital. And the lowest growth. In Ocean, it's crucial to be the largest in order to run the most efficient network And AP Miller Maersk is the largest, especially after the acquisition of Hamburg Sud. Were also quite large in the terminals part of the value chain. The terminals segment yields a higher return and is therefore key to our future business.
Our strategy here is to optimize the utilization of our terminals and make our network more efficient. However, we're not so large in logistics and transport to and from the terminal. These are areas with good with good growth and profitability and thus important growth areas for AP Miller Maersk. Our ambition is to grow our business The illustration of the value chain explains the financial elements of our strategy. 1st and foremost, we must utilize our network and capacity better in order to increase the profitability of our existing business Given that ocean today accounts for 73% of our revenue, further streamlining of the ocean segment would really make a difference.
Towards improving our short term return. At the same time, we must grow our where we can achieve profitable In other words, we have differentiate ourselves so that we can win and these are precisely the 3 overall principles that we defined for our strategy work. Last year I described how extensive the transformation is. There is no need to repeat that this year, but today I would like to tell you how far we've come. Our transformation in these years can be compared with the construction of a house designed to last for the next many years.
And if the and separation of our energy related businesses is a condition for a strong foundation for the future AP, Miller Maersk. The separation means that we find structural solutions providing a good future for each individual energy business while also enhancing the value of and the opportunities for AP Miller Mesh and our shareholders. Next part of the construction of the future AP Milamas is the ground floor. The solid basis for the future integrated transport and logistics company AP Mueller Maersk. First step here is to participate in the industry consolidation through our position of Hamburg Sud.
At the same time, we must integrate the different units in AP MilOMESK lifting their joint effort to deliver integrated trans and logistics to our customers. Furthermore, we must reduce our debt to ensure that AP Miller Maersk has the financial muscle required to make the necessary investment in that future and to disperse parts of the value added to our shareholders. The last part of our transformation house is the roof, meaning the digitalization of AP Miller Maersk and the industry and accelerating the transformation through acquisitions. This is crucial to ensuring that we can simplify and automate our processes and provide customers with direct online access to our products and services. At the same time, We're working intensely to digitalizing the industry by digitizing the many manual paper flows on a modern IT platform making the entire industry more efficient and transparent.
And finally, we want to accelerate the transformation by supplementing organic growth with acquisitions in the logistics and services area. I think you get the picture of the huge transformation of AP Miller Maersk that we're working on. As I said last year and would like to repeat this year, there are no easy shortcuts. The transformation requires hard and dedicated work and it takes time even if we're not very patient. Above all, the transformation requires talented employees and managers.
And that's what we have Let me start with a We have now found solutions for the vast majority of our energy related businesses and we're very satisfied with these solutions. In 2017, Musk Tankers was sold to AP Miller Holding for almost $1,200,000,000. Mask tankers has since then continued developing their leading position in the product tanker market under the same name and brand. We closed the deal with total SA on the sale of mask oil in March of last year And since then, we have solved the shares we received as part of the payment. The total value of the sale, including the dividends received while we owned the total shares amounts to a very satisfactory 1,000,000,000.
Maersk Oil has now become a part of Total SA and we feel that Total is fully living up to their promises to increase investments in Denmark and the North Sea. And we are very pleased to put the demerger of AP Mueller mask and thus an IPO of mask drilling to the vote today. We see an IPO as a strong solution and the launch of a new future for MASK Drilling. I will give details of the MASK Drilling this later. All in all, the demerger and the IPO of mask drilling mark the completion of the separation of the energy businesses.
We haven't been able to find structural solutions for Maersk Supply Service. But this is the smallest of our energy related businesses. And in relation to the total invested capital in AP Miller Maersk, of more than US43 $1,000,000,000. Maersk Supply Service account for only US0.6 billion dollars or less than 1.6%. That's why we have decided to stop trying to find structural solutions for masks, supply service, and instead continue our dedicated efforts to enhance its profitability.
Overall, we are very satisfied with the results of our separation project. In retrospect are huge, perhaps Denmark's biggest ever structural change of a company. Over the last 2.5 years, we have implemented structural transactions for more than DKK100 1,000,000,000 including the acquisition of Hamburg Sud. Credit is due not least to Claus Hemmingson for the successful separation. On behalf of the board, I would like to thank Claus and his very capable team for their great effort.
We've also come a long way in the transformation of the future transport and logistics business In 2018, we integrated Hamburg Sud into AP Miller Maersk and optimized our total network. It was a huge project with which we succeeded beyond expectations. We expect it to deliver synergies worth US120 million dollars in 2018 but we realized $420,000,000 and we have raised our expectations from 2019 from 350 or 4 $1,000,000 to minimum US500 million dollars as regards synergy from the acquisition of Hamburg Sud. We've also completed the integration of our transport and logistics units. This has now given us a global sales organization set to deliver everything from shipping to logistics and supply chain solutions for our customers and a global delivery organization constantly optimizing our networks and with our new CFO, Carolina Dubek Happe at the helm, they will optimize our profitability, cash flow, capital structure and reporting.
We've also created 1 global IT organization working hard to automate our processes and increase our digital skills across all units and on the ground floor we considerably reduced our interest bearing debt in 2018. This means that we have kept our investment grade credit rating which we want to 18, we continued the process of digitalizing AP Miller mask and customer experiences. A case in point is our new instant booking, enabling customers to book directly with APMula Maersk and receive instant confirmation. More than 98% of all bookings today are done online. We also made progress with the digitalization of the industry.
In December, we went live with the trade lens, the first open flat form in the industry digitizing transport documents with high data security due to the use of blockchain technology. The first customers and partners are now live on the platform. And right now, it processes 1,500,000 events and about 10,000 documents each day. And finally, we're beginning to look at focused acquisition opportunities. In February this year, we acquired Vandegrift, a leading customs broker.
In North America and this enables us to remove that complexity as well for our customers. The less than satisfactory financial performance in 2018 despite all the progress in our transformation can be attributed to unfavorable developments in external factors, rates and oil prices that we are still heavily dependent on. That's why it's important that we can measure our ability to perform better in the areas that are crucial to our strategy and future. It's not enough that we are lucky with external factors in our traditional businesses. Judging from the feedback from our customers, the transformation is beginning to take effect.
Customer satisfaction met measured by the so called Net Promoter Score showed very positive developments in 2018 and is today among the highest in the industry. The transformation is also beginning to take financial effect as reflected in the cooperation between mask line and APM terminals. The integration and cooperation have lifted the of APM terminals by 15 percentage points relative to 2017 and in the very important hubs where the terminal primarily services mask line, productivity has increased by 23% over the past 24 months. In financial terms, these improvements resulted in an EBITDA increase for APM terminals from 17000000 to 1000000 in 2018. The improvements have also reestablished us as the most effective market player with the highest reliability.
Experiences like these with close collaboration across the units in APMulamask show that the strategy to become an integrated logistics company is working for both customers and for AP Miller Maersk. I will now turn to the financial results. In 2018. Total revenue in 2018 rose by 26 percent to 1000000000 primarily driven by the acquisition of Hamburg Sud. Increasing revenue.
Total profit before depreciation, interest and tax EBITDA rose by 1,000,000 to $3,800,000,000 in 2018. The Ocean segment contributed $3,000,000,000 up by $230,000,000 on 2017. We had expected a more substantial improvement but increasing fuel prices made it difficult. The Terminals and Towage segment saw an increase of 22% and contributed $778,000,000 while our logistics and services segment saw falling earnings mainly due to restructuring costs. $3,000,000,000 in 2018, somewhat higher than the year before.
This is largely due to depreciation following the acquisition of Hamburg Sud and other depreciation, depreciation such as in mass container industry. Gains on sale of fixed assets totaled $144,000,000 relative to $150,000,000 the year before. And the total profit before tax rate, P Miller Maersk, was million in relation to $25,000,000 in 2017. Our total tax payments for continuing operations in 2018 were $386,000,000 compared to 1000000 in 2017. The increased tax payments are partly due to withholding tax paid in France on dividends received from total as well as higher taxes in about 40 other countries based on local results.
The local result in Denmark was a positive item of, 49,000,000 $79,000,000, and it's the positive result is because of a settled tax dispute And a regulation between total and AP Miller mask of about $66,000,000, which was paid out to AP Miller MASK in 2018. Overall, 2018 wasn't financially satisfactory, but we have seen significant improvement during the course of the year. From a disappointing start in the first quarter, we have seen improved earnings in the second half of the year. So in other words, we're going in the right direction and that is positive. Cash flows from operating activities amounted to 1,000,000,000 compared to 1,000,000,000 the year before the increase in cash flows reflects the growth in earning before depreciations and amortization but is also negatively affected by higher working capital due to higher fuel prices.
We have invested less than we used to, thereby reducing cash flows associated with CapEx. In 2018, our investment total $2,900,000,000 on $2,200,000,000 in 20 17 and we're expecting to further reduce the speaker to 1,000,000,000 in 2019. Excluding the acquisition of Hamburg Sud in 2017, free cash flows were $4,200,000,000 in 20.18 compared to $1,300,000,000 the year before. The total equity ratio was around 59% at the end of 2018 compared to 50% the year before. At the end of 2018, our liquidity reserve amounted to 10 point $3,000,000,000 up from $9,600,000,000 the year before.
We still have a high degree of solvency and a strong financial reserve. The sale of mask oils, total SA subsequent sale of the total shares have strengthened our financial position and we have reduced our interest bearing debt by more than billion during the year. With the development in 2018, we have, in other words, restored company growth. And we are once again stronger as a focus company than we were as a conglomerate with the energy companies in 2016. During the same period, We also saw EBITDA growth of 54% in our continuing activities.
As I said, this is still not good enough but it is an important step in the right direction. Based on these financial results, the board has proposed dividends for 20.18 of krona per share unchanged from 2017. Total ordinary dividend payments amount to DKK 3,100,000,000. With this proposal, the board wants to emphasize that we still have a lot of work to do to transform the business and improve earnings just as the board wants to maintain a strong financial reserve with regard to extraordinary dividend resulting from the separation, we have promised to provide an update on our plans as soon as the separation has been finalized by August at the latest. Of course, we intend to keep this promise.
Let me conclude the review of 2018 with the very important issue, safety. To our deep regret in 2018, seven people lost their lives while working directly or indirectly for AP Miller Maersk. Among other things, we had a tragic fire on board Maersk or Nam, which cost 5 lives. My deepest sympathy and thoughts go out to the families and relatives of the victims. Loss of human life is unacceptable in a workplace.
In any industry or any country. Our employees should be able to go to work and come home at the end of the day safely to their families. The board has therefore asked the management team to increase our focus on safety and strengthen our safety procedures and culture to prevent further fatalities. Corporate governance is an integral part of AP Munoz. As a result of the changed strategy, we found it important to adjust our remuneration model to ensure alignment with the strategy.
We have established a separate remuneration committee which is responsible for ensuring that our remuneration policy is relevant and up to date. At last year's general meeting, we decided to change our remuneration system to a more variable and share based remuneration model for the management. We did this to better align the level of remuneration with the interests of our shareholders. Based on the work done by the remuneration committee we also changed bonus model. The bonus is aligned with the strategy in that the executive board is now remunerated based on the development of the business as a whole.
This creates an incentive for cooperation across the units in line with our strategic ambition. Due to our financial comments, the bonus for 2018 is naturally below the levels seen in the past. Nevertheless, we have decided to pay out bonuses as they are based on the fulfillment of both financial targets and performance targets. But the performance targets which measure whether we are improving developed positively. We want to reward improvements in performance not Board in 2018.
The reason for the increase in the total executive remuneration in 2018 compared to 20 17 is that the executive board has doubled in size going from 3 members to 6. Naturally, this increases the overall remuneration to the executive board, but that is not the same as a salary increase On the contrary, I'm pleased to say that it boosts the leadership capacity of the executive board. And let me take this opportunity of January 2019.
In 2018, we also set up a nomination committee, which is responsible for reviewing the composition and skills of the Board of Directors. In 2018, we completed an evaluation of the board. The individual board members and the members of the executive board completed a questionnaire followed by individual interviews with an external consultant. The external consultant concluded that the processes in and around the work with the board are good, Board meetings are conducted in an efficient and constructive manner, and there's a good and open dialogue between the executive board and the Board of Directors. The evaluation also shows that the board has the skills needed to successfully perform the duties, but that the separation of the energy companies and the transformation from the broad conglomerate to a focused company will obviously lead to new demands on the composition of the board.
The conclusion was that it would make sense to make adjustments to the border to reflect the changed demands. As a result, 2 board members will be stepping down today and 2 new board members will be up for election. I'd like to thank this opportunity to thank Jan Lesley and Robert Routes for their long time commitment and hard work on the Board of Directors. We will miss their experience and dedication. Thank you.
Later day, I hope to welcome Bernard Elvort and Mark Engel. Bernard and Mark are both present today. And contribute logistics and transformation skills, which will be essential to the board in future. We will get back to this under item f on the agenda. I would like to mention that we had 3 highly competent female board candidates, but unfortunately, all of them decided that they did not have the capacity to join the board at this time.
We continue our search for female candidates to the board and maintain our target of at least 3 female board members. As mentioned earlier, another item on today's ENDRA is the demerger of AP Muirameras. And separation of mask drilling as an independent company. I'd like to tell you more about the company and the demerger process. Mask drilling is organizationally operational and financially ready for a separate listing.
The company has secured a robust long term financing agreement, which is adapted to the fluctuating conditions in the industry. In 2018, the company recorded robust performance in a difficult market, which has been affected by low oil prices since the end of 2014, prompting oil and gas companies to slow down their research and development activities. Maersk Drilling is a global leader in offshore drilling, specializing in harsh environment and deepwater drilling around the world. The company operates 1 of the world's most advanced and modern fleet consisting of 23 high-tech offshore drilling rigs and ships. It's customer based car some of the world's largest oil and gas companies, many of whom are long standing partners.
Maersk Drilling has a high level of customer satisfaction, thanks to an efficient operating time on its rigs a constant drive to increase efficiency and reduce costs and not least the company's commitment to safety, both for its employees and the environment. Maersk Drilling is a market leader in the North Sea with an estimated market share of 27%. The Norwegian part of the North Sea is one of the most challenging locations for offshore oil drilling. It is an attractive niche market as demands for special certification, skills and experience lead to higher daily rates and higher capacity utilization than other markets. In this market, mass drilling enjoys a particularly strong position.
Maersk Drilling had a revenue of $1,400,000,000 and industry leading profitability, EBITDA margin before special items of $611,000,000. Finally, the company had an EBITDA margin of 43% which is higher than the peer average. A strong ability to convert earnings to cash generated robust free cash flows of $457,000,000. The company has a net debt of just 1,100,000,000 giving Maersk drilling the most solid capital structure in the industry. At the end of 2018, Maersk has a total order book of US2.5 billion dollars with 63% of the fleet's deployment for 2019 already secured which is higher than the industry as a whole.
The solid contract coverage and strong balance sheet with low debt, ensure predictability and flexibility in the market. Maersk Drilling expects the market conditions to improve in the long term with higher utilization rates and daily rates. However, we expect the challenging market conditions to continue in 2019. In connection with the demerger of APM ULTOMERSK NERSK Drilling will be separated as a new independent company. The shares in the new company will then be admitted for trading and official listing on NASDAQ Copenhagen.
The company will continue to operate under the mask drilling name and use the 7 pointed star as part of its brand. However, the new independent listed company will have the legal name the drilling company of 1972 AS. Following the completion of the demerger, The shareholders of APMULA MASK will automatically become shareholders of MASK Drilling. With a number of shares to be determined in accordance with For each share in APMILOMERSK with a nominal value of DKK1000. Shareholders will receive 2 shares in Maersk Drilling, And for each APM with a mask share with a nominal value of DKK 500, shareholders will receive 1 share in mask drilling The distribution of Maersk Drilling shares will take place once the demerger is completed and registered with the Danish Business Authority.
Trading in shares in APM ULTOMASK on usual market terms on NASDAQ, Copenhagen, up to and including tomorrow, 3rd of April 2019 at 1700 Danish Time will include Maersk Drilling and entitled shareholders to receive Maersk drilling shares in connection with the demerger. Trading in shares in April, Muirka, Copenhagen, after 3rd April, 20191700 Danish Time will not include Maersk Drilling, and will not entitle shareholders to receive Maersk Drilling Shares in connection with the demerger. The anticipated first day of trading and official listing on NestAC Copenhagen Hagen for Maersk Drilling Shares is expected to be 4th April 2019. The price of shares in both mass drilling and APM Rooter mask will be determined by the market. Mass drilling shares are expected to be available in VP securities around the 8th April 2019.
The Danish tax agency has approved the demerger of AP Mueller Maersk is a tax exempt for Danish shareholders. Once the demerger is completed, a ratio will be calculated, which divides the historical acquisition cost of the AP Muirmezk share between the AP Muirmezk share and the new Maersk Drilling shares. The ratio will be made available The demerger means that the current AP Muirsk share will be split into 2 shares in the future. This makes it a bit more difficult to follow the price of the AP Miller Maersk share, but we have previously conducted similar transactions where parts of the AP Miller mask value were distributed to the shareholders. The overall value includes such structural changes, which is something you should bear in mind when you compare share prices of APMUTOR mask over time.
The board of directors recommends that mask drilling is to have only 1 share class giving all shareholders the same rights, including voting rights. The Board of Directors believes that this is the optimum structure from an investor point of view. From a market perspective, 1 share class is the most common structure in an international context and in the industry. The decision to give mask drilling 1 share class requires 90% of the votes at today's general meeting. I apologize if the description of the demerger and its consequences a little is a little technical and legal, but that's what is taken for granted to me if you want to execute a transaction of this size and complexity.
We have brought an information brochure in Danish containing a description of the demerger, the distribution of shares and an introduction to the mask trading business as well as a fact sheet in Danish on taxation in connection with the plan demerger. The brochure is available in the area outside you're welcome to ask one of our many helpful employees on your way out. Before giving the floor to Sean Skolff, who will talk about operations and our ambitions for 2019. I will sum up briefly. 2018 was the year when we, as promised, our solutions to the separation of our energy related business.
The IPO of Maersk Drilling marks the completion of the separation project. In addition, the foundation was laid for continuing AP Muuto Maersk as an integrated transport and logistics company. We have made good headway, but we haven't reached the goal yet. We need far better and more stable results. The financial performance in 2018 shows that we are still highly dependent on external factors.
Freight rates and oil prices in particular impact our performance. That's also going to be the case in the coming years. Until we get a better balance in our company by increasing our efficiency in ocean and also increasing our profitability in non Ocean, APMULOMASK would be more balanced in the future. More profitable. With the foundation there, we need to accelerate the transformation and we must be able distinguish between our own ability to perform better and our luck or the opposite as regards external factors.
Management has therefore decided to define 4 key figures to measure the development in our ability to accelerate the transformation. We will be reporting on these key figures in future to make it easy to follow our transformation. We want to measure that we're getting better, not luckier. I will leave it to a certain scope later to review the content and relevance of these key figures. Anor Peter Mueller and Musk McKinney Mueller created the basis for a world leading AP Mueller Mask on the principles of courage to take the difficult decisions, ambition to be amongst the leaders and excellence based on strong value of making contributions to courses in the public good.
To be useful or as it says in the charter of the foundation, to operate a beneficial business. These basic elements live on today. In AP with A mask. Given our ambition to become an integrated transport and logistics company, we have a strong focus on our social responsibility as set out in our sustainability report. We are proud to facilitate global trade between people, companies and countries.
The management has defined an ambitious target of making container transport CO2 neutral. By 2050. And given our market share of more than 25% of all the world's freezing containers, we are actively contributing to reducing food recycling conditions more sustainable and responsibility. We are proud to be able to build on our strong values that created AP Miller Maersk. Carriage, ambition and skill remain the drivers of our success today.
If anything, we give Constant Care an extra natural to in our efforts to create sustainable and profitable AP with Amazk of the future. On behalf of the board, I'd like to thank the management for their huge effort to reinvent APMEA Maersk. Also, thanks to all of our more than 84,000 employees around the world, who service our customers and live our values every day. I'll now give the floor to Sharon's call.