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Maersk delivers profit on strong boxship business despite Covid-19

Photo: Lee Hong Liang maersk.jpg
AP Moller-Maersk has delivered a respectable third quarter results with improved profitability across its business, despite the Covid-19 pandemic having a negative impact on the global economy.

The Danish shipping group reported a third quarter revenue of $9.9bn, down 1.4% year-on-year, and earnings before interest, tax, depreciation and amortisation (EBITDA) up 39% to $2.3bn.

The performance increase was based on a stringent costs control, agile capacity management, strong focus on customer offerings with further traction in uptake of digital services, and some benefit from a sequential demand recovery compared to the second quarter.

“Despite Covid-19 negatively affecting activities in most of our businesses, our disciplined execution of the strategy led to solid earnings and cash flow growth in Q3. At the same time, we managed to further integrate and simplify the organisation in Ocean & Logistics, we closed the acquisition of KGH Customs Services and continued the integration of Performance Team, supporting our strong financial performance in Logistics & Services,” said Soren Skou, ceo of AP Moller-Maersk.

The main performance driver for the quarter was the container shipping business under the Ocean sector, which, despite decreasing volumes of 3.6% improved profitability by $511m to $1.8bn. This was attributed to continued agile capacity deployment, lower costs and a temporary spike in short term freight rates due to a sudden demand pick-up on some routes.

“Our progress in earnings and in our transformation allows us to look confidently past the extraordinary 2020, however we remain well aware of the high level of uncertainty the pandemic and associated lock downs continue to pose in the coming quarters,” Skou said.

Given the current momentum across the business, Maersk raised its full year earnings forecast, citing increased momentum in fourth quarter in global container volumes and freight rates.

The company now expects EBITDA before restructuring and integration costs at $8bn to $8.5bn, up from a previous forecast of $7.5bn to $8bn.

Maersk also expects global demand growth for containers to contract by 4% to 5% in 2020 due to Covid-19.

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