Maersk profits up on capacity management despite lower container volumesMaersk profits up on capacity management despite lower container volumes

Announcing its second quarter financial results AP Moller – Maersk reported a drop in revenues to $9bn in Q2 2020 from $9.6bn in same period a year earlier, however, EBITDA increased by 25% to $1.7bn in Q2 2020 compared to $1.4bn a year earlier, primarily driven by an improvement in its core ocean sector, Maersk Line.

“The continued improvement in operating results were driven by strong cost performance across all of our businesses, lower fuel prices and higher freight rates on ocean and increased profitability in logistics & services,” said AP Moller – Maersk ceo Soren Skou.

For the container line business under the ocean sector Q2 2020 EBITDA was $1.36bn up from $1.08bn a year earlier, while revenues contracted to $6.57bn compared to $7.2bn a year earlier with freight revenues declined 10%.

“The EBITDA margin increased, driven by active capacity management, adjusting the fleet to the lower global demand, higher freight rates and lower fuel prices, which more than offset the negative impact of lower volumes across trade lanes,” Maersk said in its second quarter statement.

Volumes in Q2 decreased by 16% year-on-year to 2.9m feu, however, the average loaded freight rate increased by 4.5% to $1,915 per feu. Maersk was able to reduce operating costs by 16% to $5.2bn in the quarter through capacity management, and lower bunker and charter rates.

Related:Maersk warns of 20 – 25% drop in volumes in Q2

A drive to towards digitalising operations has continued and according to Skou digital product Maersk Spot now moves 41% of its short-term business.

Looking ahead Maersk has reinstated earnings guidance for 2020, suspended in March due to the uncertainties caused by the Covid-19 pandemic. The new guidance of an EBITDA of $6bn - $7bn for 2020, which is higher than its guidance of $5.5bn prior to suspension.

“The global demand growth for containers is still expected to contract in 2020 due to Covid-19 and for Q3 2020 volumes are expected to progressively recover. Organic volume growth in Ocean is expected to be in line with or slightly lower than the average market growth,” Maersk said.

Maersk cautioned that its guidance was subject to “significant uncertainties” related to Covid-19 and did not take into account the possibility of a second lockdown.