A.P. Moller – Maersk today reported first quarter results that Danish business daily Børsen characterized as “good numbers, grim outlook.”
The company reported revenues from continuing operations of $9.57 billion compared with $9.54 billion in the same quarter of last year and EBITDA of $1.52 billion against $1.23 in the 209 first quarter. That came against market backdrop that saw global container trade decline by 4.7% in the first quarter, primarily due to the COVID-19 pandemic.
“In the first quarter of the year, A.P. Moller – Maersk again delivered profitable growth. Operating earnings increased by 23% year-on-year, and cash return on invested capital increased by 3.5 percentage points to 10.5%, “ commented CEO Søren Skou.”The strong results were made during a quarter with sharp fuel cost increases derived from the industry’s switch to low-sulfur fuel and on the backdrop of a contraction in global trade due to lockdowns in most regions.”
“Looking into Q2 2020, visibility remains low as a result of the COVID-19 pandemic,” said Skou. “We continue to support our customers in keeping their supply chains running, however as global demand continues to be significantly affected, we expect volumes in Q2 to decrease across all businesses, possibly by as much as 20-25%. 2020 is a challenging year, but as we proactively respond to lower demands and show progress in our transformation and financial performance, we are strongly positioned to weather the storm.”
GUIDANCE FOR 2020
The full quarterly report notes that A.P. Moller – Maersk suspended the full-year guidance for 2020 (EBITDA before restructuring and integration costs of around $ 5.5 billion) on 20 March 2020 due to the COVID-19 pandemic, which is leading to material uncertainties and lack of visibility related to the global demand for container transport and logistics.
“The high uncertainties related to the outlook and impact from COVID-19 still persist and therefore the suspension of the full year guidance on EBITDA remains,” says the report. “Significant contraction in global demand is expected for Q2, with volumes expected to decrease by 20-25% across all businesses affecting both the profitability and cash flow in the quarter.
“The global market growth in demand for containers is expected to contract in 2020 due to COVID-19 (previously between 1-3% growth). Organic volume growth in Ocean is expected to be in line with or slightly lower than the average market growth. The accumulated guidance on gross capital expenditures excluding acquisitions (CAPEX) for 2020-2021 is still expected to be $3.0-4.0 billion, with steps being taken to reduce CAPEX in 2020. High cash conversion (cash flow from operations compared to EBITDA) is expected for both years.”
Read the full quarterly report HERE