A.P. Moller-Maersk A/S, the world’s largest container line, reinstated its full-year guidance at a higher level than it had previously indicated, after staying open for business throughout the COVID-19 crisis.
Shares in the company soared as much as 7.4 percent when trading began in Copenhagen yesterday.
Earnings before interest, taxes, depreciation and amortization (EBITDA) this year would be between US$6 billion and US$7 billion, the company said in a statement.
Photo: Reuters
Before suspending its guidance earlier this year, Maersk had expected profit by that measure to reach about US$5.5 billion.
Analysts surveyed by Bloomberg had predicted US$5.83 billion, on average.
“We were able to continue to serve our customers’ global transportation needs and supply chains throughout the quarter under very difficult circumstances,” Maersk chief executive officer Soren Skou said in the statement. “We were never closed for business.”
The company slashed operating costs by 16 percent in the quarter which, together with a 4.5 percent rise in freight rates, more than offset a 16 percent drop in volumes.
Frode Morkedal, a managing director at shipping firm Clarksons Platou in Oslo, said Maersk’s results suggest that the container shipping market is proving more robust in the face of the COVID-19 crisis than many had feared.
“In our view, freight rates are performing better than expected in 3Q despite liner companies adding back ship capacity to trade lanes, an indication of a stronger demand recovery than expected,” Morkedal wrote in a client note. “We continue to favor Maersk as a recovery bet and we remain constructive to the container-ship market outlook, and see earnings upgrades likely to further support the stock price.”
However, Skou said that the company’s outlook does not include the possibility of a “material” second phase of lockdowns.
He also said that “significant uncertainties remain on demand growth due to COVID-19, global supply growth and bunker prices.”
“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 with a current expectation of a mid-single digit contraction,” Maersk said.
Maersk, which transports about 15 percent of the world’s seaborne freight, reported a second-quarter EBITDA of US$1.7 billion, close to the highest analyst estimate.
The company said on June 17 that the second quarter was developing better than first feared and that EBITDA was expected to be “slightly above” US$1.5 billion.
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