AMKBY AP Moller Maersk AS (PK)

By Costas Paris and Dominic Chopping 

Shipping giant A.P. Moller-Maersk A/S swung to a $1.3 billion profit in the fourth quarter, but its outlook fell short of analyst expectations as pandemic-driven supply-chain disruptions continue to trigger sharp changes in trade demand and freight rates.

The Copenhagen-based parent of Maersk Line, the world's biggest ocean container line by capacity, said its profit before interest, tax, depreciation and amortization reached $8.2 billion last year from $5.7 billion in 2019. It expects its earnings this year to be between $8.5 billion and $10.5 billion.

The outlook was short of market expectations of around $10.8 billion in earnings this year, according to Clarksons Platou Securities. Some analysts expect significant headwinds this year, saying that freight rates that soared in the second half of 2020 have likely peaked, putting a lid on future earnings growth.

"Although the company is known to be conservative in their guidance, the message is clear and this report is therefore likely to be viewed as negative," Clarksons Platou said.

Maersk Chief Executive Søren Skou said freight rates could slip to more normal levels this year, depending on how the world reopens from the Covid-19 pandemic.

"Whether demand stays strong once the world is reopening remains to be seen," Mr. Skou said.

Maersk's shares slumped nearly 7% on the Nasdaq Copenhagen to 12,495 Danish kroner. Maersk shares gained 42% in 2020, the best performance for the stock since 2005. The stock hit a record high late last month, but has since lost steam on expectations of lower freight rates.

The company said its fourth quarter net profit hit $1.3 billion, compared with a loss of $72 million a year earlier, and below analyst expectations of $1.39 billion, according to FactSet.

"The tailwinds in the fourth quarter have continued in the first quarter, " Mr. Skou said.

Maersk and other container lines have been benefiting from a surge in shipping demand as big retailers like Walmart Inc. and Amazon.com Inc. restock inventories depleted in the early weeks of the pandemic last year. Container Trades Statistics, a London-based industry data firm, said global shipping volumes rose 4.3% in the second half of last year, including a 5.7% surge in the fourth quarter, after falling 6.6% in the first half of 2020.

At Maersk, fourth-quarter revenue rose 16% to $11.26 billion. Maersk's shipping volumes rose 3.2% in the quarter from the same period the year before, while average freight rates surged 18% and fuel costs fell 14% on the year.

Maersk expects 3% to 5% volume growth in 2021, with most of it coming in the first half of the year.

Mr. Skou said shipping volumes will remain high in the first quarter as companies clear bottlenecks in supply chains driven by the high demand and tight capacity for ocean transport and in port cargo-handling operations.

"None of us were ready for the pandemic," Mr. Skou said. "Demand is driven by consumer spending, which we expect will continue in the U.S. with more stimulus measures coming. But the intense inventory restocking cycle will stop."

Write to Costas Paris at costas.paris@wsj.com and Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

February 10, 2021 13:30 ET (18:30 GMT)

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