Maersk Warns of Coronavirus Impact as 4Q Misses Expectations
20 February 2020 - 7:12PM
Dow Jones News
By Dominic Chopping
Danish shipping giant A.P. Moeller-Maersk AS said Friday that it
made weaker-than-expected fourth-quarter earnings and warned that
it expects a weak start to the year with limited visibility for the
rest of 2020 amid the coronavirus outbreak.
Maersk swung to an unexpected net loss in the quarter of $72
million from a profit of $46 million in the year-earlier period. A
FactSet analyst poll had expected a net profit of $343 million. It
said that its financials are materially impacted by implementing
the IFRS 16 accounting standard and 2019 figures aren't comparable
with last year.
Maersk, which is considered a barometer of global trade, saw
revenue fall 5.6% to $9.67 billion, missing expectations of $9.94
billion, as its shipping unit lowered capacity to adjust to market
conditions.
Earnings before interest, tax, depreciation and amortisation for
the quarter came in at $1.46 billion against expectations for $1.53
billion. For the full-year, Ebitda rose to $5.71 billion, meeting
the company's own guidance of between $5.4 billion and $5.8
billion.
The company's main shipping unit saw revenue fall as volumes
dropped 1.8% while freight rates slipped 0.4%. Maersk said it
continued to cut its cost base at the unit while lower fuel prices
also helped offset some of the weakness.
Volumes were hit in both East-West and North-South routes, amid
continued slower growth in the U.S. and front loading of orders in
the same quarter last year ahead of anticipated tariffs, lower
demand in Europe, continued weak demand in Latin America, and
weakened market conditions in West and Central Asia and
Oceania.
Maersk said the outlook and guidance for 2020 is subject to
significant uncertainties and impacted by the current outbreak of
the Coronavirus (COVID-19) in China, which has significantly
lowered visibility on what to expect in 2020.
"As factories in China are closed for longer than usual in
connection with the Chinese New Year and as a result of the
COVID-19, we expect a weak start to the year," the company
said.
The organic volume growth in its main ocean unit is expected to
be in line with or slightly lower than the estimated 2020 average
market growth of 1% to 3%.
Accumulated gross capex for 2020-2021 is still expected to be
$3.0 billion-$4.0 billion.
Maersk declared an unchanged full-year dividend of DKK150.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
February 20, 2020 02:57 ET (07:57 GMT)
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