AMKBY AP Moller Maersk AS (PK)

By Dominic Chopping

A.P. Moeller-Maersk A/S posted better-than-expected first-quarter earnings as cost cuts and higher freight rates helped offset a slump in demand from the Covid-19 pandemic, but warned that second-quarter volumes could fall 20%-25%.

The Danish shipping company on Wednesday swung to a quarterly net profit of $197 million from a loss of $659 million in the same period last year, beating a $25 million average analysts' forecast from FactSet. Earnings last year were weighed by a $552 million loss on discontinued operations.

Revenue rose 0.3% to $9.57 billion, against $9.4 billion expected, while earnings before interest, tax, depreciation and amortization of $1.52 billion beat Maersk's own guidance of $1.4 billion.

Maersk, which is considered a barometer of global trade, saw shipping volumes fall 3.2%, while average freight rates rose 5.7% on year.

Lockdowns, first in Asia and then across Europe and North America, have led to significantly lower demand, especially on the company's East-West trades. In response, Maersk has cancelled a number of sailings and vessels have been idled, leading to a 3.5% decline in deployed capacity.

Global container trade declined by 4.7% in the first quarter and Maersk said container demand is expected to weaken further in 2020, particularly in the second quarter.

"Looking into 2Q 2020, visibility remains low as a result of the Covid-19 pandemic," said Chief Executive Soren Skou.

"As global demand continues to be significantly affected, we expect volumes in 2Q to decrease across all businesses, possibly by as much as 20%-25%...we are strongly positioned to weather the storm."

Maersk scrapped most of its full-year guidance in March amid the Covid-19 impact to global transport, supply chains and demand visibility, but said Wednesday that it still sees 2020 volume growth in its ocean unit in line or slightly lower than the market growth, a high cash conversion ratio and accumulated capital expenditure for 2020-21 of $3 billion to $4 billion.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

May 13, 2020 02:58 ET (06:58 GMT)

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