Maersk 2Q Profit Beat on Lower Fuel Prices, Higher Rates -- Earnings Review
19 August 2020 - 7:33PM
Dow Jones News
By Dominic Chopping
Denmark's AP Moeller-Maersk AS reported results for the second
quarter on Wednesday. Here's what we watched:
REVENUE: Revenue fell 6.5% to $9.0 billion compared with an
expected $8.77 billion.
NET PROFIT: The Danish shipping company posted a quarterly net
profit of $427 million from $141 million a year earlier--beating a
$281 million average analysts' forecast from FactSet--as higher
freight rates, lower fuel prices and cost cuts helped offset a
slump in demand caused by the Covid-19 pandemic. Earnings before
interest, tax, depreciation and amortization of $1.7 billion beat
Maersk's own guidance of slightly above $1.5 billion.
WHAT WE WATCHED:
VOLUMES AND RATES: Maersk, which is considered a barometer of
global trade, saw shipping volumes fall 16%, while average freight
rates rose 4.5% on year to $1,915 for a FFE--a standard 40-foot
container. The company had guided for a 15%-18% volume drop.
Fuel costs fell 37% while unit costs rose 7.3%. Revenue at the
shipping unit fell 8.7% to $6.3 billion, while Ebitda at the unit
rose 26% to $1.36 billion. Global container trade declined by
around 10% in the second quarter. Maersk said, although container
demand is expected to gradually improve sequentially in the third
quarter, it will significantly decline in 2020 as a whole compared
with 2019.
GUIDANCE: Maersk reinstated guidance, expecting to see 2020
pre-items Ebitda of between $6 billion and $7 billion, higher than
original guidance of around $5.5 billion. Organic volume growth in
its ocean unit is expected to be in line with or slightly lower
than the average market growth. Capital expenditure for 2020-21 is
seen at $3 billion to $4 billion.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
August 19, 2020 05:18 ET (09:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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