Maersk Lifts Guidance and Launches Buyback Program -- Earnings Review
19 November 2020 - 12:01AM
Dow Jones News
By Dominic Chopping
Denmark's A.P. Moeller-Maersk AS reported results for the third
quarter on Wednesday. Here's what we watched:
REVENUE: Revenue fell 1.4% to $9.92 billion, compared with the
company's own guidance of $9.9 billion.
NET PROFIT: Maersk posted a quarterly net profit attributable to
shareholders of $927 million, compared with $506 million a year
earlier, and shy of the $954 million seen in an analyst forecast
from FactSet.
WHAT WE WATCHED:
SHAREHOLDER RETURNS: Maersk unveiled a 10 billion Danish kroner
($1.59 billion) share-buyback program after an earnings rebound as
demand surged, coupled with higher freight rates and lower costs.
"A stronger-than-expected recovery in demand, following the
slowdown of 2Q led to the reactivation of all available tonnage as
well as significantly higher prices in the short-term market,"
Chief Executive Soren Skou said.
VOLUMES AND RATES: Maersk, which is considered a barometer of
global trade, said shipping volumes fell 3.6%, against the
company's guidance for a 3% drop, but this was more than offset by
a lower cost base, reduced bunker cost from lower fuel prices,
higher freight rates and lower bunker consumption. Average freight
rates rose 4.4% on year.
GUIDANCE: The shipping giant late Tuesday upgraded full-year
guidance for the second time in a month. It said it now expects
full-year earnings before interest, tax, depreciation and
amortization of $8 billion to $8.5 billion, compared with $7.5
billion to $8 billion previously. Maersk said global demand growth
for containers is expected to contract by 4% to 5% in 2020 because
of the pandemic. Organic volume growth in its main ocean unit is
now expected to be slightly below the average market growth,
compared with a previous view of growth in line with or slightly
below the market, it said. The company now expects to have an
accumulated capex of $4.5 billion-$5.5 billion between 2021 and
2022. The previous guidance on accumulated capex for 2020-2021 was
between $3.0 billion and $4.0 billion.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
November 18, 2020 07:46 ET (12:46 GMT)
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