A.P. Moller-Maersk saw improved profitability across all businesses in the second quarter of 2020 despite the sharp drop in global volumes following the COVID-19 crisis.
“The COVID-19 pandemic impacted the global demand significantly in the second quarter, and our business volumes as expected were sharply down across Ocean, Logistics & Services and Terminals,” said Soren Skou, CEO of Moller-Maersk, in a statement.
READ: Hapag-Lloyd has good first half in 2020 but COVID-19 uncertainties remain
READ: Lower volumes but higher revenues for OOCL
Consequently, group revenue declined by 6.5% to US$9 billion, driven by a volume decrease of 16% in ocean and 14% in gateway terminals, Skou said.
Despite the headwinds, operating earnings (EBITDA) improved by 25% to $1.7 billion, marking the eighth consecutive quarter with year-on-year improvements. This was driven by strong cost measures across all our businesses, lower fuel prices and higher freight rates in ocean, and increased profitability in logistics & services.
EBITDA margin increased from 14.1% in the second quarter of last year to 18.9%, the integrated container logistics company said.
Moller-Maersk, parent company of container shipping line Maersk Line, posted a profit of $427 million in the quarter, up from $141 million a year earlier.
Ocean revenue in the second quarter of 2020 amounted to $6.57 billion from $7.20 billion year-on-year. EBITDA increased to $1.4 billion, up from $1.1 billion in Q2 of the preceding year. The lower volumes in ocean were partly offset by capacity reduction of the global network leading to lower costs, together with lower fuel prices and higher freight rates.
In logistics and services, profitability increased through cost management and favorable airfreight contribution, while terminals & towage showed resilience by compensating lower volumes through cost measures.
On March 20, 2020 Moller-Maersk suspended the full-year guidance for 2020 of EBITDA of around $5.5 billion due to the COVID-19 pandemic.
But despite the uncertainties related to the coronavirus, the company is reinstating its full-year guidance for 2020 and now expects an even higher EBITDA of $6.0 billion to $7.0 billion.
The global demand growth for containers is still expected to contract in 2020 due to COVID-19 and for the third quarter, volumes are expected to progressively recover with a current expectation of a mid-single digit contraction. Organic volume growth in ocean is expected to be in line with or slightly lower than the average market growth.
Photo courtesy of Moller-Maersk
