A.P. Moller-Maersk upgraded its earnings guidance for 2020 based on a strong performance in the third quarter and massive efforts to reduce costs.
The Danish shipping giant in a statement said that given third-quarter results and “the current earnings momentum we see across the businesses,” it now expects the full-year earnings before interest, taxes, depreciation and amortization (EBITDA) to be in the range of US$7.5 billion to $8.0 billion before restructuring and integration costs.
The previous forecast was in the range of $6.0 billion to $7.0 billion.
For the third quarter, the company now reports an unaudited revenue of $9.9 billion and an EBITDA before restructuring and integration costs of $2.4 billion, “driven by a continued recovery in demand and our initiatives to improve cost.”
Volumes declined by around 3% in this period compared to the previous year, which is slightly better than the anticipated mid-single digit contraction, the company said.
Søren Skou, CEO of A.P. Moller-Maersk, said the group is on track to deliver a strong third quarter with solid earnings growth across all businesses, in particular in ocean and logistics & services.
“Volumes have rebounded faster than expected, our cost have remained well under control, freight rates have increased due to strong demand and we are growing earnings rapidly in Logistics & Services. The outlook for Q4 is solid for the same reasons, and we are therefore able to upgrade our expectations for the full year.”
At the same time, A.P. Moller-Maersk is cutting costs by laying off a large number of workers in response to the adverse impact of the COVID-19 pandemic. It expects to spend around $100 million in restructuring costs in the third quarter as it removes around 2,000 employees, part of the organizational changes it announced on September 1, 2020.
Skou said the outlook for 2021 remains uncertain due to the ongoing pandemic. “The positive impact from stimulus packages may be less strong in 2021, potential new lock downs will impact demand and the timing and effectiveness of a potential vaccine will impact 2021,” he said.
Photo from Maersk
