Maersk Posts Higher Earnings in 2019, Expects Weak Start of 2020 amid Coronavirus Outbreak
Despite weak market conditions and slow container growth of 1.4 percent, Danish shipping heavyweight A.P. Moller – Maersk managed to improve earnings and free cash flow in 2019.
The company’s earnings before interest, tax, depreciation, and amortization (EBITDA) were up by 14 percent to USD 5.7bn compared to 2018 and the EBITDA margin increased to 14.7 percent.
Revenue decreased slightly to USD 38.9bn in 2019 from USD 39.3bn.
Free cash flow was USD 6.8bn, compared to USD 5.1bn last year and CAPEX declined by USD 1.2bn to USD 2bn in 2019.
“Despite weaker market conditions A. P. Moller – Maersk was able to improve profitability and cash flow. Our cash return was healthy, and we continued the reduction of net interest-bearing debt, leading to a further deleveraging of USD 3.3bn over the year. It gives us a solid starting point for 2020 to further expand our end-to-end offering within container logistics while at the same time managing the market challenges that are obviously out there,” CEO of A.P. Møller – Mærsk A/S, Søren Skou, said.
“While we still need to improve returns, we delivered solid progress in our financial performance in 2019 while progressing the business transformation, in spite of weak trade growth, ongoing trade tensions and geopolitical uncertainty in many markets.”
In Ocean, EBITDA in 2019 increased 15 percent to USD 4.4bn, with revenue at USD 28.4bn amid a small decrease in volumes to 13.3m FFE. Unit cost at fixed bunker decreased by 1.7 percent, mainly due to improvements in capacity management and foreign exchange rate developments.
EBITDA in Logistics & Services saw a 24 percent increase to USD 238 million, while revenue decreased slightly to USD 6bn from USD 6.1bn, driven by a decrease in sea and air freight forwarding activity, which was only partly offset by an increase in warehousing and distribution.
Terminals & Towage reported an increase in EBITDA of 11 percent to USD 1.1bn with a revenue increase of 3.2 percent to USD 3.9bn.
In gateway terminals, EBITDA increased by 17 percent to USD 902m, amid a ramp-up of the new terminal in Moin, Costa Rica, higher volumes, higher storage income and reduction in SG&A.
Maersk said that synergies harvested from the Hamburg Süd acquisition and the integration of transport and logistics reached USD 1.2bn, which is above the expected target.
The long-term target on return on invested capital after tax (ROIC) grew to 3.1 percent in 2019, compared to 0.2 percent the year before.
In the fourth quarter of 2019, A.P. Møller – Mærsk A/S’ share loss hit USD 72 million, compared to the prior year’s profit of USD 32 million.
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