Maersk braces for $100 M restructuring charge over 2,000 job cuts as it lifts Q3 outlook
Danish shipowner Maersk expects to take a restructuring charge of around $ 100 million in the third quarter of 2020 related to the redundancies of around 2,000 employees.
The redundancies are part of the internal reorganization announced last month, mostly affecting the major’s Ocean and Logistics & Services.
Namely, in September Maersk revealed plans to integrate the Safmarine brand as part of its transformation into an integrated container transport and logistics company.
In addition, the Damco brand’s Air and LCL (Less than Container Load) offering will be combined with Maersk’s logistics and services products to complement its end-to-end offering.
Hamburg Süd is also undergoing changes in its organizational structure as part of the process.
As a result, Maersk’s internal reshuffling is expected to affect over 26,000 people, as Offshore Energy-Green Marine reported last month.
The restructuring charge is being announced as Maersk upgrades expectations for Q3 and full-year amid rebounded volumes and strong demand.
Based on preliminary results, Maersk’s unaudited revenue stands at $ 9.9 billion, with an EBITDA before restructuring and integration costs of $2.4 billion for Q3 2020.
Volumes in Ocean declined by around 3 pct. in Q3 2020 compared to the previous year, which is slightly better than the anticipated mid-single-digit contraction.
The full-year 2020 EBITDA is now expected to be in the range of $ 7.5-8.0 billion, before restructuring and integration costs, against previously announced $ 6-7 billion.
“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,” Søren Skou, CEO of A.P. Moller – Maersk 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.”
Maersk, like many of its container shipping counterparts, has defied the odds during COVID-19 as liner companies worked to cut capacity in line with the demand drop.
The efforts to preserve liquidity were facilitated by a drop in bunker prices, pushing down fuel costs.
As a result, liner majors like Maersk, CMA CGM and Hapag-Lloyd had their credit ratings upgraded recently by major rating agencies including Moody’s and S&P Global Ratings.