Photo: Maersk Essen; Image credit maersk

Maersk ends year with record quarterly results, expects strong Q1 amid demand surge

A.P. Moller – Maersk, the world’s largest container carrier, has ended 2020 on a strong note despite the impact of COVID-19.

The company’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew 44 pct. to $8.2bn and revenue grew to $39.7bn in 2020 compared to $38.9bn in 2019.

Maersk said that even though 2020 was dominated by low volumes, profitability grew throughout the first nine months and ended the year with record Q4 results in Logistics and Terminals, while Ocean delivered an exceptional quarter driven by the increased volumes and supply chain disruptions.

Q4 results

Q4 2020 proved to be an exceptional while challenging quarter, according to Maersk.

The demand for goods, which had suffered due to COVID-19 in Q2, picked up in Q3 and accelerated its rebound in Q4, which generated disruptions in many parts of the supply chain.

As a consequence, volumes in Logistics, Gateways and Ocean strongly progressed in the quarter, leading to both higher costs and rates.

Revenue increased by 16% to $ 11.3bn, mainly driven by an increase in Ocean of $1.1bn or 16% and in Logistics & Services of $ 532m or more than 30% of the total revenue growth in Q4.

In Terminals & Towage, revenue increased by $ 68m, while revenue decreased by $ 35m in Manufacturing & Others.

EBITDA increased to record levels in all three segments, improving by 85% to $ 2.7bn, and the EBITDA margin increased to 24.1% (15.1%).

EBITDA in Ocean increased to $ 2.2bn ($ 1.1bn), driven by a temporary increase in freight rates and bunker cost reductions, mainly from lower fuel prices.

The demand surge in the second half of year created supply chain bottlenecks, including vessel and container shortages, and led to higher rates that contributed approximately $ 1.5bn to results.

Logistics & Services grew to 7bn, compared to $6.3bn last year, and EBITDA improved 110 pct. to $454m, supported by the acquisition of Performance Team as well as improved performance in intermodal, air freight forwarding and warehousing and distribution.

2020 going down in history books

2020 will forever be remembered for the COVID-19 pandemic that negatively impacted our lives, jobs, businesses and the global economy,” says Søren Skou, CEO of A.P. Moller – Maersk.

“Financially, we left 2020 with a very strong balance sheet and little debt, which will allow us to continue to invest in our transformation and grow profitably. We are well equipped to deal with the ongoing market volatility and also to benefit from a world that hopefully starts to re-open.” 

In 2020, free cash flow improved to $4.6bn from $ 2.3bn leading to a $2.5bn reduction of net debt and $ 1.3bn returns to shareholders.

Net result amounted to $2.9bn and the Board of Directors will recommend a dividend of DKK 330 ($53.8) /share, up from DKK 150/share to the AGM on 23 March 2021.

As for the 2021 outlook, Maersk expects another year of earnings growth and transformation progress.

“We expect the current, exceptional situation to continue into 2021 with Q1 to be stronger than Q4, followed by a normalisation thereafter, and announce a guidance for the full-year 2021 of an underlying EBITDA in the range of $ 8.5-10.5bn, compared to $ 8.3bn in 2020,” the company said.

This is equivalent to an underlying EBIT guidance of $ 4.3-6.3bn and a free cash flow of above USD 3.5bn.

Ocean is expected to grow in line with the global container demand at an expected 3-5 pct. in 2021, with the highest growth seen in the first half-year.