A.P. Moeller-Maersk (Maersk), the largest container shipping line in the world by market share, enjoyed a strong start to 2020 despite the effects of the COVID-19 pandemic, according to its latest financial results.
The carrier’s earnings before interest, tax, depreciation and amortisation (EBITDA) improved 23% to US$1.5 billion compared to Q1 last year. Its revenue increased slightly to $9.6bn, despite lower volumes and mainly driven by its Ocean segment.
While earnings continued to grow, Maersk’s product offerings kept expanding in line with the strategy of supporting customer’s supply chain end-to-end.
The acquisition of Performance Team, a US-based warehouse and distribution company, and a cold store construction in St. Petersburg, Russia were completed during Q1.
Furthermore, the usage of digital services increased significantly as customers benefitted from the convenience of managing their supply chains remotely. The Maersk app for example experienced an 86% increase in usage.
In Ocean, EBITDA increased 25% to USD 1.2bn in Q1 2020, driven by factors compensating for the increase in fuel prices following the implementation of IMO 2020, including a positive result from the self-supply bunker strategy and adjustments in capacity mitigating the lower volumes related to COVID-19.
More than 90 sailings were blanked, leading to a decline of 3.5% in Maersk’s average deployed capacity in Q1.
In the landside businesses, Logistics & Services excluding the freight forwarding business, improved EBITDA to $69 million from $49 million.
Infrastructure reported a decrease in revenue to $2.1 billion compared to $2.3 billion in the same period last year due to lower revenue following COVID-19.
“In the first quarter of the year, A.P. Moller – Maersk again delivered profitable growth. The strong results were made during a quarter with sharp fuel cost increases derived from the industry’s switch to low-sulphur fuel and on the backdrop of a contraction in global trade due to lockdowns in most regions,” said Søren Skou, CEO of A.P. Moller – Maersk.
“From the beginning of the COVID-19 crisis our focus has been on the health and well-being of our employees, on supporting our customer’s businesses and the societies we are part of.
“Looking into Q2 2020, visibility remains low as a result of the COVID-19 pandemic.
“We continue to support our customers in keeping their supply chains running, however as global demand continues to be significantly affected, we expect volumes in Q2 to decrease across all businesses, possibly by as much as 20-25%.
“2020 is a challenging year, but as we proactively respond to lower demands and show progress in our transformation and financial performance, we are strongly positioned to weather the storm.”