A.P. Møller – Mærsk (APMM) has suspended its 2020 full year guidance as of March 2020 following the sever impact of COVID-19 to the global transport market and supply chains.
CEO Søren Skou confirmed in a statement that the uncertainties related to global container demand and the measures being taken by governments to contain the COVID-19 outbreak have resulted in APPM choosing to suspend its 2020 full year guidance on earnings.
Despite this, the company is expecting to deliver “better” Q1 2020 results than Q1 2019 in part because of cost mitigation regarding its IMO 2020 implementation strategy.
In a statement the company said that the impact of COVID-19 is leading to material uncertainties and lack of visibility related to the global demand for container transport.
It continues, while the global operations are running as normal, APMM has, as a consequence of the current uncertainties related to the outlook, decided to suspend the 2020 guidance on earnings before interest, tax, depreciation and amortization (EBITDA) pending more clarity on the market development and financial implications.
For 2020, APMM has previously guided an EBITDA of around $5.5 billion, before restructuring and integration costs.
The remaining part of the guidance for 2020 of volume growth in Ocean expected to be in line or slightly lower than the market growth, a high cash conversion ratio and accumulated capital expenditure for 2020-21 of between $3-4 billion is reiterated, but measures will be taken to reduce capital expenditure for 2020.
Based on preliminary figures, APMM expects EBITDA before restructuring and integration costs for Q1 to be around $ 1.4 billion $1.24 billion negatively impacted by weak volume development but mitigated by strong implementation of the company’s IMO 2020 strategy, both in terms of cost reduction initiatives and fuel price recovery.
Skou, said “During the first two and a half month of 2020 we have executed well on our IMO2020 strategy for how to manage the extra cost involved with the IMO mandated switch to low-sulphur fuel oil from January 1st. We have effectively mitigated a part of the extra cost through good procurement, blending and manufacturing fuel ourselves and we have implemented rate increases to recover the actual fuel price increase from customers.
“We consequently expect to deliver a Q1 2020 which is better than Q1 2019, despite declining volumes across our businesses, driven by the COVID-19 pandemic,” he added.
“Ensuring the health and well-being of our employees and supporting our customer’s needs remain our number one priority.” said Skou.