A.P. Moller - Maersk further improves profitability in Q3 due to strong Ocean performance and growth in Logistics & Services

2020-11-19 14:27:21 Shipping News

During the third quarter A.P. Moller - Maersk improved profitability across the business and delivered strong free cash flow, despite the negative impact on global economies from the COVID-19 pandemic.

Performance increase was based on a stringent costs control, among other things

 The company grew earnings before interest, tax, depreciation and amortisation (EBITDA) 39 pct. to USD 2.3bn with revenue decreasing 1.4 pct. to USD 9.9bn. The performance increase was based on a stringent costs control, agile capacity management, strong focus on customer offerings with further traction in uptake of digital services, and some benefit from a sequential demand recovery compared to the second quarter.

The main performance driver this quarter was Ocean which, despite decreasing volumes of 3.6 pct. improved profitability by USD 511m to USD 1.8bn, reaching an EBITDA margin of 25.4 pct. on the back of a continued agile capacity deployment, lower costs and a temporary spike in short-term freight rates due to a sudden demand pick-up on some routes.

 CROIC increased from 9.9 pct. to 13.9 pct

Cash return on invested capital (CROIC), last twelve months, increased from 9.9 pct. to 13.9 pct.  due to stronger cash flow from operating activities and lower gross CAPEX. Return on invested capital (ROIC), last twelve months, from 3 pct. to 5.9 pct. as earnings improved and invested capital declined slightly.

The free cash flow generation of USD 3.0bn in the first nine months of 2020, allowed the company to return cash to shareholders, finance acquisitions and reduce debt with net interest-bearing debt decreasing further to USD 10.8bn by the end of Q3 compared to USD 11.7bn by the end of 2019.

 Throughout the pandemic, our main priorities have been keeping our employees safe: Søren Skou CEO of A.P. Moller - Maersk.

Søren Skou adds: “Throughout the pandemic, our main priorities have been keeping our employees safe, keeping our global network and ports operating to serve our customers and supporting the societies we are part of… however we remain well aware of the high level of uncertainty the pandemic and associated lock downs continue to pose in the coming quarters.”

For 2020, the guidance on capital expenditures (CAPEX) is expected to be USD 1.5bn, and with the expectation of a high cash conversion (cash flow from operations compared to EBITDA).

For 2021-2022, the accumulated guidance on capital expenditures is expected to be between USD 4.5bn and

USD 5.5bn with the expectation of a high cash conversion.

Other Shipping News

Advertisement