A.P. Moller-Maersk said profitability last year was in line with the latest guidance for 2018, with earnings before interest, taxes, depreciation and amortization (EBITDA) of US$3.8 billion, up 8% over 2017.
The improvement in operating earnings was driven by higher freight rates, efficiencies gained from the integration of continuing operations, and synergies from the acquisition of Hamburg Süd, the Danish shipping and logistics company said in a statement published February 21.
However, margins in continuing operations were challenged and EBITDA was lower than initially expected at the beginning of the year, primarily due to an increase in bunker fuel prices not fully recovered by higher freight rates, it added.
“Although we had a challenging start to 2018, looking at our financial performance, we increased earnings despite significantly higher bunker fuel prices and lower than expected container volume growth in the second half of 2018. However, profitability needs to improve,” said Soren Skou, CEO of A.P. Moller-Maersk.
Progress to transform Maersk continued in 2018 through integrated offerings, digital solutions and robust network improvements. Since 2016, the topline has grown by 43%, to $39 billion in 2018, an additional $12 billion in turnover.
“In 2018, we made significant progress in implementing our strategy. With the expected demerger and listing of Maersk Drilling in April, the separation of our Energy-related businesses will be almost complete,” said Skou.
“We have successfully integrated Hamburg Süd, accelerated our digital transformation and come together across sales, customer service, delivery and products as one company with customers at the centre of our attention. We are starting to see growth both in Ocean and non-Ocean segments.”
For 2019, Maersk expects EBITDA of around $5 billion including effects from applying international financial reporting standards, and around $4 billion excluding such effects.
The organic volume growth in ocean is expected to be in line with the estimated average market growth of 1% to 3% for 2019.
The world’s largest container shipping company is generally viewed as a global barometer for trade, at a time when the U.S. and China are locked in a protracted dispute.
“Maersk’s guidance for 2019 is subject to considerable uncertainties due to the current risk of further restrictions on global trade and other factors impacting container freight rates, bunker prices and foreign exchange rates,” the company stated.
