Largest container carrier reports a 31 percent increase in revenue and a profit of $360 million in the third quarter.
A.P. Møller – Maersk said revenue and earnings were boosted in the third quarter both by its acquisition of Hamburg-Süd last year and growing cargo volumes, as well as increased revenue from its non-ocean businesses.
“We continue to see improved results in the third quarter after a very weak start to 2018,” said Soren Skou, the chief executive officer of Maersk.
Revenue in the third quarter 2018 was $10.1 billion, 31 percent more than in the same period last year, up 12 percent before figuring in the contribution from Hamburg-Süd.
The parent company of Maersk Line and APM Terminals said it had a profit of $360 million in the third quarter of 2018, $191 million of which was from continuing operations compared with a loss of $1.5 billion in the same period last year of which $1.4 billion was due to discontinued operations.
Comparison with the financial results in the third quarter of 2017 is complicated by the fact that Maersk was hit with a costly cyberattack on June 27, 2017, which the company said “significantly affected the container-related businesses, Maersk Line, APM Terminals and
Damco, and resulted in a negative development on volumes, utilization and unit cost performance throughout Q3 2017. Further, the cyberattack caused for additional IT costs and had a negative effect on working capital.”
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $1.13 billion for the third quarter of 2018 compared with $977 in the third quarter of 2017.
“We have good earnings momentum,” said Skou. Maersk said it now expects to have EBITDA in the range of $3.6 billion to $4 billion for the year and a positive underlying profit.
During the third quarter, Maersk announced the reorganization of Maersk Line and its logistics company, Damco. Skou said by Jan. 1 they will be one integrated company.
He also said Maersk made progress in its digital initiatives. He said more than 90 percent of customers obtain price quotes from the company online.
Maersk has been getting out of the oil and gas business. It sold its Maersk Oil business to France’s Total earlier this year for $7.45 billion and plans to spin off Maersk Drilling to shareholders next year.
Maersk benefited from Hamburg-Süd’s involvement in intra-regional trades.
Maersk said it handled more than 6.6 million TEUs in the third quarter, 26.7 percent more than in the same period the prior year. Volumes were up 14.2 percent in the major east-west trades, up 23.9 percent on north-south trades and up 65.4 percent on intra-regional trades.
Volume growth for the full year is expected to be 3 percent to 4 percent.
In the third quarter of 2018, the average loaded freight rate was $1,929 per 40-foot container, 5.5 percent higher than a year earlier. While rates rose just 5 percent on east-west and north-south trade lanes, the average was lifted by a 19.3 percent rise in intra-regional trades.
Maersk said while its global volumes increased compared to last year, demand was weaker than expected, which led to volumes being lower than anticipated.
“The Asia- Europe trade disappointed the most due to lower imports from Asia to U.K,, Turkey and Mediterranean, but lower than expected volumes were realized on most trades,” Maersk said.
Maersk said an “emergency bunker surcharge from end Q2 2018 and tighter supply-demand balance led to an increase in average freight rates in Q3 compared to Q2 2018. However, these developments were not fully reflected in the results as bunker prices continued to increase.”
Maersk said its average bunker price in the third quarter was 47 percent higher than in the same 2017 period and continued to increase throughout the quarter, while the average freight rate in ocean was just 5.5 percent higher.
It says it has realized synergies of around $290 million through the merger of Maersk and Hamburg-Süd through “procurement, network optimization and increased volumes in gateway terminals operated by APM Terminals.”
Maersk earnings boosted by Hamburg-Süd buy
