Bunker fuel price increases slow Maersk’s earnings growth


Maersk’s revenues grew 26.1% in $39,019m according to annual results released today. This was mainly due to the inclusion of Hamburg Süd in its results. In addition, revenue growth was flattered slightly by the cyber-attacks that hit the company in 2017. Nevertheless, top line growth aside from these factors appears to have been reasonably strong.

Ocean revenues totalled $28,366m, up 28.8%. Excluding the acquisition of Hamburg Süd, revenue growth increased by 5.8%, which was influenced by an increase in average freight rate of 1.9% and volume growth of 2.5%.

EBITDA growth in Ocean was not in line with revenue growth. It increased by 8.3%, being partially offset by a 32% increase in average bunker price, which was not recovered in freight rates. The company commented that Hamburg Süd’s pro forma EBITDA was $618m, up from $554m and that it had realised $32m in gains due to synergies between Maersk and Hamburg Süd.

Maersk issued a profit warning in August 2018, reducing its full-year guidance for EBITDA from $4.0bn-$5.0bn down to $3.5bn-$4.2bn. Overall group EBITDA sits in this new range after growing 7.8% to $3,806m. Its EBITDA margin is now 9.8%, which compares against 11.4% in 2017.

In Logistics & Services, revenues increased 5.4% to $6.1bn, due to higher intermodal volumes in inland haulage, volume growth from supply chain management and revenue growth in warehousing activities. However, EBITDA fell 29.5% to $98m. This was partly due to restructuring costs from merging the commercial front lines of Ocean and Logistics & Services.

In Terminals & Towage and Manufacturing & Others, revenue increased by 8.4% and 50.8% respectively. EBITDA growth in these segments was 21.8% and -65.9% respectively.

Overall, the group’s net profit for the period was $3,221m, up from a loss of $1,205m in 2017. The company generated net cash flow for the period of $977m (2017: – $1,963m).

Søren Skou, CEO of A.P. Moller-Maersk, commented, “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.”

Source: Maersk