A.P. Moller–Maersk Delivers Increase By 17% In Earnings In Q2
As compared to the same quarter in last year, this year Maersk delivers a 17% increase in earnings before interest, tax, depreciation and amortization (EBITDA) to USD 1.4 bn in Q2. There is a slight growth in revenue to USD 9.6bn, which is on par with last year, and the underlying profit increased to USD 134m from USD 15m in Q2 2018.
“Q2 was a quarter of solid progress. EBITDA was up 17% and cash flow improved 86% year on year, driven by continued recovery in Ocean,” says Søren Skou, CEO of A.P. Moller – Maersk.
On the back of the increases in volume and freight rates, Ocean EBITDA in Q2 increased by 25% to USD 1.1bn. The Ocean business continued to recover with enhanced unit cost, utilization and reliability and there is growth in revenue of 2.9% to USD 7.2bn as compared to Q2 2018.
Revenue in Terminals & Towage grew 13% to USD 957m compared to Q2 last year. In gateway terminals, volume in Q2 grew by 8.5% as compared to last year, leading to higher utilization. EBITDA increased by 11%, which is partly offset by one-off items.
In Logistics & Services EBITDA grew to USD 61m in Q2 as compared to USD 52m in the same quarter last year. Revenue was at USD 1.5bn, which is positively impacted by increased revenue in supply chain management but offset by declining revenue from the sea and air freight forwarding.
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A.P. Moller – Maersk distributed USD 615m in cash to shareholders through an ordinary dividend of USD 469m in Q2 and USD 146m related to the first phase of the share buy-back program announced on May 2019 of DKK 10bn (around USD 1.5bn) over a period of up to 15 months.
Progressing well on transformation
A. P. Moller – Maersk formed one sales organization during the first half of 2019. Now its focus is on giving customers an integrated experience and offering them even more products, thus improving the financial results across the business and accelerating the transformation.
“The transformation progressed further with an improved cash return on invested capital of 6.9% and synergies of USD 1bn realized earlier than expected. Growth in revenue and gross profit in Logistics & Services still need to improve as we continue to build capabilities within logistics and services,” Skou elaborates.
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The digital innovation’s latest example to improve customer experience is Maersk Spot, which simplifies the buying process and offers increased visibility and reliability by enabling customers to search and get competitive rates online while ensuring cargo gets on board the selected vessel. TradeLens, the blockchain platform developed together with IBM, also progressed with several new commitments from carriers and port authorities during the quarter.
Guidance for 2019
While for the first half-year EBITDA improved by USD 500m to USD 2.6bn, A.P. Moller – Maersk reiterates it’s full-year guidance for 2019 of an EBITDA of around USD 5.0bn including effects from IFRS 16.
“We reaffirm our guidance for 2019, while the macro environment continues to be subject to considerable uncertainties,” says Skou.
The guidance continues to be subject to considerable uncertainties due to the weaker macroeconomic conditions and other external factors impacting container freight rates, bunker prices and foreign exchange rates.