March 25 ------ Prompted by the uncertainties in the global transport market triggered by the coronavirus pandemic, Danish shipping and logistics major A.P. Møller – Mærsk A/S decided to suspend the 2020 guidance on EBITDA pending more clarity on the market development and financial implications. Maersk previously guided an EBITDA of around USD 5.5 billion, before restructuring and integration costs. For the first quarter of 2020, the company expects EBITDA before restructuring and integration costs to be around USD 1.4 billion, against USD 1.24 billion in the same quarter a year earlier. The results are negatively impacted by weak volume development but mitigated by Maersk’s IMO 2020 strategy implementation, both in terms of cost reduction initiatives and fuel price recovery, the company said.
Maersk expects the remaining part of the guidance for 2020 of volume growth in Ocean to be in line or slightly lower than the market growth, a high cash conversion ratio and accumulated CAPEX for 2020-21 of between USD 3-4 billion is reiterated. However, the integrated logistics company plans to take measures to reduce CAPEX for 2020. It is yet to be revealed what will those measures be. The ongoing share buy-back program, as well as proposed dividends for 2019, are not expected to be affected by the decision to suspend guidance.
“During the first two and a half month of 2020 we have executed well on our IMO2020 strategy for how to manage the extra cost involved with the IMO mandated switch to low-sulphur fuel oil from January 1st. We have effectively mitigated a part of the extra cost through good procurement, blending and manufacturing fuel ourselves and we have implemented rate increases to recover the actual fuel price increase from customers. We consequently expect to deliver a Q1 2020 which is better than Q1 2019, despite declining volumes across our businesses, driven by the COVID-19 pandemic. “Because of the current situation with high uncertainties related to global container demand due to the COVID-19 pandemic and the measures being taken by governments to contain the outbreak, we have chosen to suspend our 2020 full-year guidance on earnings but will as soon as we have more clarity return with an outlook for 2020,” says Søren Skou, CEO A.P. Moller – Maersk. Maersk is scheduled to publish its Q1 result on May 13, 2020.
Commenting on the impact on the company’s container shipping operations, Vincent Clerc, CEO of Ocean and Logistics at Maersk, said in a customer advisory that the company is coming up with solutions to mitigate the pandemic’s impact on the supply chain and keep global trade running on daily basis. “The gravity of the COVID-19 crisis, its pace and level of disruption to our lives and respective businesses is truly humbling. At Maersk, we also understand that we have a large responsibility, both for our people and for our partners. “Our operations are running smoothly across the globe despite COVID-19; our seafarers who transport your goods have stepped up and extended their time at sea, our office teams are all working remotely on laptops and are available via the usual phone numbers, web and mobile channels, ensuring both social distancing and business continuity. We have learnt from our Chinese colleagues who have kept the business running throughout the most severe of times and are pleased to share that all our operations are still in place to serve you,” he added.