Maersk improves profitability and cash flow in the third quarter

Nov, 19, 2020 Posted by Ruth Hollard

Week 202048

During the third quarter, A.P.Moller – Maersk improved profitability across the board and provided a strong cash flow, despite the negative impact of the COVID-19 pandemic on global economies. The company’s EBTIDA (earnings before interest, taxes, depreciation, and amortization) grew 39%, registering US$ 2.3 billion with revenue decreasing 1.4% to US$ 9.9 billion. The performance increase was based on strict cost controls, agile capacity management, a strong focus on offers to customers, and greater acceptance of digital services. There was also a sequential recovery in demand compared to the second quarter.

“Although COVID-19 negatively affected activities in most of our businesses, our disciplined execution of the strategy led to solid gains and cash flow growth in the third quarter. At the same time, we were able to further integrate and simplify the organization in Ocean & Logistics, we closed the acquisition of KGH Customs Services, and continued the integration of the Performance Team, supporting our strong financial performance in Logistics & Services “, says Søren Skou, CEO of AP Moller – Maersk.

The main driver of performance this quarter was Ocean, which, despite a 3.6% decrease in volume, improved profitability by US$ 511 million to US$ 1.8 billion, reaching an EBITDA margin of 25.4% due to an agile deployment, continuous capacity, lower costs, and a temporary spike in short-term freight rates due to a sudden recovery in demand on some routes.

The performance was largely supported by Logística & Serviços, which took advantage of strong demand in supply chain management, intermodal, and the acquired performance team. In the third quarter, Logistics & Services revenue grew 11% and profitability increased by 44%, reaching an EBITDA of US$ 131 million, above the US$ 91 million in 2019, despite the restructuring costs of US $ 40 million. In Terminals & Towage, the company recorded lower volumes and revenues.

Share buyback program

According to the company, given the strong performance and cash generation, the Board of Directors decided to initiate a new share buyback program for DKK 10 billion (approximately US$ 1.6 billion), over a period of up to 15 months, with the first installment (US$ 500 million) due to start in December. The remainder of the share buyback is subject to shareholder approval at the next Annual General Meeting in March 2021.

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