Maersk withdraws full-year earnings forecast amid pandemic uncertainty
2020-03-23 09:00
Due to the continued impact of the novel coronavirus epidemic on the global supply chain, on March 20, Maersk Group, the world's largest shipping company, announced that it would withdraw its 2020 performance forecast. However, Maersk predicts that first-quarter profits will be better than the same period last year, and it will also maintain its dividend distribution plan.
Maersk Group had previously predicted that its earnings before interest, taxes, depreciation, and amortization (EBITDA) would reach US\$5.5 billion this year. However, Maersk recently joined other companies in withdrawing their performance forecasts. Maersk stated that the epidemic "is creating significant uncertainty and making global container shipping demand lack visibility".
Despite this, Maersk still estimates that first-quarter EBITDA will reach approximately US\$1.4 billion, slightly higher than US\$1.24 billion in the same period last year, because increased shipping costs offset the impact of rising oil prices.
In addition, Maersk also estimates that the volume growth of its main shipping department will roughly match or be slightly lower than the overall market growth, and reiterated that its capital expenditure forecast remains unchanged at US\$3 billion to US\$4 billion.
“In the first two and a half months of 2020, we performed well in the IMO 2020 strategy, which involves managing the additional costs associated with the mandatory switch to low-sulfur fuel by IMO since January 1. We have effectively reduced some of the additional costs through good procurement, blending, and self-produced fuel, and implemented a pricing strategy to recover the actual increase in fuel prices from customers. Therefore, despite the outbreak of the epidemic and a decline in business volume, we expect the first-quarter financial report to be better than the same period last year.”
“Due to the current situation, the outbreak of the epidemic, and the measures taken by governments around the world to contain the epidemic, there is high uncertainty related to global container demand, and we have chosen to suspend the announcement of the full-year 2020 expected targets until we have a clearer outlook for 2020.” said S oren Skou, CEO of Maersk.
Vincent Clerc, CEO of Maersk Ocean and Logistics, commented on the impact on the company's container shipping business, saying that the company is proposing solutions to mitigate the impact of the coronavirus on the supply chain and maintain the continued development of global trade.
“The severity of the COVID-19 crisis and its impact on our lives and businesses is truly surprising. A significant responsibility rests on Maersk's employees and partners.”
“Despite COVID-19, our business is still operating smoothly globally; our seafarers transporting goods have stepped up their work and extended their sea voyages, our office teams are all working remotely on laptops, and can be contacted through usual phone numbers, web and mobile channels to ensure social and business continuity. We have learned from our Chinese colleagues that they have kept their business running during the most challenging times, and are pleased to share that all our businesses are still serving you,” he added.
It is understood that Maersk plans to release its first-quarter results on May 13, 2020. Maersk will also continue to implement its stock repurchase plan and plans to distribute dividends. Experts point out that this news shows that Maersk has ample funds. Affected by this, Maersk's share price surged 13% during the day on March 20, while before that, as of March 19, Maersk's share price had plummeted 48% this year.
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