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May 6, 2021 at 6:03 PMA.P. Moller – Maersk had an exceptionally strong start to the year, with robust earnings and growth momentum across all our business areas in ocean, port services, and logistics. The company benefited from strong demand in a market still shaped by the pandemic and significant disruptions in global supply chains.
(Copenhagen) The strong demand, coupled with significant operational challenges such as bottlenecks, capacity shortages, and equipment shortages in global supply chains, drove freight rates significantly higher. At the same time, customer demand for truly integrated supply chains and simple self-service solutions has never been more evident, providing momentum, particularly for logistics and digital solutions.
“A.P. Moller – Maersk delivered an exceptionally strong performance in Q1 2021 with a record profit for the quarter. The high growth and profitability were driven by solid demand in the USA, logistics, and terminals. The strong demand led to bottlenecks and a lack of capacity and equipment, pushing freight rates to record levels,” says Séren Skou, CEO of A.P. Moller – Maersk, before adding:
Focus on Long-term Transformations
“We continue to focus on the long-term transformation of A.P. Moller – Maersk and prioritize customer demand for integrated logistics. Our integrator strategy was validated in the first quarter by strong customer support. By shifting conversations with customer-friendly clients from short-term transactions to long-term value bases, we are laying the groundwork for further stable growth.”
Overall, EBITDA in the first quarter rose from USD 1.5 billion to USD 4 billion, and EBIT increased from USD 552 million in the same quarter last year to USD 3.1 billion, while revenue improved by 30 percentage points to USD 12.4 billion. The results reflect high volumes, which increased by 5.7 percent, freight rates by 35 points, and lower bunker fuel prices, resulting in an EBITDA in Ocean of USD 3.4 billion compared to USD 1.2 billion in Q1 2020 and a revenue increase to USD 9.5 billion from USD 7.2 billion.
Growth Momentum and Revenue Growth
Logistics & Services continued in the first quarter with strong growth momentum and a revenue growth of 42 percent to USD 2 billion, primarily due to organic growth but also from the acquisitions of Performance Team and KGH Customs Services. EBITDA increased by 201 percent to USD 205 million compared to USD 68 million, and EBIT rose to USD 139 million compared to USD 29 million in the same quarter last year, partly due to margin expansion.
Additionally, Gateway Terminals experienced strong business development in the first quarter with a revenue increase of 24 percentage points to USD 915 million from USD 740 million, driven by higher volumes and storage revenues, while EBITDA rose by 52 percentage points to USD 323 million from USD 213 million.
The results came in a persistently challenging environment where countries are still grappling with the effects of the pandemic.
Very Satisfied with the Results
“We have continued to dedicate significant efforts to the safety of our employees and to contributing to the societies in which we operate this quarter, with a particular focus on India,” says Saren Skou and continues:
“Overall, we can be very satisfied with the business results this quarter. The high profitability resulted in a ROIC of 15.7 points, and our strong free cash flow gives us the opportunity to continue investing in the transformation of the business while accelerating the remaining part of the ongoing share buyback program and subsequently initiating a new additional share buyback program of approximately USD 5 billion over the next two years.
Guidance for 2021
In light of the results in the first quarter of 2021 and our expectation that the extraordinary market situation will continue well into the fourth quarter of 2021, the full-year forecast was revised upwards on April 26, 2021, to:
- EBITDA in the range of USD 13.0 to 15.0 billion (previously USD 8.5-10.5 billion) compared to USD 8.3 billion in 2020
- Base EBIT in the range of USD 9.0-11.0 billion (previously USD 4.3-6.3 billion) compared to USD 4.2 billion in 2020
- Free cash flow of at least USD 7.0 billion (previously over USD 3.5 billion) compared to USD 4.6 billion in 2020
As part of the full-year guidance for 2021, A.P. Moller – Maersk now expects the current exceptional situation with the increase in demand leading to bottlenecks in the supply chain and equipment shortages to continue well into the fourth quarter of 2021 and to persist in the first quarter before normalizing thereafter. Profitability in Q1 2021 was expectedly above that of Q4 2020.
The oceans are expected to grow in line with global container demand, which is now projected to grow by 5-7 points in 2021 (previously 3-5 points) primarily due to export volumes from China to the USA, with the highest growth in the first half of the year.
For the years 2021-2022, cumulative CAPEX is now expected to be around USD 7 billion (previously USD 4.5-5.5 billion).
Photo: © Maersk
