News / Maersk group sails into the red and warns that Q1 20 will be 'really weak'

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A $61m loss in Q4 dragged Maersk to an overall net loss of $44m last year.

And the Danish transport and logistics group remains concerned about the impact on all its businesses of the coronavirus outbreak in China.

Top line revenue from operations was down slightly on the previous year, at $38.9bn, with the contribution from ocean unchanged at $28.4bn.

Liner liftings were also static, at 26.6m teu, and its average rate per teu was unmoved, at $940, despite bringing in IMO 2020 surcharges in Q4.

Chief executive Soren Skou warned analysts this morning that the first-quarter 2020 results would be “significantly impacted” by the coronavirus crisis, but would not be drawn on the extent of the damage, which he said was too early to assess.

After more than 50 cancelled sailings from China, Mr Skou said earnings this month would be “really, really weak”, and that even if production and intermodal recovered quickly, March would be “difficult”.

Nevertheless, Mr Skou suggested, there could be a “v-shaped recovery” from April that would see a significant spike in demand from the backlog of pent-up orders.

“China’s role in global supply chains is much bigger now than it was when the SARS epidemic happened more than 15 years ago, so today many factories in South-east Asia rely on parts, raw materials or semi-finished goods from China, so we will see. But if we end up with a v-shaped recovery then we could see an overshooting in the later part of Q2,” said Mr Skou.

If necessary, he said, Maersk would deploy extra sailings, sourced from the charter market, to cater for the additional demand.

Mr Skou also spoke of the challenge of IMO 2020 and recovering the extra costs of having to use low-sulphur fuel from shippers.

For the carrier’s spot cargo, which now represent some 50% of its liftings, Mr Skou said surcharges had been successfully implemented. For contracts, Maersk is about halfway through its negotiations and Mr Skou said it was a case of “so far, so good” – but he did have some concerns about the remaining contract negotiations, coming in a “weak environment”.

In Maersk’s Terminals & Towage segment, revenue increased by 3.2% to $3.9bn, with turnover from its gateway terminals up 4.1% to $3.2bn.

But Logistics & Services saw revenue decline, to $6bn from $6.1bn the previous year, as the “extraordinary” volumes of Q4 18  gained from the front-loading of cargo ahead of US tariffs on Chinese goods, were not repeated.

Maersk has announced the $545m acquisition of US-based warehouse distribution and logistics firm Performance Team which it said formed a “strategic component towards becoming a global integrator”.

Maersk said it expected an ebitda of about $5.5bn this year, before restructuring and integration costs, but warned that the 2020 outlook was “subject to significant uncertainties”.