News / Maersk reports a 'quarter of solid progress' as profits rise

Maersk Group recorded an underlying net profit of $134m in the second quarter of the year, compared with just $15m in the same period last year, which the company attributes to an improved performance by its liner division.

“Q2 was a quarter of solid progress. Ebitda was up 17% and cash flow improved 86%, year on year, driven by continued recovery in Ocean,” said chief executive Soren Skou.

Revenue for Q2 edged up by 0.6% on the year before, to $9.63bn, of which Maersk’s Ocean sector (including Maersk Line) contributed $7.15bn.

Volume carried by Maersk Line services grew 1.4%, to 6.9m teu (below the industry par of 2%), mainly driven by a 3% increase in backhaul liftings, which included a spike in demand for refrigerated goods in China. However, North American trades were impacted negatively by the trade restrictions with China.

“The organic volume growth in Ocean is still expected to be in line with the estimated market growth of 1-3% for 2019,” said Mr Skou.

Average freight rates were up by 1.5%, to $1,868 per feu, with the east-west trades gaining 3.5% and north-south routes up by just 1.3%.

In its other sectors, turnover from Logistics & Revenue was flat, at $1.48bn, but there was an impressive 13% increase in revenue from Terminal & Towage to $957m.

Mr Skou said the logistics sector had been “positively impacted” by increased revenue from supply chain management, but hit by a decline in earnings from sea and air freight forwarding.

Volumes at APMT’s gateway terminals were up 8.5% on last year, to 3m teu, resulting in improved utilisation levels at its facilities.

Maersk’s results for its liner sector confirm the general improving trend of industry interim reports published so far, led by Hapag-Lloyd last week with a positive Q2 result of $56m. Interestingly, the German carrier’s average rate came in at $1,071 per teu, compared with Maersk’s $934.

Analyst Lars Jensen said Maersk’s Q2 results today showed “good progress – despite a challenging quarter for the industry”.

He added: “In terms of profitability, the Ocean segment of the business saw an ebitda margin of 14.9%, which brings it back to the same level of performance as its German counterpart in Hapag-Lloyd. It is also clear that the result is due to a strong focus on improving profitability on existing business rather than going for volume and market share.”

The Danish transport and logistics group is on a mission to revolutionise the liner industry and is going ‘full-speed ahead’ on its digital path.

“The first focus is digitising customer transactions, enabling Maersk.com to become our key transaction platform for all products and services,” said Mr Skou. “As part of this, and to address inefficiencies in our industry, we are working on more digitalised products, Maersk Spot, our new product with fixed price and load guarantee, is a good example.”

In terms of full-year guidance, Mr Skou today reiterated the company’s previous expectation of an ebitda of around $5bn.

“We reaffirm our guidance for 2019, while the macro environment continues to be subject to considerable uncertainties,” he said.