Quarter three has seen an improvement in profitability for A.P. Moller – Maersk with strong free cash flow despite the negative impact on global economies of the Covid-19 pandemic, according to a statement released this morning.
The company grew earnings before interest, tax, depreciation and amortisation (EBITDA) by 3% to US$ 2.3bn with revenue decreasing 1.4% to US$ 9.9bn.
“The performance increase was based on stringent cost control, agile capacity management, strong focus on customer offerings with further traction in uptake of digital services, and some benefit from a sequential demand recovery compared to the second quarter,” says CEO Søren Skou.
The main performance driver in this quarter, says Skou, was ocean which, despite decreasing volumes of 3.6%, improved profitability by US$ 511m to US$ 1.8bn, reaching an EBITDA margin of 25.4%. “This on the back of continued agile capacity deployment, lower costs, and a temporary spike in short-term freight rates due to a sudden demand pick-up on some routes.”
Logistics and services was also a strong performer in Q3, with revenue growing 11% and profitability increasing by 44%, achieving an EBITDA of US$ 131m up from US$ 91m in 2019. This was despite restructuring costs of US$ 40m. The company’s terminals and towage division expanded margins and grew earnings, despite lower volumes and revenue, according to the statement.
Given the current momentum across the business, the company expects EBITDA before restructuring and integration costs in the range of US$ 8bn to US$ 8.5bn from the previous forecast of US$ 7.5bn to US$ 8bn which was the forecast on 13 October.