Costs control, capacity management and strong customer focus result in improved bottom line
During the third quarter A.P. Moller - Maersk improved profitability and grew earnings before interest, tax, depreciation and amortisation (EBITDA) 39% to $2.3 billion with revenue decreasing 1.4% $9.9 billion.
The performance increase was based on a stringent costs 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.
Søren Skou, CEO of A.P. Moller Maersk said: “Despite COVID-19 negatively affecting activities in most of our businesses, our disciplined execution of the strategy led to solid earnings and cash flow growth in Q3.
"At the same time, we managed to further integrate and simplify the organisation in Ocean & Logistics, we closed the acquisition of KGH Customs Services and continued the integration of Performance Team, supporting our strong financial performance in Logistics & Services.”
The main performance driver this quarter was Ocean which, despite decreasing volumes of 3.6% improved profitability by $511 million to $1.8 billion, reaching an EBITDA margin of 25.4% on the back of a continued agile capacity deployment, lower costs and a temporary spike in rates.
The free cash flow generation of $3 billion in the first nine months of 2020, allowed the company to return cash to shareholders, finance acquisitions and reduce debt with net interest-bearing debt decreasing further to $10.8 billion by the end of Q3 compared to $11.7 billion by the end of 2019.
Søren Skou, CEO, A.P. Moller Maersk
Given the strong performance and cash generation, the Board of Directors has decided to initiate a new share buy-back programme of approximately $1.6 billion over a period of up to 15 months.
Given the current momentum across the business, A.P. Moller - Maersk expects EBITDA before restructuring and integration costs in the range of $8 billion to $8.5 billion from previously between $7.5 billon to $8 billion as announced on 13 October 2020.
The global demand growth for containers is expected to contract by 4 to 5% in 2020 due to COVID-19.