World’s largest container shipping company describes 2020 as a challenging year
The integrated logistics service provider A.P. Moller-Maersk, which is the global market leader among container shipping companies, is warning of a drop in global demand for container services in the wake of the corona pandemic. The company originally expected the market to grow by 1 to 3 percent this year.
Now, Soren Skou, the Chairman of the Board of Directors of A.P. Moller-Maersk, fears a decline in volume in all business areas of 20 to 25 per cent for the second quarter of this year due to the continuing impairment of the demand situation. In the company’s latest press release, Skou emphasises the current difficulty of forecasting developments in this respect. The previous earnings forecast for the current financial year has therefore been withdrawn.
A.P. Moller-Maersk already laid up several ships in the first quarter. A total of ninety voyages were cancelled during the period. The company now expects 140 cancelled voyages for the second quarter.
The cancellation of trips has already led to considerable cost reductions. A.P. Moller-Maersk wants to continue to maintain strict cost discipline. After all, the Group has focused on maintaining profitability and cash flow.
The plan for cumulative capital expenditure for 2020-2021 in the amount of 3.0 to 4.0 billion US dollars is to remain unchanged. The plan is to reduce capital expenditure for the current year.
In the first quarter, the logistics service provider was able to increase revenue slightly year-on-year to around USD 9.6 billion, although volumes declined in all segments. EBITDA (earnings before interest, taxes, depreciation and amortization) even increased by around 23 percent. It reached around USD 1.5 billion in the first quarter of this year, compared with around USD 1.2 billion in the first quarter of 2019. The EBITDA margin improved by 3 percentage points year-on-year to 15.9 percent in the first three months of 2020.
According to Soren Skou, A. P. Moller-Maersk will continue to support its customers in keeping their supply chains running. He calls 2020 a challenging year. Skou sees the logistics group in a strong position to meet this challenge.