Soren Skou, CEO of Maersk, sounded confident that his business was going in the right direction when the Danish Shipping giant released its third quarter numbers yesterday (14/11/18). He commented that the company was “well into our transformation, we are progressing with the integration of our business to better serve customers and unlock the full growth potential within Logistics & Services. As a result, I am pleased to see revenue growth in Q3 across the business, including supply chain services. Our profitability and cash flow is improving”. As might be expected this an optimistic perspective.
For the whole group top line revenue grew by 31% year-on-year, although 12% was due to the acquisition of Hamburg Sud. For the core Ocean shipping business revenue rose by 32%, flattered by the effects of the cyber-attack last year. Underlying demand growth was 5% and average freight rates grew by 5.5%. The problem came with an increase in bunker fuel costs which the company appears not be have been able to pass on fully to customers. These costs rose by 47% but profits measured by earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 16%. The result was an EBITDA for Ocean of $1.1bn.
The ports business- ‘Towage & Terminals’- saw moderate revenue growth of 4.7%, strongly helped by the gain of Hamburg Sud business leading to a like-for-like growth of 10.4%. EBITDA for the quarter was $31m at US$191m.
Logistics & Services, which includes the freight forwarder Damco, saw a 7.5% increase in revenue, with ‘supply chain management’ seeing growth of 10%. Maersk said that this was due to new customers although other parts of the business did less well. Both margins and EBITDA were higher with the former up more than half at 3% and the latter up 20% at $48m.
Profits for the whole group measured in terms of EBITDA were up 16% at $1.1bn for the quarter year-on-year. Certainly, these are perfectly respectable results, however as Mr Skou hinted in discussing the impact of a possible trade war between the US and China, the market is a tough one and it remains to be seen if Maersk can sustain this performance.
Source: Transport Intelligence, November 15, 2018
Author: Thomas Cullen
