Danish shipping group Moller-Maersk said that although it had a challenging start to 2018, looking at the financial performance, it increased earnings despite significantly higher bunker fuel prices and lower than expected container volume growth in the second half of 2018.
A.P. Moller-Maersk is forecasting higher profits in 2019 and Soren Skou, CEO of Moller-Maersk, said in a statement that its "profitability needs to improve".
Profitability was in line with the latest guidance for 2018, with earnings before interests, tax, depreciation and amortization (EBITDA) of USD 3.8bn, up 8% over 2017, it said in a press release.
The improvement in operating earnings was driven by higher freight rates, efficiencies gained from the integration of continuing operations, and synergies from the acquisition of Hamburg Süd. However, margins in continuing operations were challenged and EBITDA was lower than initially expected at the beginning of the year, primarily due to an increase in bunker fuel prices not fully recovered by higher freight rates.
During 2018, net interest-bearing debt was significantly reduced from USD 14.8bn to USD 8.7bn and the company remains investment grade rated.
From 2019 and onwards, International Financial Reporting Standard (IFRS) 16 will be applied. IFRS 16 entails that leases beyond 12 months will be included in the balance sheet as assets and liabilities.
For 2019, Maersk expects EBITDA of around USD 5bn including effects from IFRS 16, and around USD 4bn excluding effects from IFRS 16.
The organic volume growth in Ocean is expected to be in line with the estimated average market growth of 1-3% for 2019. Guidance on CAPEX is around USD 2.2bn and high cash conversion (cash flow from operations compared with EBITDA) is expected.
Maersk’s guidance for 2019 is subject to considerable uncertainties due to the current risk of further restrictions on global trade and other factors impacting container freight rates, bunker prices and foreign exchange rates.
