Danish integrated shipping company A.P. Møller – Mærsk A/S (Maersk) delivered record profit during the first quarter (Q1) of 2021 due to solid demand across Ocean, Logistics and Terminals, coupled with strong freight rates.
“Strong demand combined with bottlenecks, lack of capacity and equipment shortage in the global supply chains drove freight rates up significantly,” said CEO Søren Skou in a recent earnings report.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for Maersk’s Ocean business segment “almost tripled reflecting strong volumes, significant increases in freight rates and lower bunker fuel prices,” noted Skou.
The company’s total operating costs was 5.6% lower at USD 6.0 billion in Q1 2021, compared to Q1 2020 due to lower bunker cost, partly offset by higher container handling costs as a result of higher volumes and the bottlenecks in the supply chains due to COVID-19; adjusting for the impact of foreign exchange rates, operating costs decreased by 3.7%.
Maersk’s vessels consumed 2,744,000 metric tonnes (mt) of marine fuel in Q1 2021, an 8.3% increase from bunker fuel consumption of 2,534,000 mt in the similar period last year; bunker efficiency increased by 0.5% to 41.8 g/ TEU*NM in Q1 2021 from 42.0 g/TEU*NM from Q1 2020.
Bunker costs decreased by 22% to USD 1.1 billion in Q1 2021 from USD 1.4 billion in Q1 2020. The company recorded a decrease in average bunker price of 28% to USD 398 per mt in Q1 2021, from USD 551 per mt during Q1 2020.
“Overall, I am very pleased with Q1. The strong profitability, with an EBIT of USD 3.1bn compared to USD 552m a year ago led to a ROIC of 15.7% and very strong free cash flow,” Skou concludes.
“Given the strong start of the year and that we now expect the current dynamics to last into the fourth quarter, we have upgraded our guidance significantly.
“Furthermore, we will accelerate the current share buy-back programme for it to be completed as early as September and will subsequently launch a new, additional share buy-back programme of approximately USD 5bn over two years.”
Photo credit: A.P. Møller – Mærsk
Published: 6 May, 2021
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