In Q1 2018, A.P. Moller-Maersk had a revenue growth of 30 per cent to $9.3 bn, 10 per cent excluding Hamburg Süd, with growth in all business segments and a strategic transformation well underway. A.P. Moller-Maersk has reiterated its expectations for 2018 of an underlying profit above 2017 ($356 m), however noting increased uncertainties due to geopolitical risks, trade tensions and other factors impacting freight rates, bunker prices and rate of exchange.
“In the first quarter of 2018, we reported a 30 per cent revenue growth and the integration of the business is well underway with a successful start to the Hamburg Süd integration and the closing of Maersk Oil transaction in March with an accounting gain of $2.6 bn. At the same time, on the short-term performance, our result, especially in the ocean related part of the business, was unsatisfactory. In response to the current challenging market conditions, we are implementing a number of short-term initiatives to improve profitability and we reiterate our guidance for 2018,” says Mr Søren Skou, CEO of A.P. Moller-Maersk.
A new financial reporting structure has been implemented from Q1 2018 to support the strategic direction towards becoming the global integrator of container logistics. The four new business segments (Ocean, Logistics & Services, Terminals & Towage and Manufacturing & Others) are aligned with the strategic focus on growing the non-ocean part of the business disproportionally to the ocean.
Mr Søren Skou explains: “The new format reflects that we are an integrated global container transport and logistics business focusing on our customers’ value chains, and it allows us to follow our progress, particularly in those parts of the business which are not purely ocean freight, which we need to grow in order to minimise the cyclical part of our business.”
A.P. Moller-Maersk increased its revenue to $9.3 bn with volume growth in Ocean – excluding Hamburg Süd – at 2.2 per cent, as expected slightly below estimated global demand growth of 3-4 per cent. The non-Ocean businesses reported a revenue growth, with 6 per cent in Logistics and Services and 11 per cent in Terminals & Towage, reflecting strong growth in volumes mainly driven by commercial wins and new terminals and services. Further, synergies have been realised from increasing collaboration especially between Ocean and gateway terminals, leading to volume growth significantly above the market growth.
Earnings before interests, tax, depreciation and amortisation (EBITDA) increased by 5 per cent to $669 m, negatively impacted by adverse rate of exchange development compared to same period last year of around net $100 m. Earnings in Ocean, of $492 m, was impacted by higher unit costs, among others, due to adverse developments in bunker price and rate of exchange. For the non-Ocean businesses, the higher volumes in Terminals and Towage led to an improvement in EBITDA from $139 m to $196 m, while Logistics and Services reported slightly lower EBITDA of $23 m from $32 m.
The underlying result, after financial items and tax of negative $239 m, was unsatisfactory. A number of short-term initiatives are being implemented to improve profitability, said a release.