A.P. Moller - Maersk has closed the first quarter of 2019 with a 33% increase in earnings before interest, tax, depreciation and amortization (EBITDA) to USD 1.2bn while revenue grew by 2.5% to $9.5 billion compared to Q1 2018.
Operating cash flow improved significantly to $1.5 billion and free cash flow was USD 3.5bn, including sale of shares in Total S.A.
Said Søren Skou, CEO of A.P. Moller - Maersk: “With a strong free cash flow of $3.5 billion after the sale of the remaining shares in Total SA., we have significantly strengthened our balance sheet. Net interest-bearing debt has been reduced by $2.4 billion since Q4 and by $7.1 billion since Q1 2018."
Profitability in Ocean increased. EBITDA grew 42% to $927 million compared to same period last year, mainly driven by a 3.9% increase in average loaded freight rates and an improvement in total operating cost of 2.8%.
Revenue increased to $6.9 billion despite lower volumes which declined 2.2%, impacted by the frontloading seen on the Pacific trades in Q4 2018 and weak demand on Latin America and Oceania trades.
Looking at terminal profitability, the opening of the Moin terminal, Costa Rica and positive underlying volume growth in gateway terminals had a positive impact on terminal profitability in Q1.
Terminals & Towage reported an increase in revenue to $991 million from $911 million and in EBITDA to $267 million from $244 million compared to same quarter last year.
Logistics & Services reported a decrease in revenue in Q1 2019 by 0.5% to $1.4 billion driven by lower air freight forwarding revenue. EBITDA increased to $51 million from $45 million in Q1 2018.
Asia-Europe Low Demand Leads to Maersk Rate Drop
The strategic transformation also progressed. In the first quarter, Maersk delivered combined synergies of $130 million.
Cash return on invested capital (CROIC) improved to a positive 6.7% from a negative 5.9%, driven by higher earnings, strong cash conversion and a reduction in invested capital.
Added Søren Skou: "We made good progress on the transformation, where we have completed the separation of the energy businesses, further integrated our organisation and continued to improve our product portfolio.
“This resulted in a solid cash return on invested capital and delivery of synergies, getting us closer to our target of $1 biilion by end of 2019.
“Non-Ocean revenue and gross profit in Logistics & Services grew, but needs to accelerate in the coming quarters."
As part of the intention to distribute a material part of the value of shares received in Total S.A in connection with the sale of Maersk Oil, the Board of Directors has decided to exercise the authority to buy back shares with a maximum value of $1.5 billion.
The program will run from June 2019 and over a period of up to 15 months.
Søren Skou concluded: “We reaffirm our guidance for the 2019 results. We are still facing considerable uncertainties from weaker macro numbers as well as the risk from trade tensions and implementation of IMO 2020.
“In Q1, volumes on trans-Pacific trade between Asia and North America have shown signs of decline and new tariffs can potentially reduce expected growth in global container volumes by up to 1 percentage point.”
