Danish shipping and logistics giant A.P. Moller – Maersk delivered an exceptionally strong performance in Q1 2021 with a record profit for the quarter.
Overall in Q1, EBITDA increased to $4 billion from $1.5 billion year on year and EBIT to $3.1 billion from $552 million compared to same quarter last year, while revenue improved by 30 percent to $12.4 billion.
The company benefitted from strong demand in a market still influenced by the pandemic and significant disruptions in global supply chains.
According to the company, the results reflect the high volumes, which are up 5.7 percent, significant increases in freight rates of 35 percent and lower bunker fuel prices.
“The high growth and profitability were driven by solid demand across Ocean, Logistics and Terminals. Strong demand led to bottlenecks and a lack of capacity and equipment, which drove up freight rates to record-high levels,” Søren Skou, CEO of A.P. Moller – Maersk, said.
“We remain focused on the long-term transformation of A.P. Moller – Maersk, prioritising customers’ demand for integrated logistics… As we change the conversations with customers from being short-term transactional to becoming long-term value-based, we lay the foundation for further, stable growth.”
EBITDA in Ocean stood at $3.4 billion compared to $1.2 billion in Q1 2020. Revenue also increased to $9.5bn from $7.2bn.
Logistics & Services continued with strong growth momentum and revenue increase of 42 percent in Q1 to $2bn, mainly driven by organic growth, but also with growth from the acquisitions of Performance Team and KGH Customs Services. EBITDA increased by 201 percent to $205m compared to $68m, and EBIT increased to $139m compared to $29m same quarter last year, partly driven by margin expansion.
Also, Gateway Terminals had a strong Q1 performance, with revenue increasing by 24 percent to $915m from $740m led by higher volumes and storage income, while EBITDA increased by 52 percent to $323m from $213m.
The results came in a persistently difficult environment where countries are still contending with the effects of the pandemic.
“We have continued to dedicate significant efforts to the safety of our employees and contribute to the societies we operate in, this quarter with a particular emphasis on India,” Søren Skou added.
“Overall, we can be very satisfied with how the business performed this quarter. High profitability led to a ROIC of 15.7 pct., and our strong free cash flow gives us the opportunity to invest further in the transformation of the business, while accelerating the remaining part of the ongoing share buy-back programme and subsequently launch a new, additional share buy-back programme of approx. USD 5bn over the coming two years.”
Maersk upgrades full-year guidance
Given the strong start of the year and the company’s expectation that the exceptional market situation will continue well into the fourth quarter of 2021, the full-year guidance has been revised upwards on 26 April 2021.
The guidance for the underlying EBITDA is now expected to be in the range of $13.0bn-15.0bn and the underlying EBIT in the range of $9.0-11.0bn.
As part of the full-year guidance for 2021, A.P. Moller – Maersk now expects the current exceptional situation, with the demand surge leading to bottlenecks in the supply chain and equipment shortage, to continue well into the fourth quarter of 2021 versus previously expected to continue in Q1 and normalise thereafter. As expected, profitability in Q1 2021 was above Q4 2020.
Ocean is still expected to grow in line with global container demand, which is now expected to grow by 5-7 percent in 2021, primarily driven by the export volumes out of China to the USA, with the highest growth seen in the first half-year.