A.P. Moller – Maersk had an exceptionally strong start to the year, with strong earnings and growth momentum across all our businesses in ocean, port services and logistics. The company benefitted from strong demand in a market still influenced by the pandemic and significant disruptions in global supply chains.
Strong demand coupled with significant operational challenges such as bottlenecks, lack of capacity and equipment shortage in global supply chains drove freight rates up significantly. At the same time, customers’ demand for truly integrated supply chains and simple, self-service solutions has never been more evident and this provides momentum, especially for logistics and digital solutions.
“A.P. Moller – Maersk delivered an exceptionally strong performance in Q1 2021 with record profit for the quarter. 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,” says Søren Skou, CEO of A.P. Moller – Maersk, before adding:
“We remain focused on the long-term transformation of A.P. Moller – Maersk, prioritising customers’ demand for integrated logistics. Our integrator strategy was validated by strong customer support during Q1. 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.”
We remain focused on the long-term transformation of A.P. Moller – Maersk, prioritising customers’ demand for integrated logistics.
CEO, A.P. Moller – Maersk
Overall in Q1, EBITDA increased to USD 4bn from USD 1.5bn year on year and EBIT to USD 3.1bn from USD 552m compared to same quarter last year, while revenue improved by 30 pct. to USD 12.4bn. The results reflect the high volumes, which are up 5.7 pct., significant increases in freight rates of 35 pct. and lower bunker fuel prices, leading to an EBITDA in Ocean of USD 3.4bn compared to USD 1.2bn in Q1 2020, and an increase in revenue to USD 9.5bn from USD 7.2bn.
Logistics & Services continued with strong growth momentum and revenue increase of 42 pct. in Q1 to USD 2bn, mainly driven by organic growth, but also with growth from the acquisitions of Performance Team and KGH Customs Services. EBITDA increased by 201 pct. to USD 205m compared to USD 68m, and EBIT increased to USD 139m compared to USD 29m same quarter last year, partly driven by margin expansion.
Also, Gateway Terminals had a strong Q1 performance, with revenue increasing by 24 pct. to USD 915m from USD 740m led by higher volumes and storage income, while EBITDA increased by 52 pct. to USD 323m from USD 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,” says Søren Skou and continues:
“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.
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.
CEO, A.P. Moller – Maersk
Guidance for 2021
Given the result in Q1 2021 and our 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 to:
Underlying EBITDA in the range of USD 13.0-15.0bn (previously USD 8.5-10.5bn) compared to USD 8.3bn in 2020
Underlying EBIT in the range of USD 9.0-11.0bn (previously USD 4.3-6.3bn) compared to USD 4.2bn in 2020
Free cash flow of minimum USD 7.0bn (previously above USD 3.5bn) compared to USD 4.6bn in 2020
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 pct. in 2021 (previously 3-5 pct. in 2021), primarily driven by the export volumes out of China to the USA, with the highest growth seen in the first half-year.
For the years 2021-2022, the accumulated CAPEX is now expected to be around USD 7bn (previously USD 4.5-5.5bn).