Maersk shares sink as Q1 profit disappoints
Political and trade tensions cloud container outlook
COPENHAGEN: A.P. Moller-Maersk missed first-quarter profit expectations and warned that political and trade tensions clouded the outlook, sending shares in the world’s biggest container shipper sharply lower.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for the three months to March 31 rose 5% to US$669mil but came in well below the US$852mil forecast by analysts in a Reuters poll.
Chief executive Soren Skou called the result “unsatisfactory” but said he still expected EBITDA for the year at US$4bil-US$5bil.
Maersk shares fell 11% to 9,016 Danish crowns by 0811 GMT yesterday, near their lowest in 18 months, although quarterly revenue at US$9.25bil topped analysts’ forecasts of US$8.75bil.
Analysts at Jefferies said disappointment stemmed in part from “relatively sluggish underlying volume growth” of 2.2%, short of an expected increase of 3%-4%.
Container freight rates rose 7%, but the cost of shipping a container increased even more, partly as a result of higher oil prices, Skou said.
Skou in previous quarters played down the risk of a global trade war hurting its business but noted “increased uncertainties due to geopolitical risks and trade tensions”.
“We have to admit that the Americans have taken a number of initiatives recently that have caught us by surprise,” Skou told Reuters in an interview.
“The (trade) situation has become more intense,” he said, adding it would hurt Maersk’s business if trade talks between the United States and China ended in failure.
“The whole situation regarding Iran, which is pushing oil prices up, is certainly also not good for our container business,” Skou said.
He added that Maersk is winding down its business in Iran following new US sanctions: “I don’t know the timing details exactly, but I am certain that we’re also going to shut down (in Iran).”
After a slump in shipping and oil, Maersk is restructuring and divesting its energy businesses – including oil exploration, oil tankers and supply services – to focus on shipping, ports and logistics.
Skou said he would implement short-term initiatives to improve profitability and lower unit costs,