AP Moller-Maersk expects supply chain bottlenecks and equipment shortages that caused profits to surge in Q4 2020 to continue in the first quarter of this year with Q1 earnings this year to be even higher than the final quarter of 2020.
Maersk reported a full year EBITDA of $8.2bn for 2020, up 44% on the previous year, and in the fourth quarter EBITDA jumped to a record level of $2.7bn, up 85% year-on-year. Revenue grew to $39.7bn in 2020 compared to $38.9bn in the previous year.
“While the demand surge in the second half of year created supply chain bottlenecks, including vessel and container shortages, and led to higher rates that contributed approximately $1.5bn to results, Ocean (container shipping) further improved its intrinsic performance by focusing on costs, agile capacity management and launching new digital offerings,” Maersk said.
EBITDA for its container shipping business doubled in Q4 2020 to $2.2bn, compared to $1.1bn a year earlier as a consequence of a huge surge in container freight rates caused by supply chain disruption and unprecedented demand growth.
Commenting on the results Maersk ceo Soren Skou said: “2020 will forever be remembered for the COVID-19 pandemic that negatively impacted our lives, jobs, businesses and the global economy. I am proud that we have accelerated our transformation and delivered earnings growth during every quarter of 2020, despite very different market conditions, beginning with negative COVID-19 impact in the first half to a rebound in Q4.”
Maersk also flagged up the more than doubling of EBITDA for its logistics business to $454m in 2020 as underscoring its customers demand for end-to-end services.
Looking ahead the factors which caused the sharp increase in Q4 2020 EBITDA are expected to continue in Q1 2021.
“AP Moller-Maersk expects the current exceptional situation with demand surge leading to bottlenecks in the supply chain and equipment shortage, which contributed by approximately $1.5bn to EBIT in 2020, to continue in Q1 and normalise thereafter. Consequently, AP Moller – Maersk expects profitability in Q1 2021 to be above Q4 2020,” the company said.
Earnings are expected to normalise after Q1 with Maersk giving guidance of a full year EBITDA of $8.3bn.