The A.P. Moller-Maersk Group has recorded progresses in its strategic business transformation, reporting growth in both Ocean and non-Ocean with a total revenue increase of 31% to USD10.1 billion in the third quarter of 2018.
The Danish group saw a 12% excluding Hamburg Süd, even as growth in non-Ocean was at 15%, which now contributes 31% of total revenue.
The CEO of A.P. Moller-Maersk, Søren Skou, said, “Well into our transformation, we are progressing with the integration of our business to better serve customers and unlock the full growth potential within Logistics & Services. As a result, I am pleased to see revenue growth in Q3 across the business, including supply chain services. Our profitability and cash flow is improving, positively impacted by the emergency bunker surcharge announced due to the significant increase in bunker price, synergies from Hamburg Süd and strong collaboration between Ocean and our terminal activities.”
Compared to Q3 2017, revenue in Logistics & Services increased 7.5 % with supply chain management growing 16%. New products are being developed to improve the customer experience, with results already seen where A.P. Moller – Maersk was first in the world to launch Instant Booking Confirmation to customers in the container industry.
Furthermore, gateway terminals continued to grow volumes from external customers as well as from Maersk Line and Hamburg Süd reflecting synergy impact from the closer collaboration. Total synergies with Hamburg Süd of minimum USD500 million excluding integration cost are expected by 2019 as the integration is progressing faster than planned.
Cash conversion improved from 76% to 95%. The free cash flow of USD2.1 billion compared to negative USD478 million in the same period last year lead to a lower net debt.
Volumes in Ocean grew 27%, 5% excluding Hamburg Süd which is above the estimated market growth of 2.7%, but lower than anticipated. Søren Skou elaborates:
“Our business performance in Ocean is still challenged by increased bunker prices not being fully compensated through higher freight rates. However, we continue to see improved results in the third quarter after a very weak start to 2018.”
The underlying profit in Q3 amounted to USD251 million compared to USD254 million in the same period last year. Earnings before interests, tax, depreciation and amortization (EBITDA) increased by 16% despite bunker price increasing 47%.
Unit costs at fixed bunker in Ocean decreased 0.6% compared to Q3 2017, when adjusted for foreign exchange rate and inclusion of Hamburg Süd.
A.P. Moller – Maersk expects an EBITDA in the range of USD3.6-4.0 billion from previously USD3.5-4.2 billion and reiterates the expectations of a positive underlying profit.
The organic volume growth in Ocean is now expected in line with the estimated average market growth of 3-4% for 2018 (previously slightly below the estimated average market growth of 2-4%).