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A.P. Moller-Maersk Q3 Profit Climbs, Volume Down; Lifts FY20 View; Stock Dips

mærsk nov18 lt

Shares of A.P. Moller - Maersk A/S were losing around 2 percent in Denmark trade after the container logistics company reported Wednesday weak revenue and volume in its third quarter, even as profit increased from last year. The company further raised its forecast for fiscal 2020 EBITDA, a key earnings metric.

For fiscal 2020, the shipping group now expects EBITDA in the range of $8.0 billion - $8.5 billion, before restructuring and integration costs, compared to previous guidance of $7.5 billion-$8.0 billion.

Further, the Board has decided to start a share buy-back program of around $1.6 billion, based on the strong performance and cash generation. The buy-back program will run from December 2020 and over a period of up to 15 months.

The company on Tuesday raised its full-year earnings forecast, citing increased momentum in the fourth quarter in global container volumes and freight rates.

Chief Executive Officer Søren Skou said, "Our continued progress in improving results and implementing our strategy allows us to look confidently past the volatility of the extraordinary 2020, but we remain well aware that the high level of uncertainty related to the pandemic and associated lockdowns will persist in the coming quarters."

For the third quarter, profit group share increased to $927 million from last year's $506 million. Profit for the period from continuing operations was $947 million, higher than $520 million a year ago.

Underlying profit from continuing operations increased to $1.04 billion from $452 million last year.

Profit before depreciation, amortisation and impairment losses etc. or EBITDA climbed 39 percent to $2.3 billion from $1.66 billion last year. EBITDA margin increased to 23.2 percent from 16.5 percent a year ago, with increases in all segments.

EBITDA before restructuring and integration costs was $2.4 billion for the quarter.

Earnings increased in Ocean and Logistics & Services segments, as costs were kept well under control and freight rates have increased due to recovery in demand.

Third-quarter revenue, meanwhile, declined 1.4 percent to $9.92 billion from $10.06 billion last year, mainly driven by weak volume. In the quarter, volume decreased 3.6 percent in Ocean and 3.7 percent in gateway terminals.

This was despite revenue growth in Logistics & Services of 11 percent due to acquisitions.

The company recorded a very strong quarter in Ocean as stronger-than-expected recovery in demand, following the slowdown of Q2 led to the reactivation of all available tonnage as well as significantly higher prices in the short-term market.

In Denmark, AP Moeller Maersk shares were trading at 11,270 Danish kroner, down 2.30 percent.

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