By Dominic Chopping
Danish shipping giant A.P. Moeller-Maersk AS said Friday that it made weaker-than-expected fourth-quarter earnings and warned that it expects a weak start to the year with limited visibility for the rest of 2020 amid the coronavirus outbreak.
Maersk /zigman2/quotes/208739220/delayed DK:MAERSK.A +0.93% /zigman2/quotes/202892434/delayed DK:MAERSK.B +0.78% swung to an unexpected net loss in the quarter of $72 million from a profit of $46 million in the year-earlier period. A FactSet analyst poll had expected a net profit of $343 million. It said that its financials are materially impacted by implementing the IFRS 16 accounting standard and 2019 figures aren’t comparable with last year.
Maersk, which is considered a barometer of global trade, saw revenue fall 5.6% to $9.67 billion, missing expectations of $9.94 billion, as its shipping unit lowered capacity to adjust to market conditions.
Earnings before interest, tax, depreciation and amortisation for the quarter came in at $1.46 billion against expectations for $1.53 billion. For the full-year, Ebitda rose to $5.71 billion, meeting the company’s own guidance of between $5.4 billion and $5.8 billion.
The company’s main shipping unit saw revenue fall as volumes dropped 1.8% while freight rates slipped 0.4%. Maersk said it continued to cut its cost base at the unit while lower fuel prices also helped offset some of the weakness.
Volumes were hit in both East-West and North-South routes, amid continued slower growth in the U.S. and front loading of orders in the same quarter last year ahead of anticipated tariffs, lower demand in Europe, continued weak demand in Latin America, and weakened market conditions in West and Central Asia and Oceania.
Maersk said the outlook and guidance for 2020 is subject to significant uncertainties and impacted by the current outbreak of the Coronavirus (COVID-19) in China, which has significantly lowered visibility on what to expect in 2020.
“As factories in China are closed for longer than usual in connection with the Chinese New Year and as a result of the COVID-19, we expect a weak start to the year,” the company said.
The organic volume growth in its main ocean unit is expected to be in line with or slightly lower than the estimated 2020 average market growth of 1% to 3%.
Accumulated gross capex for 2020-2021 is still expected to be $3.0 billion-$4.0 billion.
Maersk declared an unchanged full-year dividend of DKK150.