A.P. Møller – Mærsk delivered strong third quarter results that were bolstered by 39 percent growth in earnings for the Ocean division.
Søren Skou, chief executive officer, A.P. Møller – Mærsk, commented: “Despite COVID-19 negatively affecting activities in most of our businesses, our disciplined execution of the strategy led to solid earnings and cash flow growth in Q3. At the same time, we managed to further integrate and simplify the organisation in Ocean & Logistics, we closed the acquisition of KGH Customs Services and continued the integration of Performance Team supporting our strong financial performance in Logistics & Services.
“Throughout the pandemic, our main priorities have been keeping our employees safe, keeping our global network and ports operating to serve our customers and supporting the societies we are part of. This continues to be our focus as demand has begun to partially recover.
“Our progress in earnings and in our transformation allows us to look confidently past the extraordinary 2020, however we remain well aware of the high level of uncertainty the pandemic and associated lock downs continue to pose in the coming quarters.”
The Ocean division saw third quarter earnings, EBITDA, increase by 39 percent to USD1.8bn (USD 1.3bn), including restructuring costs of USD 65m, as a result of the continued agile deployment of vessels in a market that remains impacted by the outbreak of COVID-19. Not withstanding some strong pricing dynamics given the unexpected pick-up in demand on some routes, the continued agile capacity and decisive cost management reduced the operating costs by 13 percent, mainly from improvements in network cost including bunker savings, positively impacted by lower volumes in container handling cost.
Container demand has recovered significantly since the second quarter, though very uneven across different geographies. The capacity plan was adjusted accordingly to reflect the volume pick-up and regional demand pattern. At quarter-end, the fleet was almost back to full capacity across Asia where the demand was strongest, with higher capacity on some Asian trades than in 2019. Due to sudden and stronger than expected demand, short-term freight rates strengthened, especially in East-West trades out of Asia. This was partly driven by tight supply of appropriate vessels, as well as availability of containers. The unexpected increase in demand on certain routes also decreased the reliability of the network.