Presenting its Q1 result, Danish owner A.P. Moller – Maersk said it had an exceptionally strong start to the year, with strong earnings and growth momentum across all its businesses in ocean, port services and logistics. The company benefitted from strong demand in a market still influenced by the pandemic and significant disruptions in global supply chains.
Strong demand coupled with significant operational challenges such as bottlenecks, lack of capacity and equipment shortage in global supply chains drove freight rates up significantly. At the same time, customers’ demand for truly integrated supply chains and simple, self-service solutions has never been more evident and this provides momentum, especially for logistics and digital solutions.
“A.P. Moller – Maersk delivered an exceptionally strong performance in Q1 2021 with record profit for the quarter. The high growth and profitability were driven by solid demand across Ocean, Logistics and Terminals. Strong demand led to bottlenecks and a lack of capacity and equipment, which drove up freight rates to record-high levels,” said Søren Skou, CEO of A.P. Moller – Maersk, before adding, “We remain focused on the long-term transformation of A.P. Moller – Maersk, prioritising customers’ demand for integrated logistics. Our integrator strategy was validated by strong customer support during Q1. As we change the conversations with customers from being short-term transactional to becoming long-term value-based, we lay the foundation for further, stable growth.”
Overall in Q1, EBITDA increased to $4Bn from $1.5Bn year on year while revenue improved by 30% to $12.4Bn. The results reflect the high volumes, which are up 5.7%, significant increases in freight rates of 35% and lower bunker fuel prices. All divisions reported growth.
The results came in a persistently difficult environment where countries are still contending with the effects of the pandemic. “We have continued to dedicate significant efforts to the safety of our employees and contribute to the societies we operate in, this quarter with a particular emphasis on India,” said Skou. “Overall, we can be very satisfied with how the business performed this quarter. High profitability led to a ROIC of 15.7%, and our strong free cash flow gives us the opportunity to invest further in the transformation of the business, while accelerating the remaining part of the ongoing share buy-back programme and subsequently launch a new, additional share buy-back programme of approx. $5bn over the coming two years.
As part of the full-year guidance for 2021, A.P. Moller – Maersk now expects the current exceptional situation, with the demand surge leading to bottlenecks in the supply chain and equipment shortage, to continue well into the fourth quarter of 2021 versus previously expected to continue in Q1 and normalise thereafter.