Maersk sees container demand at pre-COVID levels in first-half of 2021

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Shipping group Maersk issued full-year earnings guidance above its forecast at the beginning of the year and said it expects demand for moving containers at sea to return to pre-COVID levels in the first half of next year.

The company’s share price has doubled in value since March, as cost cuts and the prospect of a global economic recovery outweighed the present impact of the coronavirus pandemic.

“Our expectation is that some time during the first half next year we will have volumes back at the level we had in 2019,” Chief Executive Soren Skou told a press conference.

Danish shipping company A.P. Moller – Maersk A/S’s CEO Soeren Skou during a press conference after the group has published accounts for the second quarter, at the head office on the Esplanade in Copenhagen, Denmark, 19 August 2020. EPA-EFE/Martin Sylvest

Maersk, which handles one in every five containers shipped by sea worldwide, posted second-quarter revenue and earnings above expectations, as a sharp drop in volumes was partly offset by higher freight rates, lower fuel prices and lower costs.

“With a strong result and a strong balance sheet we are well positioned to financially and strategically come out stronger of the crisis,” Skou said.

Maersk, which had in March suspended its earnings guidance because of coronavirus-related uncertainties, said it expected full-year core earnings (EBITDA) of between $6 billion and $7 billion before restructuring and integration costs.

That compares with the $5.5 billion it forecast at the beginning of the year.

“Maersk has delivered an extraordinarily good report,” Alm. Brand Chief Equity Analyst Michael Friis Jorgensen said. “The market is refraining from competing on price, and internally Maersk has been phenomenal in adapting to the new situation by cutting costs.”

Global demand for containers is still forecast to fall this year compared with last year, with a decline of 20% at the depth of the crisis in April set to improve to a 4%-6% contraction in the third quarter, Maersk said.

EBITDA rose 25% to $1.7 billion in the second quarter, above the $1.6 billion forecast by analysts in a Refinitiv poll, on revenue down 7% at $9.0 billion versus an expected $8.9 billion.

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