The year 2021 is off to a great start for the shipping giant A.P. Moller-Maersk as it witnesses continuing growth and exceptionally high profits across all sectors of the industry including ocean, logistics, and terminals & towage owing to the exceptional condition of the global market result of the raging pandemic.
A.P. Moller-Maersk registered record profit in the first quarter of 2021 of a whopping USD 2.7bn in comparison to the profit of USD 2.96bn for the entire 2020 along with a 30% increase in consolidated revenue, rising to USD 12.4bn, prompting Søren Skou, CEO, A.P. Moller – Maersk to say, “It is the best quarter ever in the ocean. It is the best quarter ever in logistics. It is the best quarter ever in terminals".
Data suggest that for Q1, EBITDA (earnings before interest, taxes, depreciation, and amortization) consolidating all sectors has increased by 166% to USD 4bn. EBIT (earnings before interest and taxes) has risen to USD 3.1bn from USD 55.2m in year-on-year analysis.
This exceptionally strong performance has been on the account of an abnormal surge in demand owing to the pandemic, reflected in a 5.7% rise in quarterly volume. The increase has also resulted in bottlenecks, congestion, lack of capacity, and equipment at ports all combining to drive up the freight rates to exceptionally high levels, increased almost by 35% which significantly contribute to the profits made by the company. The pandemic has also lowered the cost of operations as bunker fuel prices further plummet turning the crisis into an opportunity for the shipping giants.
All the sectors have individually recorded a high rise in revenue. For ocean, revenue has increased from USD 7.2bn for Q1 in 2020 to USD 9.5 billion in 2021. Similar gains of about 42% have been registered with regards to the logistics sector with increased revenue being of USD 2bn. The high momentum is also witnessed in the sector of terminals and towage with revenue rising by 24% to 915m.
The company sees these trends and high-profit margins as a validation for their transforming strategy of increasing coverage of long-term contracts. Basis of this is the statement by Maersk CEO Soren Skou, " For us, this is about building an integrated logistics business and selling end-to-end services.
A.P. Moller-Maersk has also revised future revenue projections in an upward trend. The reason being cited is the prevailing of exceptional circumstances in the economy expected to last now till the end of this year, as various countries battle second wave, deepening crisis of container demand, along with implications of Suez canal blockage. The revised projections estimate EBITDA for the year to be 13.0-15.0bn in comparison to 8.3bn in 2020.
This phenomenal performance by A.P Moller-Maersk in this quarter exemplifies the saying “Never let a good crisis go to waste”, in true terms.