By Christian Wienberg (Bloomberg) – A.P. Moller-Maersk A / S, the largest container shipping company in the world, is positioned for a strong rebound in two months, based on the expectation that the fallout of the coronavirus on global trade will soon reach its peak.
“Over the past two and a half weeks we have seen a steady decline in the number of new cases” and “this is positive,” said CEO Soren Skou in an interview with Matthew Miller of Bloomberg Television on Thursday, after the company released a weaker-than-expected fourth quarter report.
“It means, very well, that we may be ready for a peak within the next two weeks,” he said. “If so, we would expect a very weak March and a rebound in April, a strong rebound in April,” he said. “But there are still many uncertainties out there.”
Investors seemed unsure of how to interpret the general message. The company’s shares opened, but jumped about 4%, before sinking about 4% by mid-afternoon, local time.
Comments followed a series of results lagging behind analysts’ estimates and Maersk warned investors that the prospects for 2020 are overshadowed by “significant uncertainties” due to the outbreak of the coronavirus.
The Copenhagen-based company expects its operating profit, or Ebitda, to reach approximately $ 5.5 billion this year, less than the $ 5.94 billion estimated by analysts. Maersk acknowledged that he was seeing a “weak start to the year”.
Skou said Maersk has already had to cancel more than 50 departures from China in the past two weeks. Looking ahead, he says “much will depend on what will happen with the virus in the coming weeks.”
Frode Morkedal, CEO of equity research at Clarksons Platou Securities AS, said “the bottom line is that while the figures and guidelines reported are slightly below consensus expectations, we believe there has been growing fear that container exports from China could be significantly interrupted longer, so driving could be viewed as relatively optimistic, we support. “
“The orientation was weak but it could have been due to Maersk which included a greater effect of the coronavirus than market estimates,” Jyske Bank analyst Morten Holm Enggaard said in a statement.
Skou told reporters that he would not quantify the effect of the virus on Maersk’s driving and said it is difficult to estimate the impact.
“I really wish we hadn’t had to provide guidance,” he said. Maersk still hasn’t settled for 2020’s EBITDA forecasts until the day before the publication of its report, he said.
In 2019, Ebitda reached $ 5.71 billion, slightly less than the $ 5.78 billion expected by analysts.
Coronavirus adds to a series of challenges for the container transport industry, which is already grappling with the relapse of trade tensions between the United States and China and with a persistent excess of supply.
Since its outbreak, coronavirus has disrupted global supply chains and injured shipowners, while China grows in the main source of cargo for the maritime industry with 90% of all global trade moving by sea.
Maersk said it predicted global shipping container growth of 1-3% in 2020 compared to 1.4% in 2019. The company expects its growth rate to be in line “or slightly lower” than the market.
Maersk also listed the new low sulfur fuel that the industry has been forced to use since last month as an uncertainty that could impact bunker fuel prices and freight rates in 2020. He noted that the “weaker macroeconomic conditions” are an external uncertainty factor.
Maersk, which manages one fifth of the container fleet in the world, has tried in recent years to reduce its dependence on shipping.
On Wednesday, the company said it had agreed to acquire the American warehouse and distribution company, Performance Team, as part of its strategy to expand land transport services. The deal is worth $ 545 million.
These were some of the other highlights of Maersk’s annual report:
- FY revenue $ 38.9 billion, estimate $ 39.28 billion (range $ 38.56 billion to $ 39.97 billion)
- Ebit $ 1.73 billion, estimate $ 1.76 billion (range from $ 1.54 billion to $ 1.96 billion)
- Underlying profit $ 546 million
- Dividend FY per share DKK150
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