A.P. Moller - Maersk accelerates transformation and grows revenue in 2018
Progress on the transformation of A. P. Moller - Maersk continued in 2018. Customers benefitted from integrated offerings, digital solutions and robust network improvements. Since 2016, the topline has grown by 43%, to USD 39bn in 2018, an additional USD 12bn in turnover, the company said in its release.
Profitability was in line with the latest guidance for 2018, with earnings before interests, tax, depreciation and amortization (EBITDA) of USD 3.8bn, up 8% over 2017. The improvement in operating earnings was driven by higher freight rates, efficiencies gained from the integration of continuing operations, and synergies from the acquisition of Hamburg Süd. However, margins in continuing operations were challenged and EBITDA was lower than initially expected at the beginning of the year, primarily due to an increase in bunker fuel prices not fully recovered by higher freight rates.
During 2018, net interest-bearing debt was significantly reduced from USD 14.8bn to USD 8.7bn and the company remains investment grade rated.
Following the listing of Maersk Drilling through a demerger and subject to maintaining investment grade rating, details on future dividend policy, capital structure and the distribution of a significant part of the proceeds from the sale of Maersk Oil will be announced no later than August 2019.
From 2019 and onwards, International Financial Reporting Standard (IFRS) 16 will be applied. IFRS 16 entails that leases beyond 12 months will be included in the balance sheet as assets and liabilities.
For 2019, Maersk expects EBITDA of around USD 5bn including effects from IFRS 16, and around USD 4bn excluding effects from IFRS 16.
The organic volume growth in Ocean is expected to be in line with the estimated average market growth of 1-3% for 2019. Guidance on CAPEX is around USD 2.2bn and high cash conversion (cash flow from operations compared with EBITDA) is expected.
Maersk’s guidance for 2019 is subject to considerable uncertainties due to the current risk of further restrictions on global trade and other factors impacting container freight rates, bunker prices and foreign exchange rates.