In the second quarter of 2021, A.P. Moller – Maersk continued to deliver strong growth and profitability, with record-breaking performance marking the 12th quarter of successive year-on-year earnings progress.
Revenue grew 58 pct. to USD 14.2bn in Q2 and EBIT increased almost five times to USD 4.1bn. The net result came in at USD 3.7bn in the second quarter, bringing the net result for the first half of 2021 to USD 6.5bn. Return on invested capital (ROIC) is now at 23,7 pct. for the past 12 months.
The strong results benefited both from the exceptional circumstances in Ocean, where congestions and bottlenecks continued to drive up rates, and from solid progress in executing on our strategic transformation where we kept a firm focus on our customers need for integrated solutions across their supply chains. I am pleased with the strategic progress we have made and the high value generation. We continue to build a higher quality Ocean business with more long-term contracts, a rapidly growing logistics business, and a value creating terminals business. Our exceptional earnings and high cash flow enable us to further accelerate our transformation, invest in growing our activities, also through acquisitions and at the same time return cash to shareholders. To that effect we also announced today the acquisitions of Visible SCM and B2C Europe which complements our existing supply chain offering and addresses our customers need for E-commerce logistics.
In Ocean, profitability in Q2 was driven by revenue growth to USD 11.1bn from USD 6.6bn and EBIT increased to USD 3.6bn from USD 0.5bn. The growth came from a 15 pct. rebound in volumes and an increase in average freight rates of 59 pct., as both long-terms contracts rates with key clients increased and short-term contracts were still impacted by congestions and bottlenecks.
Logistics & Services delivered 38 pct. revenue growth to USD 2.2bn in Q2 with more than half coming from the top Ocean customers. Demand was strong across all product families and consequently EBIT more than tripled to USD 153m compared to USD 42m in the same quarter last year, leading to an EBIT margin of 7.1 pct.
Also, Gateway Terminals had a strong Q2 with volumes rebounding 24 pct. and persisting high storage income. Revenue increased to USD 969m from USD 723m last year, while EBIT doubled to USD 302m leading to an EBIT margin of 31.1 pct.
The outlook for Q3 is strong and we expect that the current momentum in Ocean will continue into Q4, also benefitting our Terminals business. Logistics & Services will continue its strong growth pattern for the rest of the year. As communicated on 2 August, we have upgraded our guidance for 2021 to an underlying EBITDA of USD 18-19.5bn, an EBIT of 14-15.5bn and a free cash flow expected to be minimum USD 11.5bn.
Guidance for 2021
Ocean is still expected to grow in line with global container demand, which is now expected to grow 6-8 pct. in 2021 (previously 5-7 pct. in 2021), still primarily driven by the export volumes out of China to the USA.
For 2021-2022, the expectation for the accumulated CAPEX remains to be around USD 7bn.
Earnings in Q3 are expected to exceed the level for Q2 2021. Trading conditions for the quarters ahead are, however, still subject to a higher-than-normal volatility due to the temporary nature of current demand patterns, disruptions in the supply chains and equipment shortages.
Highlights and sensitivity guidance
Revenue
| USD million | 2021 | 2020 |
|---|---|---|
|
Ocean
|
11,072
|
6,570
|
|
Logistics & Services
|
2,168
|
1,569
|
|
Terminals & Towage
|
1,148
|
878
|
|
Manufacturing & Others
|
344
|
316
|
|
Unallocated activities, eliminations, etc.
|
-502
|
-336
|
|
A.P. Moller – Maersk consolidated
|
14,230
|
8,997
|
EBITDA
| USD million | 2021 | 2020 |
|---|---|---|
|
Ocean
|
4,400
|
1,357
|
|
Logistics & Services
|
216
|
97
|
|
Terminals & Towage
|
423
|
237
|
|
Manufacturing & Others
|
41
|
49
|
|
Unallocated activities, eliminations, etc.
|
-16
|
-43
|
|
A.P. Moller – Maersk consolidated
|
5,064
|
1,697
|
EBIT
| USD million | 2021 | 2020 |
|---|---|---|
|
Ocean
|
3,580
|
552
|
|
Logistics & Services
|
153
|
42
|
|
Terminals & Towage
|
334
|
200
|
|
Manufacturing & Others
|
33
|
–
|
|
Unallocated activities, eliminations, etc.
|
-16
|
-43
|
|
A.P. Moller – Maersk consolidated
|
4,084
|
751
|
CAPEX
| USD million | 2021 | 2020 |
|---|---|---|
|
Ocean
|
313
|
202
|
|
Logistics & Services
|
36
|
41
|
|
Terminals & Towage
|
96
|
112
|
|
Manufacturing & Others
|
–
|
7
|
|
Unallocated activities, eliminations, etc.
|
7
|
–
|
|
A.P. Moller – Maersk consolidated
|
452
|
362
|
Sensitivity guidelines
Financial performance for A.P. Moller – Maersk for 2021 depends on several factors and is subject to uncertainties related to COVID-19, bunker fuel prices and freight rates, given the uncertain macroeconomic conditions.
All else being equal, the sensitivities for 2021 for four key assumptions are listed in the table below:
| Factors | Change | Effect on EBIT (midpoint of guidance) Rest of year |
|---|---|---|
|
Container freight rate
|
+/- 100 USD/FFE
|
+/- USD 0.7bn
|
|
Container freight volume
|
+/- 100,000 FFE
|
+/- USD 0.2bn
|
|
Bunker price (net of expected BAF coverage)
|
+/- 100 USD/tonne
|
+/- USD 0.2bn
|
|
Foreign exchange rate (net of hedges)
|
+/- 10% change in USD
|
+/- USD 0.1bn
|
