Maersk and Hapag-Lloyd issue profit warning due to corona crisis
Container carriers Maersk and Hapag-Lloyd have issued a profit warning because of the global corona crisis. The global economy is being hit hard as a result of the virus outbreak, which of course has repercussions on the expected results of both shipping companies.
In February, Maersk announced a ‘weak start to the year’ due to the corona crisis. At the time, the Danish container giant announced an earnings forecast (ebitda) of 5.5 billion US dollars for the year as a whole. As the pandemic has spread to Europe and the United States in recent weeks, that prospect is no longer valid.
‘The current situation gives great uncertainties about the global demand for containers as a result of the Covid-19 pandemic and the measures taken by governments to contain the outbreak. That is why we have chosen to suspend our profit forecasts for 2020,’ said top executive Søren Skou in a trade report on Friday 20 March.
For the Ocean division (container shipping), Maersk expects growth to be in line or slightly lower than the market. However, measures are being taken to reduce investment costs.
The Danes still intend to pay out a dividend to its shareholders over 2019. Additionally, the programme that started last year to buy back large shareholdings remains intact.
Maersk’s trade announcement came just after the announcement of German competitor Hapag-Lloyd, which also expects a lesser year due to the pandemic. The Hamburg-based container carrier expects results for at least the first half year to be less good than previously expected.
The group’s earnings forecast for 2020 has been set at between 1.7 and 2.2 billion US dollars. This is close to the ebitda of almost 2 billion euros achieved in 2019, according to Friday’s annual figures. The Germans have not communicated any earlier forecasts for 2020.
The forecast is subject to greater uncertainties than normal, warned the company when the figures were published. ‘2020 will be a very unusual year, after we have seen that conditions in many markets have changed very rapidly in recent weeks as a result of the coronavirus,’ said CEO Rolf Habben Jansen of Hapag-Lloyd.
The CEO notes, however, that markets in China and other Asian countries that endured the first wave of coronavirus are recovering slowly, but faster than expected. However, this positive news is being considerably overshadowed by the fact that Western economies are now in the throes of collapse due to the virus. Habben Jansen: ‘Now that the impact is also becoming visible on the other continents, the effects will be considerable.’
This article first appeared (in Dutch) on Nieuwsblad Transport, a sister publication of SWZ|Maritime.