The world's biggest shipping company posted a shock 25% rise in profits as global demand starts to recover amid the pandemic

ReutersThe Maersk Line container ship Maersk Sentosa is helped by tugs as it navigates the River Mersey in Liverpool
  • Maersk the world’s biggest container shipping company beat its own forecast with a 25% increase in operating profit to $US1.7 billion in the second quarter of 2020 compared to Q2 2019..
  • Maersk said in June it was expecting operating profit of $US1.5 billion.
  • Maersk withdrew its full-year guidance in March because of uncertainty surrounding the pandemic.
  • But it said Wednesday it now expects EBITDA of between $US6 billion and $US7 billion for the whole of 2020.
  • Maersk CEO said it expects global demand for containers to be low in 2020, but expects volumes to “progressively recover” in Q3 20.
  • Visit Business Insider’s homepage for more stories.

Maersk, the world’s largest container shipping company posted an increase in operating profit of 25% to $US1.7 billion in Q2 beating it’s own expectations, as global trade recovers somewhat from the worst impacts of the coronavirus pandemic.

Maersk said Wednesday in its Q2 earnings report its operating profit rose across all segments from $US1.357 billion in Q2 2019 to $US1.697 billion in Q2 2020, marking a 25% increase year-on-year.

The company beat its own expectations, as it announced on 17 June it was expecting operating profit of $US1.5 billion.

Søren Skou, Maersk’s CEO said: “The continued improvement in operating results were driven by strong cost performance across all of our businesses, lower fuel prices and higher freight rates on Ocean and increased profitability in Logistics & Services.”

Maersk, which is often considered a key indicator of global economic health and demand, now expects earnings to level between $US6 billion and $US7 billion in 2020.

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The company had given an initial guidance of $US5.5 billion in March before suspending its full-year guidance due to the COVID-19 pandemic.

But the company’s revenues fell 6.5% to $US9 billion in the second quarter “mainly driven by a volume decrease of 16% in Ocean and 14% in gateway terminal,” Maersk said.

But it said the revenues, were “partially offset by increased freight rates and increased revenue per move in terminals.”

Maersk is expecting a slump in global demand for containers across 2020 due to COVID-19, but expects volumes to “progressively recover” in Q3 2020.

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Skou said: “As a result of the lock-downs, closed borders and travel restrictions around the world, we experienced significant problems in relieving our seafarers when their contracts expired, a persistent issue of serious concern to us, which we are proactively addressing.”

Maersk shares were up 5% at $US9,762 as of 7 a.m. ET.

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