The Strategist

Maersk shows 44% rise in profits in 2020

02/12/2021 - 08:41

Moller-Maersk, the largest container shipping operator, presented its financial statements for the year 2020. Earnings before interest and taxes (EBITDA) rose by 44% to $8.3 billion in the period, and revenue was also up slightly, up 2% to $39.7 billion. In the fourth quarter, Maersk's EBITDA rose 88% to $2.7 billion and revenue was up 16.5% to $11.3 billion.

As the pandemic began, Maersk, like other freight carriers, suffered from a lack of orders, but then demand recovered and even increased, including due to the growth of online commerce. As the company notes, Maersk containers have been running at full capacity since August, something not seen in recent years, and freight rates have peaked. In 2020 Maersk shares showed the best growth since 2005 - by 42%.

However, the company's current statements have not impressed investors, and its shares have fallen by 8%. This is due to several factors at once. Maersk's annual and quarterly results, despite the growth, were worse than expected. Analysts polled by Bloomberg forecasted EBITDA of $8.6 billion in 2020 and $3.06 billion for the quarter. In addition, investors found Maersk's 2021 projections too modest: the company expects EBITDA to reach between $8.5 billion and $10.5 billion this year.

Moreover, a significant growth of income last year is associated with an increase of freight rates, due to higher demand for transportation. However, according to Maersk's own forecast, starting from April, the situation will normalize, which means that rates will go down or at least they will not rise further. "Investors have the impression that profits have probably reached the ceiling at the moment, because its main driving force, namely high freight rates, has peaked," says Nordnet investment economist Per Hansen.