Maersk, the world’s largest container shipping firm, has launched a $1.6 billion share buyback program. The Danish company matched third-quarter profit expectations on Wednesday in the midst of a stronger-than-expected pickup in demand.
"A stronger-than-expected recovery in demand, following the slowdown of 2Q led to the reactivation of all available tonnage as well as significantly higher prices in the short-term market," said Chief Executive Soren Skou.
The shipping giant raised its guidance for a second-time since October, reported a 39% increase in EBITDA to $2.3 billion in the third quarter, with $1.5 billion in free cash flow. The profit, before restructuring and integration costs, will reach $8 billion to $8.5 billion this year. Previous guidance was for $7.5 billion to $8 billion.
Maersk’s shipping volumes fell 3.6%, against the company’s guidance for a 3% drop. However, this was offset by a lower cost base, higher freight rates, reduced bunker cost due to lower fuel prices, and lower bunker consumption. The shipping company’s average freight rates rose 4.4% on year.
It posted quarterly net profit attributable to shareholders of $927 million, compared with $506 million a year earlier, and a little less than the $954 million seen in an analyst forecast from FactSet.
The company’s revenue fell 1.4% to $9.92 billion, compared with its own guidance of $9.9 billion.
Despite limitations due to the COVID-19 lockdown, global container volumes increased by around 1% in the third quarter. Maersk expected growth for containers to decrease by 4% to 5% in 2020 due to the coronavirus outbreak.
The organic volume growth is now expected to be below the average market growth, it said.