Danish shipping giant A.P. Moeller-Maersk AS on Friday posted forecast-beating third-quarter net profit amid lower fuel costs, but warned that growth in the container market is slowing more than previously thought as global economies weaken and escalating trade restrictions weigh.
Maersk MAERSK.B, +3.18% reported a total quarterly net profit of $520 million from $396 million in the year-earlier period. A FactSet analyst poll had expected a net profit of $359 million. Net profit attributable to shareholders totaled $506 million.
Maersk, which is considered a barometer of global trade, confirmed that revenue slipped 1% to $10.06 billion, as guided in a recent announcement.
The company’s main shipping unit saw relatively flat revenue as a 2.1% rise in volumes was offset by a 3.6% drop in freight rates. Profitability in the unit jumped, as Maersk continued to cut its cost base at the unit while lower fuel prices also helped.
Global container trade softened to around 1.5% in the quarter from around 2.0% in the second quarter, reflecting a broad-based weakening of the economic environment in all the main economies and negative effects from escalating trade restrictions, it said.
As a result, Maersk cut its organic volume growth target for its main shipping unit. It now expects growth to be in line with or slightly lower than the average market growth, which is expected at 1%-2% for 2019.
Previously Maersk saw 2019 ocean unit organic volume growth in line with market guidance for growth of 1%-3%.
Globally, implemented trade restrictions have likely reduced container trade by 0.5%-1.0% in 2019, Maersk said. In 2020, the negative impact on container volumes from tariffs is expected to be around 1%.
Maersk last month raised its full-year guidance and Friday reiterated that it continues to expect 2019 earnings before interest, taxes, depreciation and amortization of between $5.4 billion and $5.8 billion.
Earnings before interest, taxes, depreciation and amortization was $1.66 billion in the third quarter, up 14% on the year.
“While the global container demand, as expected, was lower in 3Q due to weaker growth in the global economy, we continued to improve our operating results,” said Chief Executive Soren Skou.
“We will continue our focus on profitability and free cash flow in 4Q and into 2020.”