Maersk showed good performance in Q3 and recorded a lesser-than-expected revenue fall of 1.4%.
Danish integrated shipping company Maersk AS (OTCMKTS: AMKBY) has reported profits in Q3 as the company rebounds faster than expected. The company released its 2020 Q3 earnings report on the 18th of November.
After the news, the company’s stock price has started to move upwards. At the time of writing, Maersk stock is 5.75% up, trading at $9.52. And that’s the highest level since 2017.
According to the earnings report, the world’s largest container shipping firm Maersk pulled in a 39% increase in the third quarter. This quarterly increase is about $2.3 billion earnings before tax, depreciation, and amortization (EBITDA), with $1.5 billion in free cash flow.
Referring to the coronavirus pandemic and its effects on the global economy. The company said:
“In Q3, the global economic environment was still severely impacted by the spread of the COVID-19 pandemic and its effect on the economies on all continents. However, volumes have decreased lesser than expected. As costs were kept well under control and freight rates have increased due to recovery in demand, earnings in Ocean and Logistics & Services.”
Maersk in Q3
Maersk also recorded a lesser-than-expected revenue fall of 1.4% to $9.9 billion. In 2019 Q3, the company reported over $10 billion in revenue. The revenue loss happened majorly as a result of a 3.6% volume decrease in Ocean and 3.7 in gateway terminals operations “partially offset by a revenue increase in Logistics & Services of 11% due to acquisitions.”
The CEO of Maersk Soren Skou said in a statement as the company rebounds:
“A stronger-than-expected recovery in demand, following the slowdown of the Q2 led to the reactivation of all available tonnage as well as significantly higher prices in the short-term market.”
The CEO added that three objectives are guiding the company’s decisions as the pandemic persists. Skou said the first objective is to protect employees, also to serve customers by ensuring that the company’s global ports and network are available. Also, Skou mentioned that another objective of the company during the worldwide health crisis is to join the society in fighting the virus.
Maersk Initiates New Share Buy-Back Program
In addition, the company’s Board of Directors has decided to launch a new share buy-back program. The program would last for 15 months starting from December 2020. As noted in the published earnings result, the buy-back program would worth about $1.6 billion.
Before now, the Board has issued buy back shares of nearly $1.5 billion in the second quarter of 2019. The program lasted for 15 months and was concluded on the 24th of July. Now, the new share buy-back program will be in different phases. The first phase of the program, worth about $500 million, should begin on the 1st of December. Maersk said the phase would last through April 2021.
The company also revealed that the board is yet to approve the concluding phases of the buy-back program. The Board will conclude on the details for the remaining phases during the Annual General Meeting in March 2021.
More news from the business world can be found here.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
