The world's biggest shipping company posted a shock 25% rise in profits as global demand starts to recover amid the pandemic
- Maersk the world's biggest container shipping company beat its own forecast with a 25% increase in operating profit to $1.7 billion in the second quarter of 2020 compared to Q2 2019.
- South African shipping and logistics firm Grindrod also reported better-than-expected results on Wednesday, and its share price jumped by 5%
- Maersk CEO said it expects global demand for containers to be low in 2020, but expects volumes to "progressively recover" in Q3 20.
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Maersk, the world's largest container shipping company posted an increase in operating profit of 25% to $1.7 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 $1.357 billion in Q2 2019 to $1.697 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 $1.5 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."
South African shipping and logistics firm Grindrod also reported better-than-expected results on Wednesday, and its share price jumped by 5% to 374c.
While Grindrod expects to suffer a headline loss of up to R247 million for the six months to end-June. But the company's share price was up almost 3% in opening trading, as it reported that it generated cash of more than R500 million from its operations "well up on the prior year" - despite the impact of Covid-19.
Maersk, which is often considered a key indicator of global economic health and demand, now expects earnings to level between $6 billion and $7 billion in 2020.
The company had given an initial guidance of $5.5 billion in March before suspending its full-year guidance due to the COVID-19 pandemic.
But the company's revenues fell 6.5% to $9 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.
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% by late afternoon, SA time.
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