Maersk Raises its 2021 Profit Forecast by Another $5 Billion
Number-one ocean carrier Maersk is having an exceptionally good year. With freight rates driven sky-high by COVID-related demand and disruption, Maersk has reported some of the best quarterly earnings in its history, and it has raised its outlook for the rest of the year.
The company reported revenue of $14.2 billion and an underlying EBITDA of $5.1 billion, showing exceptionally healthy margins. Maersk said that the strong quarterly performance was mainly driven by the "continuation of the exceptional market situation, with strong rebound in demand causing bottlenecks in the supply chains and equipment shortage."
Container volumes rose by 15 percent year-on-year during the quarter, but that was just a small component of the increase in revenue. Average freight rates jumped 59 percent in the second quarter relative to the same period last year, reflecting both the downturn early in the pandemic - the weak first half of 2020 - and the surge in demand at the current stage of the pandemic.
Maersk said that the exceptional market situation is still expected to continue at least until the end of the year. The outlook for global market demand growth for the year has been revised up to 6-8 percent (about one percentage point), still mainly driven by American demand for Chinese goods. Accordingly, Maersk has raised its profit guidance dramatically upwards: it now expects full-year EBITDA in the range of $18-19.5 billion (about $5 billion more than previous guidance of $13-15 billion).
It is the second quarter in a row that Maersk has raised its full-year guidance by about $5 billion. In April, based on an extraordinary Q1 and strong expectations for the rest of the year, the line boosted its guidance for EBITDA from $8.5-10.5 billion to $13-15 billion.
Maersk isn't the only carrier to report excellent earnings. The rising tide has lifted all boats, including those of Japanese carrier ONE, which posted a $3.5 billion profit in its fiscal year ending in March - its best showing ever. Likewise, the heavily-subsidized South Korean carrier HMM posted its first profit in a decade in 2020, buoyed up by strong rates and utilization, and it recorded the highest quarterly profit in its history in the first quarter of 2021.