Maersk says its financial performance is expected to take a hit amidst the Coronavirus outbreak

Maersk says its financial performance is expected to take a hit amidst the Coronavirus outbreak
Written by:
Michael Harris
20th February, 16:29
Updated: 11th March, 08:57
  • Maersk says its financial performance is expected to take a hit amidst the Coronavirus outbreak.
  • Maersk recorded worse than expected financial performance in the fourth quarter.
  • CEO Soren Skou expressed confidence in an expected rebound in shipping industry in Q2.
  • Maersk expects $5.5 billion in earnings (EBITDA) in fiscal 2020.

The Danish shipping giant, Maersk, said on Thursday that its earnings in fiscal 2020 could take a hit due to the recent outbreak of Coronavirus in China. The company also highlighted that the ongoing economic slowdown and the previously flared trade tensions between the U.S and China have already kept the shipping industry weighed that is likely to get worse in the upcoming months as Coronavirus continues to hurt global business operations.

Maersk Posted Worse Than Expected Financial Results In The Fourth Quarter

The logistics company had recorded worse than expected financial results in the fourth quarter. Earlier on Thursday, the company declared its regional operations taking heat as the health emergency continues to keep factories closed in China after extended holidays for Lunar New Year.

In terms of global container demand, however, CEO Soren Skou expressed optimism and forecast a 1% to 3% growth in fiscal 2020. The CEO remarked that a rebound is likely in 2020’s second quarter. In 2019, a 1.4% growth was recorded in global container demand that was reported significantly lower than a 3.8% growth noted in the previous year.  

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The initial response in the stock market to Maersk’s statement on Thursday was a marginal drop that was followed by an around 4% gain later in the day. At the time of writing, Maersk is exchanging hands at 8,228 DKK that marks an around 15% decline in 2020 so far. Its performance in 2019, on the other hand, was reported upbeat with an annual gain of around 20% in the stock market.

Maersk had previously announced plans of focusing more on offering customized logistics solutions. In light of that, the logistics company revealed that it wishes to buy Performance Team. Performance Team is a United States-based warehousing and distribution firm.

Maersk Expects $5.5 Billion In Earnings (EBITDA) In Fiscal 2020

All in all, the company said that the Coronavirus crisis in China can potentially lead to months of delays in deliveries. Maersk recorded $1.46 billion in Q4 earnings (EBITDA) that came significantly shy of $1.51 billion estimate. In its guidance for fiscal 2020, the shipping company said it now expects $5.5 billion in earnings (EBITDA) as compared to the analysts’ estimate of $6.0 billion. In 2019, the figure was capped at $5.7 billion.

The global popularity of Maersk is evident from the fact that it handles 1 out of every 5 containers that are shipped via sea across the globe. The shipping firm said on Thursday that the price that its major customers like Walmart and Nike pay in order to have the sea-borne containers delivered is expected to see a decline due to the Coronavirus outbreak in China.

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