The world’s largest container shipping company AP Moller-Maersk has overcome worries about fallout from the US-China trade war to deliver better than expected profits but says it is planning for a sustained global slowdown.
“We have navigated quite well all these global trade tensions in this past year. The impact from the US-China trade tensions has been manageable,” chief executive Soren Skou told the Financial Times.
Mr Skou said that the Danish company — which is seen as a bellwether for global trade and transports about 18 per cent of the world’s seaborne freight — had benefited from trade liberalisation that affected three times more volume than US-China tariffs.
He added that US companies had switched some of their sourcing of goods away from China to south-east Asian countries such as Vietnam while US consumer spending had remained robust.
“It’s not really tariffs that decide the demand, it’s consumer spending in the US,” he said.
Maersk stuck to its profit guidance for this year but also warned there were “considerable uncertainties” due to slowing manufacturing growth and the potential for increased US tariffs on Chinese goods.
If the US presses ahead with its plans to impose tariffs on $300bn of Chinese goods — which President Donald Trump this week postponed until December — this would cut global container demand by 1 percentage point in 2020, Maersk warned. Container demand was up 2 per cent in the second quarter, the company said, well below the double-digit figures often recorded before the 2008 financial crisis.
It reported earnings before interest, tax, depreciation and amortisation of $1.36bn in the second quarter, ahead of the average analyst forecast of $1.24bn and last year’s $1.16bn. Revenues increased 0.6 per cent to $9.62bn. Shares in Maersk rose 4 per cent on Thursday morning.
Mr Skou said the company had assumed the global economy “would go down a gear or two” this year, adding: “Whether we end up in a recession or not, it’s too early to tell. But we’re planning for a low-growth scenario.”
Maersk is in the middle of one of the largest transformations by a European company in recent years, selling or spinning off almost all its energy businesses to focus solely on transport and logistics. It is trying to expand its land logistic activities to provide a balance to container shipping and port terminals but posted only small revenue growth in its non-ocean businesses in the second quarter.
However, at a group level Mr Skou said that the focus for this year was on increasing profitability. Return on invested capital increased to 3.1 per cent in the second quarter from just 0.1 per cent a year earlier, but is still far from Maersk’s goal of 7 per cent. “Revenue growth is not of huge importance to us right now . . . I need to make some money,” he added.