A.P. Moeller-Maersk A/S is facing a weak year as the coronavirus outbreak takes a toll on shipping volumes and freight rates after broader market conditions sent the Danish shipping giant to an unexpected fourth-quarter loss.
The world’s biggest container ship operator said Thursday it has canceled dozens of sailings out of China since late January as factories there were closed for an extra week after the Lunar New Year and struggled to resume production.
Maersk Chief Executive Soren Skou said in an interview that quarantines and travel restrictions aimed at containing the spread of the virus have had “a huge impact” on China’s export volumes. “But it’s also hurting import volumes with not enough truck drivers to move things around,” he said.
Maersk has dropped more than 50 sailings from China ports since late January, part of the larger retrenchment of shipping services in and out of a country that is an anchor of global trade.
In the quarter ending in December, Maersk swung to an unexpected net loss of $72 million from a profit of $46 million in the year-earlier period. A FactSet analyst poll had expected a net profit of $343 million. The company said that the results were hurt by implementing a new international accounting standard for leases and 2019 figures aren’t comparable with last year.
Maersk, which is seen as a barometer of global trade, reported a revenue fall of 5.6% to $9.67 billion, missing expectations of $9.94 billion, as its shipping unit lowered capacity to adjust to market conditions.
It said the outlook for 2020 is subject to significant uncertainties and affected by the coronavirus, which has significantly lowered visibility on what to expect in the short term.
“As factories in China are closed for longer than usual in connection with the Chinese New Year and as a result of the Covid-19, we expect a weak start to the year,” the company said.
Maersk’s stock was down 3.9% to 8,228 Danish kroner in trading Thursday on the Copenhagen Stock Exchange.
For the full year, Maersk’s earnings before interest, taxes, depreciation and amortization rose to $5.71 billion, meeting the company’s own guidance of between $5.4 billion and $5.8 billion, but it expects to report a lower figure this year of around $5.5 billion.
The company’s main Maersk Line shipping unit saw revenue fall as volumes dropped 1.8% while freight rates slipped 0.4%. Maersk said it continued to cut its cost base at the unit while lower fuel prices also helped offset some of the weakness.