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Fri 24 May 2019, 11:55 GMT

Maersk posts decline in bunker consumption, costs


Shipper spent less on marine fuel despite higher average price.

Image credit: Maersk
A.P Moller - Maersk reports that bunker costs for its Ocean segment fell year-on-year (YoY) by $52m, or 4.4 percent, to $1.142bn in the first quarter (Q1) of 2019 - despite a higher average price.

The average price spent on bunkers by Ocean in Q1 was $417 per tonne - a YoY rise of $35, or 9.2 percent.

However, the total amount of marine fuel consumed by Ocean in Q1 actually decreased YoY by 390,000 tonnes, or 12.5 percent, to 2.739m tonnes.

Quarterly Comparison

Q1 2019 Q1 2018 Q4 2018
Consumption (MMT) 2.739 3.129 2.848
Cost ($bn) 1.142 1.194 1.325
Avg Price ($/mt) 417 382 465

Maersk also noted that Rotterdam bunker prices were 24 percent higher by the end of Q1 2019 compared to the end of last year, and 14 percent higher compared to Q1 2018.

Discussing future market trends, Maersk posited: "Forward markets indicate that bunker prices will increase further by 1.6% in Q2 2019 compared to end of Q1 2019. Thereafter, forward market pricing points to a 13% decline in bunker prices by Q4 2019, compared to Q1 2019."

The boxship operator added that the "anticipated" price drop was due to an expected wider spread between the price of crude and bunker fuel, "reflecting the market's view of the impact of the IMO 2020 sulphur regulations on demand for high[-]sulphur bunker fuels".

Ocean EBITDA and revenue

Maersk's Ocean division recorded a YoY EBITDA growth of $275m, or 42.2 percent, to $927m in Q1.

Revenue in Q1 climbed YoY by $119m, or 1.7 percent, to $6.929bn.

A.P. Moller - Maersk: Key indicators

First-quarter EBITDA increased YoY by $567m, or 84.8 percent, to $1.236bn.

Maersk posted a profit before tax of $2m, an after-tax loss for the period of $656m and an underlying loss of $69m.

Revenue in Q1 was up $287m, or 3.1 percent, to $9.54bn.

Commenting on the results, Maersk CEO Soren Skou said: "We had a good start to 2019. In Q1, revenue grew by 2.5%, operating earnings improved by 33% and cash flow from operations doubled to USD 1.5bn. With a strong free cash flow of USD 3.5bn after the sale of the remaining shares in Total SA., we have significantly strengthened our balance sheet. The net interest-bearing debt is reduced by USD 2.4bn since Q4 and by USD 7.1bn since Q1 2018."

Guidance

In its guidance for 2019, Maersk said that a $100 change in the price of bunker fuel (net of expected BAF coverage) would lead to the group's EBITDA varying by $0.3bn.

Maersk maintains that it still expects to post an EBITDA of around $5.0bn in 2019.

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