COPENHAGEN (Reuters) - Cost-cutting and price rises will help Maersk (MAERSKb.CO) deliver higher first-quarter earnings than a year ago, the shipping giant said on Friday, though it scrapped its full-year forecast due to uncertainty caused by the coronavirus pandemic.
The Danish company said its guidance on earnings before interest, tax and amortisation (EBITDA), previously $5.5 billion for the year, was suspended until further notice.
Preliminary results showed it made first-quarter EBITDA of around $1.4 billion.
Despite lower volume growth, Maersk said savings and steps to offset the higher cost of low-sulfur fuel had buoyed earnings. The company announced a round of job cuts in November.
“We consequently expect to deliver a Q1 2020 which is better than Q1 2019, despite declining volumes across our businesses, driven by the COVID-19 pandemic,” chief executive Soeren Skou said in a statement.
Maersk shares were up more than 9% in early trading.
The company said it mitigated higher fuel costs by making and blending its own fuel, as well as passing the cost on to its customers.
Its ongoing share buy-back program as well as proposed dividends for 2019 would not be affected by its decision to scrap financial guidance, Maersk said.
The company expects volume growth in its main Ocean division to be roughly in line or slightly lower than the market growth, while it reiterated its forecast for capital spending of $3-4 billion.
It said it would take further measures to reduce spending in 2020.
Rival container shipping company Hapag-Lloyd (HLAG.DE) said on Friday the coronavirus pandemic would curb business growth until at least the middle of the year.
Reporting by Nikolaj Skydsgaard; editing by Jason Neely and Mark Potter