Maersk, the world’s largest container shipping firm, matched third-quarter profit expectations on Wednesday amid a stronger-than-expected pickup in demand.
The Danish company, seen as a bellwether for global trade, reported a 39% quarterly increase in earnings before tax, depreciation and amortization (EBITDA) to $2.3 billion, with $1.5 billion in free cash flow.
Revenue fell by 1.4% on the year, less than the company had expected, with declines in the company’s Ocean and Gateway Terminals operations “partially offset by a revenue increase in Logistics & Services of 11% due to acquisitions,” the earnings report noted.
Despite being negatively impacted by a “sharp drop in volumes” in the previous quarter, the company had upped its full-year guidance ahead of an anticipated spike in demand in the third quarter, as measures to contain the coronavirus pandemic were eased around the world.
The Board has also opted to issue a new share buyback program worth 10 billion Danish krone ($1.59 billion), which will run for 15 months from December 2020.
Maersk shares slipped 2% lower by late morning trade.
“A stronger-than-expected recovery in demand, following the slowdown of Q2 led to the reactivation of all available tonnage as well as significantly higher prices in the short-term market,” Maersk CEO Soren Skou said in a statement Wednesday, adding that the firm’s profitability focus helped deliver a particularly strong quarter in its ocean operations.
Skou said the pandemic continues to weigh on the world’s supply chains, and noted that this high level of uncertainty will persist into the coming quarters, with lockdown measures being reimplemented in various parts of the world.
Speaking to CNBC’s “Squawk Box Europe” on Wednesday, Skou projected that the pickup in demand would be sustainable into the first quarter of 2021.
“I think what we are benefiting from is that some of the money that would otherwise have gone into holiday travel and restaurant visits and events is being spent on goods — new flatscreens and sneakers and patio furniture — and that is clearly a benefit for our industry,” he said, adding that this was the reason volumes in the fourth quarter are returning to 2019 levels worldwide.
This article originally appeared on CNBC