A.P. Moller-Maersk's earnings expected to be hurt by coronavirus outbreak
China is a key market for the shipping company
Former undersecretary of state for economic growth Bob Hormats talks about all three major indices only seeing small pullbacks from coronavirus fears.
COPENHAGEN, Denmark (AP) — The world's largest shipping company, Denmark's A.P. Moller-Maersk, said Thursday it expects the outbreak of the new coronavirus in China to hurt its 2020 earnings.
The company said in its annual earnings report that the 2020 outlook "is subject to significant uncertainties and impacted" by the coronavirus outbreak, "which has significantly lowered visibility on what to expect in 2020."
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"As factories in China are closed for longer than usual in connection with the Chinese New Year and as a result of the Coronavirus, we expect a weak start to the year."
China is a key market for the shipper.
Workers wearing protective gears spray disinfectant as a precaution against the new coronavirus at Agricultural and Wholesale Products Center in Daegu, South Korea, Thursday, Feb. 20, 2020. (Kim Hyun-tae/Yonhap via AP)
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Mainland China has reported 2,118 deaths and 74,576 total cases. While the overall spread of the virus has been slowing, the situation remains severe in Hubei province and its capital, Wuhan, where the new coronavirus was first detected in December. More than 80% of the country's cases are in Hubei and 95% of the deaths, according to official figures.
The company issued the warning as it reported earnings for 2019, with revenue declining slightly to $38.9 billion from $39.3 billion. In the fourth quarter, revenue dropped to $9.7 billion from $10.2 billion.
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CEO Soeren Skou noted that despite weaker market conditions and global container growth of only 1.4%, the Copenhagen-based group "was able to improve profitability and cash flow."
"While we still need to improve returns, we delivered solid progress in our financial performance in 2019 while progressing the business transformation, in spite of weak trade growth, ongoing trade tensions and geopolitical uncertainty in many markets," he said.
Shares were up nearly 2% in Copenhagen.