Deals valued at nearly $1 billion combined come as Maersk, the world’s largest container shipper, reports strong earnings
Denmark-based Maersk reported a 58% increase in revenue for the second quarter on high shipping volumes and freight rates. PHOTO: MICHAEL KOOREN/REUTERS
By Paul Page Aug. 6, 2021 2:13 pm ET
A.P. Moller-Maersk A/S reported robust earnings helped by a frenetic global shipping market, announced it bought two e-commerce logistics companies together valued at nearly $1 billion, and mapped out more, potentially larger acquisitions. Maersk, the world’s largest container shipping line by capacity, said Friday that is acquiring Salt Lake City-based Visible Supply Chain Management LLC, which operates nine fulfillment centers across the U.S., and Netherlands-based B2C Europe in separate deals with a combined enterprise value of $924 million. The purchases follow a series of acquisitions and investments in sectors including warehousing, customs brokerage and trucking technology, aimed at extending Maersk’s expansion beyond ocean freight into inland logistics. “Our strategy has been to provide a more integrated solution,” Maersk Chief Executive Soren Skou said in an interview. “So we are moving from shipping containers from port to port to shipping from door to door. For that to happen, we need to grow our capabilities on shore,” he said.“Now, we are looking to be able to deliver goods from Asia to the U.S., not just to the port but also to someone’s door.” Denmark-based Maersk reported earnings lifted by high shipping volumes and freight rates amid strong consumer demand and a rush by companies to restock depleted inventories after the lifting of coronavirus restrictions. Second-quarter net profit totaled $3.75 billion, up from $443 million in the year-earlier period, when results were weighed down by the economic slowdown resulting from pandemic restrictions. Revenue rose to $14.23 billion, up 58% from a year earlier. Earnings before interest, taxes, depreciation and amortization nearly tripled to $5.06 billion. Maersk said in a preliminary financial report earlier in the week that it expects third-quarter earnings to outpace the second quarter’s. Volumes in the core Maersk Line business were up 15% from a year earlier and average freight rates were up 59%. Visible SCM is the larger of the two new acquisitions, with an estimated $550 million in annual revenue, while B2C Europe brings in about $140 million, according to investment analyst group Jefferies. The additional revenue is tiny compared with Maersk’s, but Mr. Skou said the operations would help the company’s global sales force sell a broader array of services to big customers. He said the strong financial foundation would help accelerate a strategy Maersk launched in 2017 to make end-to-end logistics a bigger share of its revenue. “We have a very substantial balance sheet, and quite a substantial war chest. We had $11.5 billion in free cash flow and we have no debts, so we have quite a significant ability to make acquisitions,” he said. “We hope to announce more acquisitions by the end of the year,” he said, adding that two additional targets “would probably be a reasonable” near-term expansion. Maersk’s results are part of a stream of robust financial reports across the container-shipping sector as the economic rebound from the impact of coronavirus pandemic restrictions encourages retailers and manufacturers to rush more goods to markets. The sudden rush to restock, along with a series of supply-chain disruptions at key chokepoints, has tied up big volumes of shipping capacity and sent freight prices skyrocketing. Germany-based container line Hapag-Lloyd AG said late last month it expects operating earnings for the first half of 2021 to reach roughly $3.5 billion, up from $600 million in the year-earlier period. Ocean Network Express Holdings Ltd. of Japan said that it expects a profit of more than $2.5 billion for the quarter ended June 30 and that revenue more than doubled from a year earlier. With ocean carriers in their traditional peak shipping season ahead of the holidays, Mr. Skou sees no relief from today’s congestion and delays before year-end. “The whole global supply chain is under pressure,” he said, “Even if the consumer demand should turn down at some point, we will see the inventory restocking continuing. Right now, we can’t see into 2022.”
—Dominic Chopping contributed to this article.
Write to Paul Page at paul.page@wsj.com