AP Moller – Maersk posts strong Q2 financial results despite adverse market conditions

The A.P. Moller – Maersk (Maersk) reports a second quarter in 2023 above expectations, while market normalization continued to be ongoing during the period, leading to lower volumes and rates. Revenue stood at US＄13.0 billion, compared to US＄21.7 billion in Q2 2022, and profitability remained strong at 12.4%, albeit lower compared to the exceptional Q2 2022. Reflecting strong first half performance, Maersk raises its financial outlook and now expects underlying EBITDA of USD 9.5 – 11.0 billion (previously USD 8.0 – 11.0 billion), underlying EBIT of USD 3.5 – 5.0 billion (previously USD 2.0 – 5.0 billion), despite a weakened market outlook for the second half.

“The second quarter result contributed to a solid first half of 2023, in which we responded to sudden changes in market conditions, caused by destocking and the moderate growth environment after the pandemic years. Our decisive cost containment actions, together with our portfolio of contracts, cushioned some of the effects of this market normalization. The focus on costs will continue to play a central role in dealing with a subdued market outlook that we expect to continue through the end of the year. As we step up to this agenda, we are unwavering in our transformation and continue to invest in and provide truly integrated logistics solutions for our customers, enhancing the resilience of their supply chains for the uncertain times ahead,” says Vincent Clerc, CEO of Maersk.

Marine segment revenue decreased from US＄17.4 billion to US＄8.7 billion, driven by a reduction in freight rates and volumes loaded. While the volume and rate environment stabilized at a lower level during the second quarter, the marine segment continued to be affected by lower demand, driven by a significant inventory correction, particularly in North America and Europe. Strong cost management partially offset the impact of revenue on financial performance in the Ocean segment.

Revenue in Logistics & Services was US＄3.4 billion, compared to US＄3.5 billion. The segment was also affected by lower volumes due to continued destocking and weaker consumer demand, as well as low rates. As with the Ocean segment, market demand is expected to remain weak while the inventory correction is ongoing.

Revenue in Terminals decreased from US＄1.1 billion to US＄950 million and was influenced by normalizing storage revenue and lower volumes amid lower consumer demand and less congestion in North America. Strong cost control contributed to continued solid financial performance.

Financial guidance for 2023
The inventory correction seen since the fourth quarter of 2022 appears to have lingered and is now expected to last through the end of the year. Based on continuous destocking, A.P. Moller – Maersk now sees global container volume growth in the range of -4% to -1%, compared to -2.5% to +0.5% previously. The Ocean segment is expected to grow in line with the market.

For the entire year 2023, the A.P. Moller–Maersk increased its financial guidance. The A.P. Moller – Maersk now expects CAPEX to be at the lower end of the previously communicated ranges of USD 9.0 – 10 billion and USD 10.0 – 11.0 billion.

Distribution of profits to shareholders
Total profit distribution to shareholders of US＄2.4 billion occurred during the second quarter of 2023, through withholding taxes on dividends paid of US＄1.5 billion and share repurchases of US＄868 million.

Sharing is caring!