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Maersk sees 55% jump in Q1 revenue on the back of higher freight rates
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Revenue rose to US$19.3 billion from $12.44 in the same quarter last year
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EBITDA more than doubles to $9.1 billion with growth across ocean, logistics and terminals segments
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Maersk expects full-year revenue to remain strong as rising freight rates on Maersk’s long-term contract portfolio will add $10 billion to its 2022 revenue
Danish shipping giant A.P. Moeller-Maersk announced record results for the first quarter of 2022, its fifth straight quarter of growth, on the back of higher freight rates and strong long-term partnerships with customers seeking end-to-end supply chain support.
Revenue rose 55% to US$19.3 billion from US$12.44 in the same quarter last year. Earnings before interest, tax, depreciation and amortization (EBITDA) more than doubled to US$9.1 billion from $4.04 billion, and free cash flow increased to $6 billion, the group said in a May 4 statement.
Consolidated first quarter EBIT was US$7.3 billion, a roughly 135% spike from a year ago.
“In the first quarter, we delivered the best earnings quarter ever in A.P. Moeller-Maersk with growth across Ocean, Logistics and Terminals. The increased earnings were driven by freight rates and by contracts being signed at higher levels,” said Soren Skou, chief executive of A.P. Moeller-Maersk.
He said that while global supply chains remain under significant pressure, the group continues to demonstrate superior ability to help customers overcome logistic challenges.
“In logistics, we enjoyed strong demand for products and solutions across our portfolio, leading to the fifth quarter in a row with organic growth of more than 30% while terminals presented its best quarter ever,” said Skou.
Maersk said revenue from its ocean segment surged 64% to $15.6 billion in the first quarter, as strong rates more than offset a 7% decline in volumes. The company expects full-year revenue to remain strong as the increase in freight rates on Maersk’s long-term contract portfolio will add around $10 billion to its 2022 revenue.
“This will more than offset the significant increase in costs, which were up 21% in the first quarter given higher fuel costs and inflationary pressure on network and container handling costs,” the company statement said.
Revenue from the logistics business grew 41% from a year ago to $2.9 billion as both existing and new customers buy into the full value proposition of integrated solutions.
Maersk said it continues to invest in acquisitions that add capabilities in technology and e-commerce and strengthen the portfolio, such as Pilot Freight Services, which closed on May 2, 2022.
In its terminal operations, Maersk increased its revenue to $1.1 billion in the first quarter from $915 million last year, and the return on invested capital (ROIC) was a record 12.5% before impairment in GPI of $485 million following the company’s exit from the Russian market.
Maersk said first-quarter freight rates remained high as Covid-19 and capacity shortages continued to disrupt the supply-side of the logistics industry. Global container demand eased 1.2% from more than 8% in 2021 while global air cargo volumes increased by 2.9%.
Trade flow growth flattened from the Far East to both North America and Europe. Russia’s invasion of Ukraine is having a negative impact on trade flows and consumer confidence in Europe. Given this background, global container demand is now expected to grow -1/+1%, compared with an earlier forecast of 2-4%
Maersk expects an underlying EBITDA of around $30 billion, an underlying EBIT of around $24 billion and a free cash flow above $19 billion for full-year 2022. This is based on a strong first half of 2022, as well as higher contracted rates.
Normalization of ocean operations is still assumed to take place early in the second half of the year.
