-
Maersk beats expectations for Q2 2023 as the shipping sector reels from lower volumes and falling rates
-
US$13.0 billion revenue is 40% lower than the $21.7 billion in Q2 2022; profitability is strong at 12.4%
-
Upgraded 2023 outlook: underlying EBITDA raised to $9.5-11.0 billion and underlying EBIT tweaked to $3.5-5.0 billion
With robust Q2 results beating expectations, global transport and logistics mammoth A.P. Moller-Maersk has upgraded its outlook for 2023 while the ongoing market normalization characterized by lower volumes and falling rates continues to hound the shipping sector.
Maersk released its second-quarter financial results on Friday, August 4, saying revenue stood at US$13.0 billion, down 40% from $21.7 billion a year ago, while profitability was strong at 12.4%, although significantly lower compared with the extraordinarily strong Q2 2022.
Reflecting the strong first-half performance, Maersk raised its financial outlook. Now it expects underlying EBITDA of $9.5-11.0 billion (previously $8.0-11.0 billion) and underlying EBIT of $3.5-5.0 billion (previously $2.0-5.0 billion) despite a weakened second-half market outlook.
“The Q2 result contributed to a strong first half of the year, where we responded to sharp changes in market conditions prompted by destocking and subdued growth environment following the pandemic-fueled years,” Maersk chief executive Vincent Clerc said in a statement.
Clerc said decisive cost-containment measures that Maersk adopted, together with its contract portfolio, partly cushioned the impact of market normalization.
“Cost focus will continue to play a central role in dealing with a subdued market outlook that we expect to continue until end year,” the CEO said.
He said Maersk is “unwavering in our transformation” as it continues to “deliver integrated logistics solutions to… customers and amplify their supply chain resilience for the uncertain times ahead.”
Ocean revenue was halved to $8.7 billion in Q2 2023 from $17.4 billion previously as freight rates and loaded volumes contracted.
Maersk said volumes and rates stabilized at a lower level in Q2. Ocean continued to be impacted by lower demand, driven by a significant inventory correction, particularly in North America and Europe. A strong cost management partially offset the top line impact on the financial performance in Ocean.
Revenue in Logistics & Services was $3.4 billion in Q2 2023, vs. $3.5 billion a year ago. Maersk said the segment was suffered from lower volumes due to the continued destocking and weaker consumer demand, as well as low rates. The group said logistics market demand will stay subdued as long as the inventory correction is ongoing.
Revenue in Terminals decreased to $950m from $1.1 billion, influenced by declining storage revenue and lower volumes amid lower consumer demand and less congestion in North America. Strong cost control contributed to a continued solid financial performance.
Maersk said the inventory correction that began in Q4 2022 appears to be prolonged and should last through yearend. The group now expects global container volume growth in the range of -4% to -1% compared with -2.5% to +0.5% previously. Ocean expects to grow in line with the market.
The group now expects capital expenditure to be at the lower end of the previously communicated ranges of $9.0-10 billion for 2022-2023 and $10.0-11.0 billion for 2023-2024.
In February this year, Maersk reported its “best result in history” of US$81.5 billion revenue in 2022, up 32% y-o-y, which drove up EBIT 57% to $30.9 billion as historically high shipping rates continued into H1 2022 amid strong demand for shipping services.
