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A.P. Moller – Maersk Q3 2023 Financial Results: Navigating Turbulent Waters

In a pivotal quarter marked by shifting tides in the maritime industry, A.P. Moller – Maersk has reported financials reflecting significantly lower freight rates. The Q3 2023 results reveal a notable decrease in revenue by USD 10.6 billion to USD 12.1 billion, compared to USD 22.8 billion in the same period last year. This downturn is attributed to a drop in Ocean revenue by USD 10.1 billion, Logistics & Services by USD 665 million, and Terminals by USD 118 million.

The company attributes these declines to the normalization from the COVID-19-induced peak, resulting in lower volumes and rates compared to both Q3 2022 and Q2 2023. The oversupply situation in the Ocean sector has further compounded these challenges, leading to a reduction in earnings before interest, taxes, depreciation, and amortization (EBITDA) to USD 1.9 billion from USD 10.9 billion. Notably, the Ocean segment saw a decrease of USD 8.8 billion in EBITDA due to significantly lower freight rates.

EBIT and Financial Items

The earnings before interest and taxes (EBIT) for Q3 2023 dropped to USD 538 million from USD 9.5 billion, with an EBIT margin of 4.4%, impacted by decreased EBITDA, particularly in the Ocean segment. Logistics & Services witnessed a decrease in EBIT margin to 3.9% due to lower rates and volumes, while Terminals experienced a decline driven by lower storage revenue and the net positive impact of divestments and impairments taken in Q3 2022.

Financial items, net, presented a gain of USD 153 million, a positive shift from a loss of USD 303 million, influenced by increased interest income, decreased interest expense, and foreign exchange rate impact. Tax decreased to USD 137 million, primarily due to lower profit before tax.

Multi-year Comparison and Market Dynamics

Examining the multi-year perspective, the logistics industry faced disruption from COVID-19 from 2020 to 2022, causing significant challenges in global supply chains. The subsequent surge in demand for logistics services resulted in all-time high freight rates in Q3 2022. However, the high demand normalized as congestions eased, leading to a rapid decline in shipped volumes and rates starting in late Q3 2022.

In Q3 2023, the deterioration of rates regained momentum due to increased supply in the Ocean sector. A.P. Moller – Maersk, adapting to market dynamics, reported an underlying profit of USD 489 million, adjusted for net gains primarily from the sale of vessels and containers.

Financial Position and Share Buy-back

The company maintained a robust financial position with a net cash position of USD 6.8 billion. Share buy-back activities during Q3 included repurchasing 80,706 A shares and 321,132 B shares, worth DKK 5.2 billion (approximately USD 766 million). The company owns a total of 212,938 A shares and 898,475 B shares as treasury shares, corresponding to 6.32% of the share capital.

ESG Initiatives and Industry Collaboration

In September 2023, A.P. Moller – Maersk achieved a significant milestone with the delivery of the world’s first methanol-enabled container vessel, emphasizing its commitment to sustainability. Collaborating with CMA CGM, the company aims to develop high standards for sustainable, green fuels and operation of green methanol vessels. Three major deals were also announced for the low-greenhouse gas shipping solution ECO Delivery.

Financial Guidance for 2023

Looking ahead, A.P. Moller – Maersk adjusts its global container volume growth projection to -2% to -0.5%, expecting results towards the lower end of the previously communicated ranges for underlying EBITDA and EBIT. The company remains committed to its financial targets and prioritizes capital allocation to investments in the business, debt repayment, dividends, and share buy-backs.

Source: Maersk

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