Management Review
In the latest interim report for Q2 2024, A.P. Moller-Maersk presented a detailed analysis of its performance amidst a turbulent market environment. The report, discussed and approved by the Board of Directors and the Executive Board, revealed that despite numerous challenges, Maersk remains committed to its strategic transformation towards becoming a global integrator of container logistics.
Financial Guidance and Targets
A.P. Moller-Maersk has adjusted its financial guidance for 2024-2025, anticipating CAPEX to be between USD 10.0-11.0bn due to ongoing fleet renewal. The underlying EBITDA is projected to be between USD 9.0-11.0bn, while the underlying EBIT is expected to range from USD 3.0-5.0bn.
The company’s sensitivity guidance underscores the significant impact of various macroeconomic factors on its financial performance. For instance, a fluctuation of USD 100 per FFE in container freight rates could result in a USD 0.6bn change in EBIT, highlighting the volatility in the industry.
Ocean Segment
The Ocean segment faced considerable pressure, delivering a negative EBIT margin of 2.0% over the last twelve months, significantly below the target of 6%. This decline is attributed to persistent rate pressures and competitive market conditions. Despite these challenges, Maersk maintained its total average operated fleet capacity within the range of 4.1-4.3m TEU, demonstrating resilience and operational efficiency.
Logistics & Services Segment
In contrast, the Logistics & Services segment showcased more stable performance. The segment reported an external revenue of USD 7,285 million for the first half of 2024, a slight decrease from the USD 6,961 million recorded in the same period last year. This segment’s profitability, measured by EBITDA, was USD 614 million for the first six months of 2024.
Terminals Segment
The Terminals segment reported a revenue of USD 2,088 million for the first half of 2024, up from USD 1,826 million in the same period in 2023. This increase reflects the strategic investments and efficiency improvements undertaken by Maersk in its terminal operations. The segment’s EBITDA for the same period was USD 756 million, highlighting its critical role in the company’s overall performance.
Market Environment
The report also shed light on the broader market environment, noting that the financial performance for the rest of 2024 is heavily dependent on fluctuating macroeconomic conditions, bunker fuel prices, and freight rates. The company remains vigilant and adaptive to these changes, ensuring that it can navigate through the uncertainties and maintain its strategic objectives.
Roadmap Towards 2025
Looking ahead, Maersk remains focused on its mid-term financial targets introduced at the Capital Markets Day in May 2021. The company aims to achieve a return on invested capital (ROIC) above 7.5% every year under normalized conditions. However, the current ROIC stands at 2.0%, reflecting the recent profitability challenges. Maersk’s average ROIC from the start of 2021 to Q2 2024 was 32.8%, significantly above the 12% target set for the period 2021-2025.
*The full report can be found HERE
Source: A.P. Moller-Maersk
