A.P. Moller – Maersk (Maersk) surprised with its second-quarter results in 2023, exceeding expectations amidst ongoing market normalization that led to reduced volumes and rates. The reported revenue stood at USD 13.0 billion, a significant drop from the USD 21.7 billion recorded in Q2 2022. Despite the decline, the company’s profitability remained strong at 12.4%, although notably lower compared to the exceptionally robust Q2 performance in the previous year. Reflecting on the impressive first-half performance, Maersk has revised its financial outlook and now anticipates underlying EBITDA in the range of USD 9.5 – 11.0 billion (previously USD 8.0 – 11.0 billion), and underlying EBIT between USD 3.5 – 5.0 billion (previously USD 2.0 – 5.0 billion), despite a weakened market outlook in the second half.
“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. Our decisive actions on cost containment, together with our contract portfolio, have cushioned some of the impacts of this market normalization. Cost focus will continue to play a central role in dealing with a subdued market outlook that we expect to continue until the end of the year. As we intensify our efforts, we remain unwavering in our transformation, investing in and delivering truly integrated logistics solutions to our customers, enhancing their supply chain resilience for the uncertain times ahead,” says Vincent Clerc, CEO of Maersk.
Ocean revenue witnessed a significant decrease, falling to USD 8.7 billion from USD 17.4 billion, mainly driven by a decline in freight rates and loaded volumes. Though the volume and rate environment stabilized at a lower level during Q2, Ocean continued to face the brunt of lower demand, particularly due to a significant inventory correction in North America and Europe. The company’s strong cost management strategies helped offset some of the impact on Ocean’s financial performance.
Logistics & Services revenue also experienced a dip, amounting to USD 3.4 billion compared to USD 3.5 billion. This segment was similarly affected by lower volumes caused by ongoing destocking and weakened consumer demand, leading to lower rates. Like Ocean, the market demand in Logistics & Services is expected to remain subdued as long as the inventory correction persists.
Revenue in Terminals declined to USD 950 million from USD 1.1 billion, influenced by the normalization of storage revenue and lower volumes due to reduced consumer demand and decreased congestion in North America. Nonetheless, robust cost control measures contributed to a sustained solid financial performance.
Looking ahead to 2023, the inventory correction observed since Q4 2022 is expected to extend until year-end. Consequently, A.P. Moller – Maersk now projects global container volume growth in the range of -4% to -1%, as opposed to the previous projection of -2.5% to +0.5%. Ocean anticipates growing in line with the market.
For the full-year 2023, A.P. Moller – Maersk has raised its financial guidance. CAPEX is now expected to be at the lower end of the previously communicated ranges, specifically USD 9.0 – 10 billion for 2022-2023 and USD 10.0 – 11.0 billion for 2023-2024.
As for cash distribution to shareholders, during Q2 2023, a total distribution of USD 2.4 billion occurred through dividend withholding taxes paid amounting to USD 1.5 billion and share buy-backs of USD 868 million.
