Maersk announced another set of good results for Q3 2022, even as the company admitted the good times may be over. As Soren Skou, CEO of Maersk, commented, there is “an energy crisis in Europe, high inflation, and a looming global recession, there are plenty of dark clouds on the horizon.”
For the quarter, the company as a whole saw revenue up by 37% year-on-year and Earnings Before Interest, Depreciation and Tax (EBITDA) up 60% to US$22.7bn and US$10.8bn respectively.
Maersk stated that even in the third quarter “demand for logistics services moderated across global supply chains” although “supply-side bottlenecks continued to pose challenges, but there are signs of easing as demand slows and COVID 19-related restrictions in China diminish”. This has resulted in falls in freight rates combined with declines of 3% in container volumes compared to the same period last year.
Despite this, revenue at the ‘Ocean’ container shipping business was up 38% year-on-year to US$18bn whilst EBITDA was up 60% to $9.9bn. This strength was explained by Maersk as being due to an “average freight rate increase of 42%”, even in the face of higher costs and a fall in container volumes of 7.6%.
The other parts of Maersk’s business also continued to do well, with ‘Logistics & Services’ seeing a revenue growth of 61% to US$4.2bn and EBIT up 33% to US$258m. A good deal of this increase is due to acquisitions, something that is continuing with the integration of LF Logistics.
The key fact behind much of these results has been Maersk’s ability to lock-in higher revenues and profits through longer term container shipping contracts, which has protected it from the falls seen on the spot market. This will not last forever. Yet Maersk has not changed its expectations for profits, giving guidance of an “underlying EBITDA of around USD 37.0bn, an underlying EBIT of around USD 31.0bn”.
However, it still comments that “given the unfolding economic slowdown, which is also expected to continue into the coming year, APMM has lowered its outlook for the growth of 2022 global container demand to between -2/- 4% decline from previously the lower end of the +1/-1% range”. The container shipping market is decelerating.
Source: Transport Intelligence, 3rd November 2022
Author: Thomas Cullen
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