The fact that 2022 was an “unprecedented” performance for Maersk can be of little surprise. As the company stated, “the abnormal market conditions in the first part of the year” resulted in a “solid performance across all businesses.” However, “declining consumer demand led to a significant de-stocking in all segments” and this augurs badly for the container shipping market.
Company revenue was up 32% year-on-year to US$81.5bn, EBIT (Earnings Before Interest and Tax) increased 57% at US$30.9bn and profit before tax was US$30.2bn as compared to US$18.73bn in 2021. At the core Ocean business revenue and EBIT both leapt-up at $64bn and $29bn respectively. Yet the fourth quarter saw revenue fall by 8.8% year-on-year, with EBIT falling even more heavily.
The reason of course, was the combination of falling volumes and falling freight rates, although in Q4 Maersk said rates were only 3.5% lower year-on-year. Vincent Clerc CEO of A.P. Moller – Maersk, said that contract rates were falling towards the rates seen in the spot market. Other parts of the business are on different trajectories, with Logistics & Services seeing revenue up by a third and profits up by half. However, these numbers are flattered by acquisitions and organic growth was around 21%. If anything, the performance in Q4 was improving.
At the terminals business both revenue and EBIT edged-up in single digit percentages for the whole of 2022, sustained by higher-rates and demurrage charges. Yet the business in Q4 took a downturn with EBITDA falling by $100m to $288m in Q4 2022.
The alarming part of these numbers was the forecast. Maersk said that it expected EBIT to be between $2-5bn next year, approximately 90% fall whilst EBITDA will fall to $8-11bn as compared to the $36.8bn of 2022. This will be due to “2023 global GDP growth is expected to be muted and global ocean container market growth to be in a range of -2.5% to +0.5%,” although Maersk didn’t elaborate on its expectations for the freight-rate. The good news is that it expects the market correction to be largely over by the second half of 2023, due to the need for re-stocking.
Author: Thomas Cullen
Source: Ti Insights
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