Maersk Navigates Challenging Market

Maersk sets sights on managing costs as “strongest quarter of the year” comes to a close.

Global shipping giant A.P. Moller – Maersk (Maersk) reported a first quarter results that were in line with expectations, as the company navigated the challenges presented by a continued destocking and easing of congestion.

The lower volumes affected all segments of Maersk’s business, leading to a 26% decline in revenue to $14.2 billion, from $19.3 billion in the same quarter last year. Meanwhile, EBITDA decreased to $4.0 billion from $9.1 billion, and EBIT to $2.3 billion from $7.3 billion.

Despite the challenging market conditions, Maersk CEO Vincent Clerc expressed satisfaction with the company’s financial performance in Q1, and emphasized the importance of proactively managing costs as the company adjusts to the changing business environment.

“We delivered a solid financial performance in a challenging market with lower demand caused by a continued destocking,” said Clerc. “Visibility remains low for the remainder of the year and moving through this market normalisation, we remain focused on proactively managing costs. As we adjust to a radically changed business environment, we continue to support our customers in addressing their supply chain challenges.”

In the Ocean segment, revenue declined by $5.7 billion to $9.9 billion, primarily due to lower freight rates and volumes as demand softened. However, the company’s cost containment measures have been successful, and the Ocean contract negotiation season is proceeding in line with expectations.

In Logistics & Services, revenue grew 21% to $3.5 billion, driven by the consolidation of acquisitions. However, the segment was affected by lower volumes caused by inventory corrections, especially with North American and European retailers, which was partially offset by new commercial wins. Additionally, underlying business performance was impacted by lower rates in Air Freight and weaker demand in eCommerce.

“We are pleased to note that customers continue to value the integrated logistics solutions and close partnership we provide,” said Clerk.

In the Terminals segment, lower volumes and storage income resulted in a decrease in revenue to $876 million from $1.1 billion. However, strong cost control measures contributed to a solid financial performance.

Looking ahead, Maersk expects volumes to gradually pick up in the second half of the year, but visibility remains low. The company’s guidance for 2023 remains unchanged, with Q1 expected to be the strongest quarter of the year. Guidance is based on the expectation that inventory correction will be complete by the end of H1, leading to a more balanced demand environment, that 2023 global GDP growth remains muted, and that the global ocean container market will grow in a range of -2.5% to +0.5%.

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