Maersk Reports Record-Shattering Quarterly Earnings Amid Continued ‘Exceptional Market Situation’

The world’s largest shipping line tripled its earnings in the third quarter with no end in sight to supply chain disruptions driving high freight rates.

A.P. Moller – Maersk reported record earnings in Q3, 2021 as revenue grew by 68 percent to $16.6 billion. Third quarter EBIT was up almost five times to $5.9 billion and EBITDA tripled to $6.9 billion. Return on invested capital (ROIC) increased to 34.5 pct. for the past 12 months.

“In the ongoing exceptional market situation, with high demand in the US and global disruptions to the supply chains, we continued to increase capacity and expand our offerings to keep cargo moving for our customers,” said CEO Søren Skou. “Our integrator strategy is key to supporting our customers’ end to end logistics needs by designing a more stable Ocean business, strongly growing our logistics offering and relying on automated and efficient terminals.”

This “exceptional market situation” has driven high freight rates in its Ocean segment. Third quarter revenue almost doubled to $13.1 billion from $7.1 billion in 2020, when freight rates were already recovering from COVID-19 shutdowns. Ocean EBITDA increased by $4.4 billion to $6.3 billion and EBIT improved by $4.4 billion to $5.3 billion, Maersk said. In order to “further guarantee reliable transportation,” the company’s share of long-term contracts was increased and now accounts for around 64 percent of long-haul volumes compared to 50 percent a year ago.

Maersk said its Logistics & Services segment also continued the positive momentum with revenue increasing 38 percent to $2.6 billion, with 33 percent attributed organic growth. “The growth was driven by strong activity increase across all products and strong commercial synergies to Top 200 Ocean customers,” Maersk said.

In Logistics & Services, EBIT increased to $194 million from $100 million in same quarter last year. An EBIT margin of 7.5 percent came in well ahead of the company’s mid-term target of above 6 percent.

Gateway Terminals also had a strong Q3 with revenue growing to $1 billion in Q3 from $816 million last year as volumes increased by 9.6 percent, mainly coming from North America, Latin America and Asia as opening times were expanded and capacity utilization increased. Together with underlying efficiency improvements Terminals achieved a return on invested capital of 10 percent.

9 months into 2021, Maersk’s year-to-date revenue now stands at over $43 billion. Year-to-date EBITDA is now at $16 billion and EBIT is $13 billion. Underlying profit in Q3 came in at $5.4 billion and about $11.9 billion year-to-date.

Looking Ahead

The fourth quarter of 2021 and first quarter 2022 are shaping up to be big, as well.

Looking ahead, A.P. Moller – Maersk’s full-year guidance remains unchanged from its previous announcement on September 16, 2021. An underlying EBITDA is expected in the range of $22 to 23 billion, EBIT in the range of $18 billion to 19 billion and a free cash flow of minimum $14.5 billion.

Maersk said the Ocean segment is now expected to grow below the global container demand, which revised upwards to 7-9 percent expected growth in 2021 (previously 6-8 percent in 2021), “subject to high uncertainties related to the current congestion and network disruption,” Maersk said.

For 2021-2022, the expectation for the accumulated CAPEX remains unchanged at around $7 billion.

“The current trading conditions are still subject to a higher-than-normal uncertainty due to the temporary nature of current demand patterns, disruptions in the supply chains. However, current conditions are expected to continue at least into the first quarter of 2022, resulting in an EBITDA for Q1 2022 in line with Q4 2021,” Maersk said.

Speaking of End-to-End Logistics…

Coinciding with its earnings release, Maersk has announced its intention to acquire global freight forwarding company Senator International to expand its air freight network and it’s also adding aircraft, including three leased cargo planes to be operational from 2022 and two newbuilding Boeing aircraft to be deployed by 2024, through Maersk’s Star Air subsidiary.

Another notable revelation from Maersk’s earnings… Maersk’s Board of Directors has decided to extend the current share buy-back program by another $5 billion in 2024 and 2025.

“As a natural next step in expanding our multi logistics offering we today announce the acquisition of SENATOR INTERNATIONAL and the ordering of additional aircraft, building on our existing Air Freight capabilities and adding even more flexibility to our customers’ supply chains,” said Skou. “Given the significant progress of our transformation into a logistics integrator and the continued commitment to shareholder returns, the Board of Directors has decided to extend the current share buy-back programme by an additional USD 5bn over the years 2024 and 2025.”