Maersk Warns of ‘Dark Clouds on the Horizon’ for Container Shipping
Maersk delivered another record quarter in Q3 2022, but “dark clouds” are gathering on the horizon.
A.P. Moller – Maersk on Wednesday reported strong results for Q3 2022 with higher earnings across its three business segments; Ocean, Logistics and Terminals.
Revenue increased by 37%, and both EBITDA and EBIT increased around 60% compared to Q3 2021, to $22.8 billion, $10.9 billion and $9.5 billion, respectively. Profits came in at $8.9 billion, bringing group profit to $24.2 billion through the first nine months of 2022.
“Our third quarter result was another record and the 16th quarter in a row with year-on-year earnings growth,” said CEO Søren Skou.
Maersk said year on year growth in Logistics and Ocean contract rates were the main drivers of its improved performance. But demand for logistics services moderated across global supply chains in Q3, reflecting declining freight and charter rates relative to the previous quarter as the “expected normalization gained momentum through the quarter,” Maersk said.
While supply-side bottlenecks continued to pose challenges, Maersk says there are signs of easing as demand slows and COVID 19-related restrictions in China diminish.
“Ocean freight rates, which have driven the exceptional results we have delivered in 2022, were again up both year-on-year and compared to the second quarter. However, it is clear that freight rates have peaked and started to normalize during the quarter, driven by both decreasing demand and easing of supply chain congestion. As anticipated all year, earnings in Ocean will come down in the coming periods,” said Skou.
Maersk said global container volumes are estimated to have declined –3% year-on-year in Q3. As a result of slowing economic activity, Maersk now expects global container demand to contract between –2 and –4% this year.
“With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon,” warns Skou. “This weighs on consumer purchasing power which in turn impacts global transportation and logistics demand. While we expect a slow-down of the global economy to lead to a softer market in Ocean, we will continue to pursue the growth opportunities within our Logistics business.”
Looking ahead, Maersk confirmed its full year guidance calling for underlying EBITDA of around $37 billion, an underlying EBIT of around $31.0bn and a free cash flow above $24.0bn.
“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. Capex guidance for 2022-2023 remains unchanged at USD 9.0-10.0bn,” Maersk said.
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