A.P. Moller - Maersk (Maersk) delivered record results for the first quarter of 2022 across its businesses, driven by higher rates and strong long-term partnerships with customers seeking end-to-end supply chain support.
The Danish shipping company said its revenue was up 55% to US$19.3 billion as EBITDA more than doubled to US$9.1 billion. Maersk also said its free cash flow increased to US$6 billion.
Best quarterly earnings ever
"In Q1 we delivered the best earnings quarter ever in A.P. Moller - Maersk with growth across Ocean, Logistics, and Terminals. The increased earnings are driven by freight rates and by contracts being signed at higher levels. While global supply chains remain under significant pressure, we continue to demonstrate superior ability to help customers overcome logistic challenges," said Søren Skou, CEO of A.P. Moller - Maersk.
"In Logistics, we enjoyed strong demand for products and solutions across our portfolio leading to the 5th quarter in a row with organic growth of more than 30pct. while Terminals presented its best quarter ever," Skou added.
Maersk noted that in its Ocean business, the liner's revenue increased 64% to US$15.6 billion during the first quarter as strong rates more than offset a 7% a decline in volumes.
Higher revenue expectations for 2022
It added that the revenue for the full year is expected to continue to be strong as the increase in freight rates on our long-term contract portfolio will add approximately US$10 billion to revenue in 2022 compared to 2021.
Maersk noted that this will more than offset the significant increase in costs, which were up 21% in the first quarter given higher fuel costs and inflationary pressure on network and container handling costs.
In Q1, revenue in Logistics grew 41% to US$2.9 billion compared to same quarter last year as both existing and new customers continue to buy into the full value proposition of integrated solutions.
At the same time, Maersk said it continues to invest in acquisitions that add capabilities within technology and e-commerce and strengthen the portfolio such as Pilot Freight Services, which closed on May 2 this year.
In Terminals, revenue increased to US$1.1 billion in Q1 compared to the US$ 915 million seen last year — driven by higher storage income, improvement in revenue per move, and volume growth in the overall contracting market.
Russia-Ukraine war impact
Maersk said freight rates remained elevated in Q1 as Covid-19 and capacity shortages continued to disrupt the supply-side of the logistics industry. Meanwhile, global container demand declined by 1.2% compared to the +8% in 2021 while global air cargo volumes increased by 2.9%.
"Trade flow growth flattened from the Far East to both North America and Europe. Russia's invasion of Ukraine is having a negative impact on trade flows and consumer confidence in Europe. Given this background, global container demand is now expected to grow -1/+1pct, compared to an earlier expectation of 2-4pct," Maersk added.
As earlier announced, however, Maersk anticipates an underlying EBITDA of around US$30 billion this year, an underlying EBIT of around US$24, billion and a free cash flow above US$19 billion for the full year of 2022.
The Danish shipping giant increased its profit guidance by US$6 billion from the US$24 billion it was earlier expected to make.
"This is based on a strong first half of 2022 as well as higher contracted rates, while the normalisation in Ocean is still assumed to take place early in the second half of the year," Maersk said.