A.P. Moller – Maersk (Maersk) expects the subdued market to continue for the rest of the year as normalisation continues.
The Danish shipping and logistics company also raised its financial outlook for the full year of 2023 despite reporting a business slowdown in the first half.
Maersk said its revenue for the second quarter stood at US$13.0 billion, markedly down from the US$21.7 billion it reported during the same period in 2022. It noted that "profitability was strong" at 12.4%, despite being significantly lower compared to the extraordinarily strong Q2 2022.
"The Q2 result contributed to a strong first half of the year, where we responded to sharp changes in market conditions prompted by destocking and subdued growth environment following the pandemic fuelled years," said Vincent Clerc, CEO of Maersk, adding that the company's decisive actions on cost containment, together with its contract portfolio, cushioned some of the effects of this market normalisation.
"Cost focus will continue to play a central role in dealing with a subdued market outlook that we expect to continue until the end year," Clerc said, noting that Maersk will continue to invest in and deliver truly integrated logistics solutions to its customers and amplify their supply chain resilience for the uncertain times ahead.
Source: Maersk
For the second quarter, Maersk saw its ocean revenue halved to US$8.7 billion from US$17.4 billion, driven by decreased freight rates and loaded volumes.
"While the volume and rate environment stabilized at a lower level during Q2, Ocean continued to be impacted by lower demand, driven by a significant inventory correction, particularly in North America and Europe," Maersk said.
Revenue in Logistics & Services revenue stood at US$3.4 billion compared to US$3.5 billion. Maersk said the segment was also impacted by lower volumes due to the continued destocking and weaker consumer demand, as well as low rates.
"As in Ocean, market demand is expected to continue to be subdued as long as the inventory correction is ongoing," the ocean carrier said.
Meanwhile, revenue in Terminals decreased to US$950 million from US$1.1 billion and was influenced by the normalisation of storage revenue and lower volumes amid lower consumer demand and less congestion in North America.
Source: Maersk
Financial guidance for 2023
Maersk said the inventory correction observed since Q4 2022 "appears to be prolonged and is expected to last through year-end."
Based on the continued destocking, the company said it now sees global container volume growth in the range of -4% to -1% compared to -2.5% to +0.5% previously. Ocean, it noted, is expected to grow in line with the market.
For the full-year 2023, A.P. Moller – Maersk raises its financial guidance.
"Reflecting the strong first-half performance, Maersk raises its financial outlook and now expects underlying EBITDA of US$9.5 billion - US$11.0 billion (previously US$8.0 billion – US$11.0 billion), underlying EBIT of US$3.5 - 5.0bn (previously US$2.0 billion - US$5.0 billion) despite a weakened second half market outlook," Maersk said.
Maersk also now expects CAPEX to be at the lower end of the previously communicated ranges of US$9.0 billion - US$10 billion for 2022-2023 and US$ US$10.0 billion - US$11.0 billion for 2023-2024.