Maersk reports lower Q2 & H1 profit

Danish container shipping major Maersk reported an underlying profit of US$ 623 million in the second quarter of 2024, down by around 52% from last year’s US$ 1.3b. The figure was adjusted for net gains of US$ 208m, driven primarily by vessel and container sales in Ocean.

For the first half of the year, the company reported a profit of US$ 1.04b, considerably down from last year’s equivalent of US$ 3.9b.

Maersk’s Q2 revenue stood at US$ 12.8b, slightly down from US$ 13b reported a year earlier, stemming from a decrease in Ocean of US$ 333m and by US$ 129m as a result of the Svitzer demerger. Revenue in Logistics & Services and Terminals increased by US$ 246m and US$ 139m, respectively.

Q2 EBITDA decreased to US$ 2.1bn (US$ 2.9b), mainly related to a decrease in Ocean of US$ 852m driven by a negative timing effect from rates and higher costs, partly offset by higher volumes. In Logistics & Services, EBITDA increased due to higher volumes and Terminals increased by 23% due to higher volumes and revenue per move.

“Our results this quarter confirm that performance in all our businesses is trending in the right direction. Market demand has been strong, and as we have all seen, the situation in the Red Sea remains entrenched, which leads to continued pressure on global supply chains. These conditions are now expected to continue for the remainder of the year,” CEO of A.P. Møller – Mærsk A/S, Vincent Clerc, said.

“As we look ahead, our focus remains on leveraging organic growth while exploring opportunities for value-accretive acquisitions particularly in Logistics. We will maintain tight cost control and high asset utilization, and further execute on our fleet renewal program.”

Given the ongoing tight vessel capacity, Maersk is returning to shipyards with plans to sign newbuilding orders and time-charter contracts, aiming to secure a total dual-fuel capacity of 800,000 TEU, with deliveries expected between 2026 and 2030.

Read more: Maersk to add up to 60 dual-fuel ships, announces turn to bio-LNG

Ocean’s performance

The profitability of Maersk’s Ocean business in Q2 was significantly impacted by the continuing Red Sea/Gulf of Aden situation, which resulted in re-routing south of Cape of Good Hope as well as increased freight rates, mainly in Asia exports.

Revenue fell by US$333 million to US$8.4 billion, despite a 6.7% increase in volumes and a 2.3% rise in loaded freight rates. Maersk ascribed the decline to the timing effects of rates. EBITDA also saw a significant drop, decreasing to US$1.4 billion, compared to US$2.3 billion in Q2 2023, as a result of reduced revenue and higher costs. Consequently, the EBITDA margin shrank by 9.2 percentage points to 16.8%. EBIT decreased from US$1.2 billion to US$470 million.

For H1, revenue decreased by 12% to US$ 16.4b (US$ 18.6b), driven by a decrease in freight revenue due to lower rates by 8.1%, partially offset by higher loaded volumes by 7.1%. Ocean delivered an EBIT margin of negative 2.0% over the last twelve months, below the target of 6% under normalised conditions, due to continued pressure on rates.

Outlook

Due to the continued supply chain disruptions caused by the ongoing situation in the Red Sea/Gulf of Aden and robust container market demand, Maersk raised its financial guidance for 2024. Specifically, the company lifted projections from underlying EBITDA of US$ 7-9b to US$ 9-11b and EBIT of US$ 1-3b to US$ 3-5b.

According to Maersk, global container demand is estimated to have grown between 5-7% y/y in Q2, with all import regions contributing positively except for Africa. Import growth in Q2 was strongest in Latin America, North America and Far East Asia. On the export side, Chinese exports stood out once more with y/y growth close to 10% in Q2. Global container demand growth is expected to remain positive in coming quarters, but likely at a slower pace. Given that it has exceeded expectations in the first half of the year, the estimated range for demand growth for 2024 is moved upward, between 4-6%.