Maersk navigates a challenging market Ship’s crew

Maersk focuses on cost management as ‘strongest quarter of the year’ draws to a close.

Global shipping giant AP Moller – Maersk (Maersk) reported first-quarter results that were in line with expectations as the company tackled challenges stemming from continued destocking and congestion relief.

The lower volumes impacted all segments of Maersk’s business and resulted in a 26% decline in revenue to $14.2 billion from $19.3 billion in the year-ago quarter. Meanwhile, EBITDA fell to $4.0 billion from $9.1 billion and EBIT to $2.3 billion from $7.3 billion.

Despite the challenging market conditions, Maersk CEO Vincent Clerc expressed his satisfaction with the company’s financial performance in the first quarter and stressed the importance of proactive cost management as the company adapts to the changing business environment.

“We have delivered solid financial performance in a challenging market with lower demand caused by continued destocking,” Clerc said. “Visibility remains low for the remainder of the year and during this market normalization we remain focused on proactive cost management. As we adapt to a radically changing business environment, we continue to support our customers in addressing their supply chain challenges.”

In the Ocean segment, revenue declined $5.7 billion to $9.9 billion primarily due to lower freight rates and volumes amid slowing demand. However, the company’s cost containment efforts have been successful and the contract negotiation season for Ocean is proceeding as expected.

At Logistics & Services, revenue rose 21% to $3.5 billion, driven by consolidation of acquisitions. However, the segment was impacted by lower volumes caused by inventory corrections, particularly at North American and European retailers, partially offset by new commercial gains. In addition, the underlying business development was impacted by lower rates in air freight and weaker demand in e-commerce.

“We are pleased that customers continue to value the integrated logistics solutions and close partnership we offer,” said Clerk.

In the Terminals segment, lower volumes and storage revenue led to a decline in revenue from $1.1 billion to $876 million. However, strong cost control measures contributed to solid financial performance.

Looking ahead, Maersk expects volumes to gradually pick up in the second half of the year, but visibility remains low. The company’s 2023 guidance remains unchanged, with Q1 expected to be the strongest quarter of the year. The forecast is based on the expectation that the inventory correction will be completed by the end of the first half, which will lead to a more balanced demand environment, that global GDP growth will remain subdued in 2023 and that the global maritime container market will trade in a range of -2.5 % will grow. to +0.5%.

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