Maersk 2022 First Quarter Financial Report Announced, Not Optimistic About The Shipping Market in The Second Half of The Year!

On May 4, AP Moller - Maersk (Maersk) released its first-quarter 2022 financial results, with record results across various businesses.

In the first quarter of 2022, Maersk's various businesses achieved record performance, thanks to the provision of end-to-end supply chain services for customers and the establishment of good long-term partnerships with customers. Revenue rose 55% to $19.3 billion, earnings before interest, tax, depreciation and amortization (EBITDA) were $9.1 billion, and free cash flow increased to $6 billion.

2022 performance impact factors:

Given uncertain macroeconomic conditions, Maersk's 2022 financial results depend on a number of factors and are subject to uncertainties related to the situation in Russia and Ukraine, COVID-19, bunker prices and freight rates.

Maersk CEO Søren Skou said: “In the first quarter, we delivered our best quarterly performance ever, with growth in our marine, logistics and terminal businesses. While global supply chains remain under intense pressure, we continue to build on our excellence The ability to help customers overcome logistics challenges. In the logistics business, customers have strong demand for all logistics products and solutions, and the company has achieved organic growth of more than 30% for five consecutive quarters. In addition, the terminal business also achieved the highest record in history. Good performance."

In the first quarter, Maersk's marine business revenue rose 64% to $15.6 billion, but volumes fell 7%. Revenues are expected to remain strong for the full year as 2022 increases in various long-term contracts compared to 2021 and is able to offset significantly higher costs.

Higher fuel costs and inflationary pressures on the route network and container handling costs pushed costs up 21% in the first quarter.

In the first quarter, logistics revenue increased by 41% year-on-year to $2.9 billion, driven by existing and new customers' recognition of the value of Maersk's integrated logistics solutions.

In the terminal business, revenue increased to $1.1 billion in the first quarter from $915 million in the same period last year, with a record return on invested capital (ROIC) of 12.5%. This result did not factor in the $485 million impairment of Global Port Investments (GPI).

Market Conditions and 2022 Results Expectations

Freight rates remained high in the first quarter due to the ongoing impact of the COVID-19 pandemic and capacity shortages on the supply side of the logistics industry.

Global container demand fell by 1.2% (compared to 8% in the same period in 2021); during this period, global airfreight volumes increased by 2.9%. Growth in trade volumes from the Far East to North America and Europe has flattened, and the situation in Russia and Ukraine has had a negative impact on trade flows and consumer confidence in Europe. As a result, global container demand is now expected to grow by -1/+1%, compared to previous expectations of 2-4%.

Maersk expects full-year 2022 actual EBITDA of $30 billion, actual EBIT of $24 billion, free cash The stream will exceed $19 billion. The forecast is based on performance in the first half of 2022 and higher contracted rates.

On the premise that the EBITDA in the first quarter is as high as 9.1 billion US dollars, Maersk expects that the estimated EBITDA for the remaining three quarters is only 20.9 billion US dollars, which is an average of about 6.96 billion per quarter. US dollar, significantly lower than the first quarter's recognized profit.

It can be seen that Maersk is not optimistic about the shipping market in the second half of the year. In the latest financial report, Maersk publicly stated that it is expected that the shipping market will gradually return to normal in the second half of the year.