2 May 2024 (Lloyd's List) - MAERSK has raised the lower end of its full-year guidance on the back of the expectation that the crisis in the Red Sea will continue into the second half of 2024.
“We had a positive start to the year with a first quarter developing precisely as we expected,” said chief executive Vincent Clerc.
“Demand is trending towards the higher end of our market growth guidance and conditions in the Red Sea remain entrenched.
“This not only supported a recovery in the first quarter compared to the previous quarter, but also provide an improved outlook for the coming quarters, as we now expect these conditions to stay with us for most of the year.”
Maersk had previously expected earnings before interest in tax to remain negative with a worst-case scenario of -$5bn. It has now raised the bottom end of that outlook to -$2bn.
“We still anticipate the high number of new vessels being delivered during this and next year to eventually offset these factors and put the ocean markets under renewed pressure,” Clerc said.
“We therefore relentlessly continue to pursue our cost agenda with the aim of rolling back the disruption linked cost in ocean and restoring margins in logistics and services.”
Results for Ocean division saw improved rates and higher costs, but strong volumes, high capacity utilisation, and continued cost discipline meant an improved performance compared to the previous quarter.
Average loaded freight rate decreased by 18% year on year to $2,368 per feu across most trades but were up 23% compared to the fourth quarter, driven by Asia to Europe as well as India Middle East and North America trades.
Total operating costs were 7% higher at $7bn, driven by higher bunker costs and container handling costs, which increased by 19% and 5.5%, respectively, due to the Red Sea/Gulf of Aden situation.
While Logistics and Services saw significant growth in volumes, margins were at an “unsatisfactory” level due to low utilisation in some warehouses and short-term challenges implementing new customer contracts in the ground freight business in North America, it added.
Ebit for the segment decreased to $54m year on year and was down 10% on the fourth quarter.
“Maersk’s results for the first quarter were marked by increasing volumes while rates continued to be under pressure versus previous year, resulting in revenue of $12.4bn, a decrease of $1.9bn mainly from Ocean, however with an increase of $33m and $23m in Logistics and Services and Terminals, respectively,” it said.
Group ebit decreased by $2.1bn to $77m, largely driven by Ocean but with a “significant” increase of $93m in Terminals.
“The lower end of the original financial guidance is raised based on a strong market demand with container volume growth towards the upper end of the 2.5%-4.5% range and Maersk growing in line with the market,” the company said.
“Further, the ongoing Red Sea/Gulf of Aden situation is expected to continue into the second half of the year. Over-supply remains a challenge and will eventually prevail, but the impact is delayed.”
