Maersk Q1 2024 results show revenue decrease

Today, A.P. Moller – Maersk has released its financial results for Q1 2024. The company delivered a first quarter “in line with expectations showing a strong recovery in earnings compared to the fourth quarter of 2023.”

Furthermore, in its press release, Maersk emphasizes: “Results were driven by a good performance in Terminals and the combination of higher demand and a prolonged Red Sea crisis. As these conditions are expected to continue well into the second half of the year, Maersk lifts the lower end of its guidance range and now expects underlying EBIT at USD -2.0 to 0.0bn.”

The company’s results for Q1 were marked by increasing volumes while rates continued to be under pressure versus the previous year, resulting in revenue for Q1 of US$ 12.4bn (US$ 14.2bn), a decrease of US$ 1.9bn mainly from Ocean, however with an increase of US$ 33m and US$ 123m in Logistics & Services and Terminals, respectively.

EBITDA decreased by US$2.4bn to US$ 1.6bn (US$ 4.0bn), driven by lower earnings from Ocean. EBIT decreased by US$ 2.1bn to US$ 177m (US$ 2.3bn) with the performance of the Ocean division offset to some extent by a significant increase of US$ 93m in Terminals.

A total distribution of cash to shareholders of US$ 1.5bn took place during Q1 2024 through dividends paid of US$ 1.0bn and share buy-backs of US$ 443m.

Ocean

The start of 2024 has been significantly impacted by the ongoing situation in the Red Sea/Gulf of Aden with the implementation of a new network as crew safety and cargo protection were prioritised, causing market rates and costs to increase due to supply chain disruptions. EBIT remained in negative territory and significantly lower than in Q1 2023.

Loaded volumes increased by 7.5% compared to Q1 2023, led by an increase in contracts primarily in Asia-Europe, America, and intra-Asia trades, reflecting the higher market demand. The average loaded freight rate decreased by 18% compared to Q1 2023 and increased by 23% compared to Q4 2023, impacted by the Red Sea/Gulf of Aden situation.

Furthermore, loaded volumes increased to 2,928k FFE (2,724k FFE), however, decreased by 5.8% compared to Q4 2023 in line with normal seasonality.

The rerouting south of Cape of Good Hope led to a higher bunker consumption by 16% and higher operating costs by 7.0% compared to Q1 2023. Unit cost at fixed bunker decreased by 2.9% compared to Q1 2023, primarily due to higher volumes. Efforts to reconfigure the network allowed Ocean to tackle the Red Sea/Gulf of Aden situation and improve utilization to 95%, while reliability suffered.

Revenue decreased by US$ 1.9bn to US$ 8.0bn (USD 9.9bn), driven by a decrease in freight revenue of 20%, with loaded freight rates down by 18%, partly offset by 7.5% higher volumes. Revenue increased by 12% compared to Q4 2023.

EBITDA decreased by US$ 2.4bn to US$ 956m (US$ 3.4bn) due to lower revenue. The EBITDA margin decreased by 22 percentage points to 11.9% (34.0%). Similarly, EBIT decreased by US$ 2.1bn to negative US$ 161m (positive US$ 2.0bn).

Terminals

Terminals’ volume grew significantly during Q1 with a 10% like-for-like increase, recovering from a weak Q1 2023. North America was the primary driver growing 29%, due to a significant recovery in US West Coast volume.

The Red Sea/Gulf of Aden situation had a limited impact on revenue with the terminal in Aqaba, Jordan, being the only facility significantly affected. Utilisation increased by 4 percentage points to 70% with the significant increase in volumes partly offset by capacity increases from ongoing terminal modernisation programmes in North America and Europe.

Revenue per move (like-for-like) increased by 4.7% driven by tariff increases and positive customer mix, which offset a further decrease in storage revenue.

Cost per move (like-for-like) increased marginally by 0.5% as inflationary pressure was countered by the impact of higher volume and inflation-offsetting cost initiatives. As a result, the EBITDA margin improved by 1.6 percentage points.

Revenue increased by 14% to US$ 999m (US$ 876m), driven by higher volumes and improved tariffs, more than offsetting a continued decrease in storage revenue.

Volume grew by 9.0% (10% like-for-like excluding exits) driven by strong growth of 29% in North America, due to a significant increase in West Coast volume, and a 6.7% increase in volume in Latin America.

Volume from Ocean remained at par (1.6% increase like-for-like) and volume from external customers increased by 14% (14% like-for-like). Utilisation increased to 70% (66%) with the increase in volume being partially offset by an increase in capacity.

Terminals completed the acquisition of a facility in Suape, Brazil, where a fully electrified terminal will be constructed. The portfolio has been further streamlined as Terminals increased its stake in APM Terminals Monrovia, Liberia, to 100% through a share swap, divesting its stake in the terminal in Conakry, Guinea.

Logistics & Services

Logistics & Services experienced growth in volumes across all product families. While Transported by Maersk and Managed by Maersk achieved good results in a strongly competitive environment, Fulfilled by Maersk was weak with lower capacity utilisation in Contract Logistics and contract implementation challenges in Ground Freight in North America weighing on margins.

High number of new vessels

“We had a positive start to the year with a first-quarter developing precisely as we expected. 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 provided an improved outlook for the coming quarters, as we now expect these conditions to stay with us for most of the year. However, 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. We therefore relentlessly continue to pursue our cost agenda to roll back the disruption-linked cost in Ocean and restore margins in Logistics & Services. This work on cost, helped by our strong value proposition, is crucial in supporting our customers through the ongoing volatility and building a more resilient business,” comments Vincent Clerc, CEO of Maersk.

For the full year 2024, Maersk raises its financial guidance as seen in the table below.