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A.P. Moller – Maersk reports record Q1 results while further developing customer relationships

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Shri Vaibhavi Logistics

COPENHAGEN : Maersk (Maersk) delivered record results for Q1 2022 across its businesses, driven by higher rates and strong long-term partnerships with customers seeking end-to-end supply chain support. Revenue was up 55pct. to USD 19.3bn, EBITDA more than doubled to USD 9.1bn and free cash flow increased to USD 6bn.

In Q1 we delivered the best earnings quarter ever in A.P. Moller – Maersk with growth across Ocean, Logistics and Terminals. The increased earnings are driven by freight rates and by contracts being signed at higher levels. While global supply chains remain under significant pressure, we continue to demonstrate superior ability to help customers overcome logistic challenges. In Logistics, we enjoyed strong demand for products and solutions across our portfolio leading to the 5th quarter in a row with organic growth of more than 30pct. while Terminals presented its best quarter ever.Søren Skou CEO of A.P. Moller – Maersk

In Ocean, revenue increased 64pct. to USD 15.6bn during Q1 as strong rates more than offset a 7pct. decline in volumes. Revenue for the full year is expected to continue to be strong as the increase in freight rates on our long-term contract portfolio will add approximately USD 10bn to revenue in 2022 compared to 2021. This will more than offset the significant increase in costs, which were up 21% in the first quarter given higher fuel costs and inflationary pressure on network and container handling costs.

In Q1, revenue in Logistics grew 41pct. to USD 2.9bn compared to same quarter last year as both existing and new customers continue to buy into the full value proposition of integrated solutions. At the same time Maersk continues to invest in acquisitions that add capabilities within technology and e-commerce and strengthen the portfolio such as Pilot Freight Services, which closed on 2 May 2022.

In Terminals, revenue increased to USD 1.1bn in Q1 compared to USD 915m last year and the return on invested capital (ROIC) ended on a record 12.5pct. before impairment in GPI of USD 485m following the exit of the Russian market. The process around the sale of GPI is ongoing. Results in Terminals are driven by higher storage income in NAM, improvement in revenue per move and a volume growth in the overall contracting market.

Market situation and guidance for 2022

Freight rates remained elevated in Q1 as Covid-19 and capacity shortages continued to disrupt the supply-side of the logistics industry. Global container demand declined by 1.2pct. compared to +8pct. in 2021 while global air cargo volumes increased by 2.9pct. Trade flow growth flattened from Far East to both North America and Europe. Russia’s invasion of Ukraine is having a negative impact on trade flows and consumer confidence in Europe. Given this background, global container demand is now expected to grow -1/+1pct, compared to an earlier expectation of 2-4pct.

As announced on 26 April 2022, Maersk anticipates an underlying EBITDA of around USD 30bn, an underlying EBIT of around USD 24bn and a free cash flow above USD 19bn for the full year of 2022. This is based on a strong first half of 2022 as well as higher contracted rates, while the normalisation in Ocean is still assumed to take place early in the second half of the year.

Financial highlights

Highlights Q1

Revenue

USD million2022 Q12021 Q1
Ocean15,5709,478
Logistics & Services2,8792,045
Terminals1,131915
Towage & Maritime Services555523
Unallocated activities, eliminations, etc.-843-522
A.P. Moller – Maersk consolidated19,29212,439

EBITDA

USD million2022 Q12021 Q1
Ocean8,2143,444
Logistics & Services319205
Terminals456323
Towage & Maritime Services7989
Unallocated activities, eliminations, etc.16-22
A.P. Moller – Maersk consolidated9,0844,039

EBIT

USD million2022 Q12021 Q1
Ocean7,0722,700
Logistics & Services183139
Terminals-73239
Towage and Maritime Services6941
Unallocated activities, elimination, etc.22-22
A.P. Moller – Maersk consolidated7,2733,097

CAPEX

USD million2022 Q12021 Q1
Ocean1,156193
Logistics & Services3421
Terminals8069
Towage and Maritime Services8149
Unallocated activities, eliminations, etc.3-3
A.P. Moller – Maersk consolidated1,354329

Sensitivity guidelines

Financial performance for A.P. Moller – Maersk for 2022 depends on several factors and is subject to uncertainties related to the situation in Russia and Ukraine, COVID-19, bunker fuel prices and freight rates, given the uncertain macroeconomic conditions.

All else being equal, the sensitivities for 2022 for four key assumptions are listed in the table below:

FactorsChangeEffect on EBIT (midpoint of guidance) Rest of year
Container freight rate+/- 100 USD/FFE+/- USD 1.0bn
Container freight volume+/- 100,000 FFE+/- USD 0.2bn
Bunker price (net of expected BAF coverage)+/- 100 USD/tonne+/- USD 0.5bn
Foreign exchange rate (net of hedges)+/- 10% change in USD
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