A.P. Moller – Maersk outperforms expectations with a 72% decline in Q2 2023 profits

Maersk, the Danish shipping giant, reported a significant decline in second-quarter earnings due to falling container rates. However, the company still exceeded market expectations and raised its full-year guidance.

As a key player in the shipping industry, Maersk’s profit before interest, tax, depreciation, and amortization (EBITDA) for the second quarter amounted to $2.91 billion, a significant drop from the record-breaking $10.3 billion achieved in the same period of 2022. Despite this decrease, analysts had predicted an EBITDA of $2.41 billion, according to Refinitiv data.

The company had previously anticipated a decline in earnings following an exceptional 2022, during which it benefited from unusually high ocean freight rates. Maersk warned of a further decline as container rates continued to fall and volumes remained weak, particularly in North America and Europe.

Maersk’s revenue plummeted by 40% year-on-year, from $21.65 billion in the second quarter of 2021 to $12.99 billion, reflecting the ongoing decrease in container rates and lower demand due to destocking. The company now expects global shipping container demand to decline by as much as 4%, surpassing its previous worst-case scenario of 2.5%.

In response to these market conditions, CEO Vincent Clerc emphasized the company’s focus on cost containment and its contract portfolio, which helped mitigate the impact of the market normalization. He acknowledged the subdued growth environment following the pandemic and highlighted the continued importance of cost focus in navigating the challenging market outlook.

Furthermore, Maersk revised its profit forecast for the full year, narrowing the range to between $9.5 billion and $11 billion for underlying EBITDA. The initial estimate ranged from $8 billion to $11 billion.