Maersk to earn more than $30bn in 2022 on higher rates

Danish carrier A.P. Moller-Maersk (Maersk) reported a 55 percent increase in revenue to $19.3 billion for Q12022, driven by higher rates and strong long-term partnerships with customers.

EBITDA more than doubled to $9.1 billion, and free cash flow increased to $6 billion, according to an official statement.

"In Q1, we delivered the best earnings quarter ever in A.P. Moller- Maersk with growth across Ocean, Logistics and Terminals," says CEO Søren Skou. "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 fifth quarter in a row with organic growth of more than 30 percent while Terminals presented its best quarter ever."

Ocean revenue up 64%
In Ocean, revenue increased 64 percent to $15.6 billion as strong rates more than offset a 7 percent decline in volume. "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 $10 billion to revenue in 2022 compared to 2021. This will more than offset the significant increase in costs that are up 21 percent in Q1 given higher fuel costs and inflationary pressure on network and container handling costs," the statement said.

Logistics, Terminals log gains

Logistics revenue increased 41 percent to $2.9 billion as customers continue to buy into the full value proposition of integrated solutions. "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 $1.1 billion compared to $915 million in Q12021.

"With Maersk's decision to withdraw completely from doing business in Russia, the process was initiated to divest all assets in Russia, and an impairment of $485 million was made to the holding in Global Ports Investments (GPI), which operates six terminals in Russia, reducing EBIT to a negative $73 million from $239 million in Q12021."

2022 EBITDA seen at $30bn
As announced on April 26, 2022, Maersk anticipates an underlying EBITDA of around $30 billion and a free cash flow above $19 billion for 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, the statement added.

Initiates second phase of buyback
Mærsk had decided last year to launch a share buyback programme of up to DKK 32 billion (around $5 billion) to be executed over a period of two years.

"The first phase, which started on November 3, 2021, was completed on April 27, 2022. The total market value of the shares acquired in the first phase amounted to DKK 8 billion ($1.1 billion).

The second phase of the buyback programme will run from May 5, 2022 to November 1, 2022. The shares to be acquired will be limited to DKK 8 billion (around $1.15 billion).