Maersk Q2 revenue zooms 52%, hikes buyback by $500mn

Danish carrier A.P. Moller-Maersk (Maersk) reported a 52 percent increase in revenue at $21.7 billion for the second quarter ended June 30, 2022 on exceptional market conditions "and sustained momentum from the strategic transformation focused on integrated logistics."

Based on the strong performance in the first half of 2022, Maersk has upgraded its guidance for the full year 2022 and increased the current share buyback programme, says a statement announcing the results.

"We delivered an exceptionally strong result for the second quarter and consequently recorded the 15th quarter in a row with year-on-year earnings improvements," says Søren Skou, CEO, A.P. Moller - Maersk. "We are pleased with our performance across the business in the first half of 2022, which clearly demonstrates the progress and great work by the entire Maersk team, transforming the company towards becoming a global, integrated logistics company."

EBITDA and EBIT increased to $10.3 billion and $9 billion, respectively, and free cash flow was up at $6.8 billion. "The Q2 net result came in at $8.6 billion and $15.4 billion for the first half of the year. Return on invested capital (ROIC) was at 62.5 percent for the past 12 months."

In Ocean, revenue increased to $17.4 billion and EBIT increased to $8.5 billion over the second quarter. "The higher freight rates were partly offset by 7.4 percent lower volumes and by higher fuel, handling, and network costs. Although spot rates have softened from their peak earlier in the year, the company continued to sign contracts at rates above previous year levels given strong demand and continuing global supply chain congestion."

For the quarter under review, revenue in logistics increased 61 percent to $3.5 billion and EBIT increased to $234 million, mainly due to higher volumes from new customer wins and increased spending from existing customers. "Maersk continued to invest in its logistics portfolio and capabilities. In Q2, the acquisitions of logistics specialist, Pilot Freight Services and the global air freight expert, Senator International were completed, and Maersk further strengthened its air freight offering by launching Maersk Air Cargo."

In Terminals, revenue was up at $1.1 billion and EBIT increased to $316 million, "mainly driven by strong import demand in the United States and above market growth in Asia as well as higher storage income, which was however partly offset by higher costs."

Russia impact
"The impact on EBIT from the Russia/Ukraine situation was less negative due to a reversal in Q2 of $93 million of certain losses and impairments in Ocean previously recognised in Q1," says a note released after the results were announced. "$70 million relates to more containers successfully being evacuated from the affected areas than previously anticipated. The net EBIT impact for H12022 is negative $624 million."

Guidance for 2022
Maersk anticipates an underlying EBITDA of around $37 billion for 2022, an underlying EBIT of around $31 billion and a free cash flow above $24 billion. "This is based on the strong performance in the first half of 2022, and a gradual normalisation of Ocean freight rates taking place in the fourth quarter of 2022."

The board has decided to increase the current share buyback programme by $500 million annually to $3 billion for the years 2022-2025.