Maersk reports 13% YoY revenue decrease in Q1 2024

A.P. Moller-Maersk (Maersk) announced that it delivered first-quarter financial results in line with expectations showing a strong recovery in earnings compared to the fourth quarter of 2023. Revenue stood at $12.4 billion compared to $14.2 billion last year while EBITDA decreased from $3.4 billion in Q1 2023 to $1.5 billion in Q1 2024. EBIT decreased to $117 million from $2.3 billion in 2023.

“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,” it reads.

“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 provide 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 with the aim of rolling back the disruption linked cost in Ocean and restoring 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 build a more resilient business,” says Vincent Clerc, CEO of Maersk.

Ocean results were impacted by the situation in the Red Sea with increased market rates and costs due to the supply chain disruptions. Strong volumes, high capacity utilisation and continued cost discipline ensured improved results compared to the previous quarter.

Logistics & Services saw significant growth in volumes, while margin was at an unsatisfactory level on the back of too low utilization in some of our warehouses and short-term challenges implementing new customer contracts in the ground freight business in North America.

Maersk's air freight volumes, which come under Logistics & Services, increased by 52 percent from Q1 2023 and was on par with Q4 2023 at 85,000 tonnes in the first quarter of 2024, which ended on March 31, 2024.

In its Q1 2024 financial results, Maersk noted that the improvements in demand resulted from a modal shift from container trade in reaction to the Red Sea/Gulf of Aden situation, a surge in e-commerce and favourable base effects.

“Global air freight forwarding demand growth turned positive in Q1, estimated between 4-5% y/y, after seven quarters of contraction. Trade in Far East Asia has driven growth, particularly Chinese exports, which grew 17% y/y in the first two months of 2024. Lifestyle and retail have rebounded in recent months, growing double-digits y/y. Global supply increased 11.5% y/y in Q1, driven by a strong inflow of belly capacity, but it did not curtail rates,” it reads.

Terminals started the year with strong results supported by good volumes growth. Strong cost management and high productivity helped improve margins.

Maersk continued to streamline its portfolio to focus on end-to-end logistics with the spin-off of Svitzer. The demerger was approved by an Extraordinary General Meeting on April 26th and completed on April 30th, with Svitzer Group A/S now listed on the Nasdaq Copenhagen.

The lower end of the original financial guidance is raised based on a strong market demand with container volume growth towards the upper end of the 2.5-4.5% range and A.P. Moller - Maersk growing in line with the market. Further, the ongoing Red Sea / Gulf of Aden situation is expected to continue into the second half of the year. Over-supply remains a challenge and will eventually prevail, but the impact is delayed.