Business, Feature, Freight News, Sea

Maersk Delivers Solid 2023 Financial Results

[ March 1, 2024   //   ]

Danish container line giant A.P. Moller – Maersk reported solid financial results for 2023, in line with the company’s financial guidance.
Though volumes were up across most products and cost controlled efforts helped improve results, rates continued to erode, particularly in ocean. The company reported EBITDA of US$9.8 billion with revenue of US$51.5 billion reflecting an EBIT margin on 7.7 percent.
“2023 was a transitional year following the extraordinary market boom caused by the pandemic,” said Vincent Clerc, CEO of Maersk. “We secured solid financial results despite significantly changed circumstances, and we are well positioned to manage the expected headwinds in 2024.”
Measures to enforce strict cost management demonstrated the company adapting “to the new reality,” Clerc said. “We need to see further progress in the logistics business to align with our targets, as we continue to push our transformation forward and enhance our competitiveness.”
Despite robust volumes in the current market, the “Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually the oversupply in shipping capacity will lead to price pressure and impact our results,” Clerc said. “The ongoing disruptions and market volatility emphasize the need for supply chain resilience, further confirming that Maersk’s path toward integrated logistics is the right choice for our customers to effectively manage these challenges.”
Maersk’s ocean operations saw strong schedule reliability and the continued cost-cutting efforts helped ease the impact of the rapid increase in supply. Financial results were still strong due to robust cost containment but eroded during the year, as continued challenging market conditions resulted in substantially lower freight rates.
Logistics and Services continued to win new business but destocking at the beginning of the year followed by lower rates led to a decrease in revenue. Profitability declined compared with 2022 and an increased emphasis on cost management helped protect margins and reset the cost basis.
Terminals continued the steady performance and secured another very strong year. Despite a decline in storage revenue given the market normalization, diligent execution on operational excellence, cost control, price increases and utilization led to return on invested capital of 10.5 percent, ahead of mid-term targets.

2024 Guidance

Maersk anticipates that global container volume will grow 2.5 percent to 4.5 percent in 2024 and that the carrier will grow in line with the market. The Danish line further expects “the significant oversupply challenges in the ocean industry will materialize fully over the course of 2024. High uncertainty remains around the duration and degree of the Red Sea disruption with the duration from one quarter to full year reflected in the guidance range.”
Maersk’s board of directors said it has decided to demerge its towage business, which will be tax exempt for Danish tax purposes. The activities in Svitzer A/S (Svitzer) and its subsidiaries will be contributed to a new company, Svitzer Group A/S (Svitzer Group), which shares will be distributed pro-rata to Maersk shareholders and are expected to be admitted for trading and official listing on Nasdaq Copenhagen.
“Maersk has concluded that Svitzer as a stand-alone listed entity is the best option for the company and for long-term value creation for Maersk shareholders. The anticipated first day of trading and official listing for the shares of Svitzer Group on Nasdaq Copenhagen will be April 30.
The board of directors has suspended the share buy-back program due to uncertainty of ocean market conditions. Total cash distribution to shareholders from the buy-backs was US$771 million for Q4 and US$3.1 billion for the full year.

Maersk said oversupply challenges in the ocean industry will materialize fully over the course of 2024.” PHOTO: A.P. Moller – Maersk