“THE BEST earnings quarter ever” is how A.P. Moller – Maersk CEO Søren Skou described his company’s first-quarter 2022 financial results.
The company reported record results for Q1 2022 across its businesses, driven by higher rates and strong long-term partnerships with customers seeking “end-to-end supply chain support,” the company said.
Revenue was up 55% to US$19.3 billion, EBITDA more than doubled to US$9.1 billion and free cash flow increased to US$6 billion.
Mr Skou said the company saw growth across its ocean, logistics and terminals divisions.
“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,” he said.
“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% while terminals presented its best quarter ever,” he said.
In the ocean division, revenue increased 64% to US$15.6 billion during the first quarter as strong rates more than offset a 7% decline in volumes.
Maersk expects the division’s revenue for the full year to continue to be strong as the increase in freight rates on its long-term contract portfolio will add approximately US$10 billion to revenue in 2022 compared to 2021.
This will more than offset the significant increase in costs, Maersk said, which were up 21% in the first quarter given higher fuel costs and inflationary pressure on network and container-handling costs.
In Q1, revenue in logistics grew 41% to US$2.9 billion compared with same quarter last year as both existing and new customers continue to buy into the full value proposition of “integrated solutions”, the company said. At the same time 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.
In terminals, revenue increased to US$1.1 billion in Q1 compared to US$915m last year and the return on invested capital ended on a record 12.5% before impairment in GPI of US$485 million following the exit of the Russian market. The process around the sale of GPI is ongoing. Results in Terminals are driven by higher storage income in NAM, improvement in revenue per move and a volume growth in the overall contracting market.
As announced in late April, Maersk anticipates an underlying EBITDA of around US$30 billion, an underlying EBIT of around US$24 billion and a free cash flow above US$19 billion for the full year of 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 company said freight rates remained elevated in the first quarter as COVID-19 and capacity shortages continued to disrupt the supply-side of the logistics industry. Global container demand declined by 1.2% compared to an 8% increase in 2021, while global air cargo volumes increased by 2.9%. Trade flow growth flattened from the far east to both North America and Europe. Russia’s invasion of Ukraine is having a negative impact on trade flows and consumer confidence in Europe. Given this background, global container demand is now expected to grow -1/+1%, compared to an earlier expectation of 2-4%.
