A.P. Moller-Maersk says its Q1 2024 results were in line with expectations, with a strong recovery in container line earnings since the final quarter of 2023 and a strong performance in terminals.
APPM said the latest quarter continued a positive development both in volumes and profitability, but also mainly reflect the ongoing situation in the Red Sea/Gulf of Aden, which caused significant disruption during the quarter and implied increased rates and costs in the Ocean division. Logistics & Services returned to growth year-over-year with profitability still challenged in specific areas.
“With the Red Sea crisis still ongoing, plans are made for the current rerouting south of the Cape of Good Hope to be extended potentially for the remainder of the year, while APMM still expects overcapacity to prevail which implies lower rates during the second half.
“As a result of the strong container market and the Red Sea/Gulf of Aden disruption likely to remain into the second half of the year, APMM raises the lower end of its financial guidance with an underlying EBITDA in the range of US$4.0-6.0 billion (previously US$1.0-6.0 billion) and an underlying EBIT in the range of negative US$2.0-0.0 billion (previously negative US$5.0-0.0 billion),” the Group said.
Although Q1 was marked by increasing volumes rates continued to be under pressure versus the previous year, resulting in revenue for Q1 of US$12.4 billion (US$14.2 billion), a decrease of US$1.9 billion mainly from Ocean, however with an increase of US$33 million and US$123 million in Logistics & Services and Terminals, respectively.
EBITDA decreased by US$2.4 billion to US$1.6 billion (US$4.0 billion), driven by Ocean. EBIT decreased by US$2.1 billion to US$177 million (US$2.3 billion) stemming from Ocean but with a significant increase of US$93 million in Terminals.
Ocean results increased sequentially given the strong volumes and tightened rates impacted by the Red Sea/Gulf of Aden situation but were significantly down from the previous year. The average loaded freight rate increased compared to Q4 2023 but decreased compared to Q1 2023. The rerouting south of Cape of Good Hope led to higher bunker consumption and higher operating costs.
“The global economy continues to demonstrate a certain strength amid increasingly confrontational geopolitics and high interest rates,” APMM said. “Economic growth is expected to be around 2.5% in 2024, according to Oxford Economics, an upward revision from their forecasts at the beginning of the year. Growth is becoming increasingly balanced as activity improves in manufacturing.
“The Global Manufacturing Purchasing Managers Index (PMI) moved into expansionary territory (above the 50 threshold) in Q1. Moreover, manufacturing export orders and orders-to-inventories ratios have continued to rise at the start of 2024, providing near-term support for logistics demand.”
Despite abundant risks to supply chains, demand for container trade increased in Q1 2024. Global container demand is estimated to have grown between 7-9% y/o/y, with all import regions contributing positively.
APMM said. the figure surprised on the upside, with import growth strongest in North America, Latin America
and Oceania.
