Moller-Maersk delivers 'exceptional' profits and ups share buyback despite weaker demand
Comment of the Day

August 05 2022

Commentary by Eoin Treacy

Moller-Maersk delivers 'exceptional' profits and ups share buyback despite weaker demand

This article from TradeWindsnews may be of interest to subscribers. Here is a section:

AP Møller-Mærsk has posted record profits for Q2 2022. According to Mærsk, revenue increased by 52% and earnings more than doubled compared to the same quarter in 2021

The Danish containership giant netted revenue of US$21.7Bn and said the financial performance was above its prior expectations.

CEO Søren Skou attributed the profits to “strong contract rates in ocean, rapid profitable growth in logistics and continued solid performance in terminals".

"Volumes in ocean were softer as congestion continued and the war in Ukraine weighed on consumer confidence, particularly in Europe,” Mr Skou said.

In the box shipping segment, revenue grew to US$17.4Bn and EBIT increased to US$8.5Bn over the second quarter. Higher freight rates were partly offset by 7.4% lower volumes and by higher fuel, handling, and network costs. Total EBITDA and EBIT sat at US$10.3Bn and US$8.9Bn, respectively, while free cash flow rose to US$6.8Bn.

Maersk noted that although spot rates have softened from their peak earlier in 2022, contracts have continued to be agreed at rates above previous annual averages, given the strong demand and continuing global supply chain congestion.

In its logistics segment, Mr Skou said AP Møller-Maersk “grew volumes above the market”, resulting in revenue growth of 36%, notching up the sixth quarter in a row of more than 30% growth.

Strong import demand from the United States and above market growth in Asia has helped drive revenue from the company’s terminals segment to US$1.1Bn with EBIT rising to US$316M.

Eoin Treacy's view

I was at one of the Dallas customs warehouses this morning picking up Mrs.Treacy’s container of inventory for the holiday season.

It’s obviously quite different from visiting the port of Los Angeles but this is my second time at the facility so it's reasonable to draw some conclusions.

Whenever I have picked up goods in the past there was about a half hour wait before they located the goods inside the warehouse. Today, they already had the first pallet at the truck before I got back from the office. The only explanation for the speed of service is they don’t have much to do.

The Baltic Dry Ship Index continues to fall back towards its base formation.
Maersk rebounded impressively over the last couple of months but is short-term overbought and looks susceptible to at least some consolidation.

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