A.P. Moller – Maersk yet again reported delivered record results in Q2 2022. However, it said global demand for logistics services was moderating and freight rates decreased slightly.
Over the past quarter Maersk’s revenue increased by 52% and earnings more than doubled compared to same quarter last year.
These results, the company said, were driven by continued exceptional market conditions and sustained momentum from the strategic transformation focused on integrated logistics.
But there may be clouds in the offing. Maersk said global demand for logistics services continued to moderate across global supply chains in Q2 2022. Freight rates softened marginally over the quarter but remained at a high level historically as supply chain congestion increased across the globe.
The company said global container volume declined by 2.3% compared to Q2 2021 while global air cargo volumes (CTK) were 9.4% lower in April/May.
Maersk said geopolitical uncertainty and higher inflation via higher energy prices continued to weigh on consumer sentiment and growth expectation.
A.P. Moller – Maersk CEO Søren Skou said the second-quarter result was “exceptionally strong” and it was the 15th quarter in a row with year-on-year earnings improvements.
“We are pleased with our performance across the business in first half of 2022, which clearly demonstrates the progress and great work by the entire Maersk team, transforming the company towards becoming a global, integrated logistics company,” Mr Skou said.
“The result was driven by 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,” he said.
“However, in Logistics we grew volumes above the market as our Ocean customers continue to buy into our value proposition, resulting in organic revenue growth of 36%, notching up the 6th quarter in a row of more than 30% organic growth.”
In Q2, revenue grew to US$21.7 billion, EBITDA and EBIT increased to US$10.3 billion and US$9 billion respectively, and free cash flow rose to US$6.8 billion. The Q2 net result came in at US$8.6 billion and US$15.4 billion for the first half of the year. Return on invested capital (ROIC) was at 62.5 % for the past 12 months.
In Ocean, revenue grew to US$17.4 billion and EBIT increased to US$8.5 billion over the second quarter. The higher freight rates were partly offset by 7.4% lower volumes and by higher fuel, handling, and network costs. Although spot rates have softened from their peak earlier in the year, the company continued to sign contracts at rates above previous year levels given strong demand and continuing global supply chain congestion.
During Q2, Maersk maintained its strong momentum in bringing integrated logistics solutions to customers. For the quarter, revenue in Logistics grew 61% to US$3.5 billion and EBIT increased to US$234 million mainly due to higher volumes from new customer wins and increased spending from existing customers. Maersk continued to invest in its logistics portfolio and capabilities; in Q2 the acquisitions of logistics specialist, Pilot Freight Services and the global air freight expert, Senator International were completed, and Maersk further strengthened its air freight offering by launching Maersk Air Cargo.
In Terminals, revenue grew to US$1.1 billion and EBIT increased to US$316 million, mainly driven by strong import demand in the United States and above market growth in Asia as well as higher storage income, which was however partly offset by higher costs.
In its report, Maersk said six people were killed while working for the company in the first half of 2022. Three of these were Maersk employees and three were employed by third parties while performing work on Maersk premises.
The company said it was “deeply saddened and committed to full transparency, applying all efforts to learn from these tragic events and work towards eliminating the factors and managing the critical risks that lead to fatal incidents”.
Additionally, the company said it had “launched several initiatives to ensure that the working environment across all parts of the company is safe, supportive and welcoming to all” after an internal investigation “focused on inclusion”.
“Specially for the seafaring population, this includes active outreach to female seafaring colleagues to gather their first-hand accounts of the culture at sea notably around sexual harassment,” the company said.
“The conversations, which are still taking place, unfortunately confirms that cultural change is needed. The company is fully committed to creating a safe workplace for all and has a dedicated team working on the cultural transformation and collaborates with subject matter experts in the field of anti-sexual assault/sexual harassment (SASH), as well as with other industry participants and advocates.”