Maersk warns of trading volumes even as profits soar

AP Moller-Maersk has warned container trade could decline this year due to the ongoing supply chain crisis, even as the shipping group raised its annual profit forecast by a quarter.

The Danish company, the world’s largest container line by profit but second by capacity, boosted its full-year guidance after its first-quarter results beat expectations on the back of still-high freight rates.

Maersk now expects its underlying earnings before interest, tax, depreciation and amortization to be $30 billion this year, up from its previous forecast of $24 billion and the average expectation of analysts about $28 billion.

But Maersk added that it now expects container demand – an indicator of global trade growth – to be between 1% growth and a 1% decline this year, down from a previous forecast of a 2% increase. at 4%.

Maersk is considered an indicator of world trade because it transports one in five containers on the seas. He credited an “exceptional market situation” in shipping, which saw volumes fall 7% in the first quarter due to bottlenecks, but freight rates up 71% from the previous quarter. ‘last year.

Its shares rose 8% on Tuesday morning to DKr 19,605, reversing some of their decline so far this year. The stock jumped nearly three-quarters last year.

Maersk said first-quarter revenue rose 56% to $19.3 billion, while underlying Ebitda more than doubled to $9.2 billion.

Container shipping groups, and in particular Maersk, have benefited from supply chain setbacks that began in 2020 during the Covid-19 pandemic and have persisted in recent months. The group warned last month that the lockdown of Shanghai, one of China’s biggest ports, would increase transport costs.

It stuck to its forecast that supply chain conditions would normalize in the second half of the year, but declined to comment further until its full results are released next week.

Maersk has raised its 2021 profit forecast four times as high freight rates and supply issues have helped boost profits throughout the year.

Soren Skou, chief executive of Maersk, told the Financial Times in February that regulators had been looking closely at strong profit levels in 2020 and 2021, but “I feel like regulators are seeing it for what It is”. He added that this signified the “strong spike in demand” following the end of the first wave of the Covid pandemic in 2020, after which retailers and manufacturers struggled to get their hands on enough stock. .

Maersk is using its windfall profits to invest money in its inland logistics business as it aims to provide customers with a one-stop-shop for freight. Some shareholders have expressed skepticism about the price of multiple transactions, but Maersk has also increased its dividend and strengthened its share buyback program.