A.P. Moller-Maersk A/S, a bellwether for global trade, reported a 56% decline in first-quarter operating profit and signaled weaker results for the rest of 2023 as transport volumes slowed and freight rates plunged.
(Bloomberg) — A.P. Moller-Maersk A/S, a bellwether for global trade, reported a 56% decline in first-quarter operating profit and signaled weaker results for the rest of 2023 as transport volumes slowed and freight rates plunged.
Earnings before interest, tax, depreciation and amortization fell to $3.97 billion, the Copenhagen-based company said in a statement on Thursday. That compares with a median estimate of $3.55 billion in a survey of analysts. Still, Maersk warned that the three-month period “will be best quarter of the financial year.”
“Despite a better-than-expected start to the year, the outlook for the economy remains weak, with global GDP growth expected to stay close to 2%,” Maersk said.
A spike in demand for consumer goods during the Covid-19 pandemic, coupled with supply-chain issues limiting vessel supply, lead to record profits in the freight industry in 2021 and 2022. Now, the world economy is cooling and companies are seeking to reduce inventories at warehouses rather than moving new goods from Asia to Europe and the US.
Maersk, which transports close to one-fifth of the world’s containers, said volumes declined 9.4% in the quarter while freight rates fell 37% from the same period of 2022.
Maersk repeated its forecast that the world’s container transport volumes may shrink as much as 2.5% this year. It also stuck to its own full-year financial forecast of underlying Ebitda of $8 billion to $11 billion, which is roughly a quarter of the 2022 figure.
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