By Dominic Chopping
A.P. Moeller-Maersk, the Danish shipping giant, has posted a significant decline in second-quarter net profit due to falling freight rates and volumes. However, thanks to cost-cutting measures, the company managed to exceed expectations and has raised the lower end of its full-year guidance range.
In the second quarter, A.P. Moeller-Maersk reported a net profit of $1.45 billion, compared to $8.62 billion in the same period last year. Revenue also dropped by 40% to $12.99 billion. Despite the decline, the company surpassed the FactSet consensus, which had expected a net profit of $591 million on revenue of $13.09 billion.
A.P. Moeller-Maersk acknowledged that the inventory correction by companies seems to be lasting longer than anticipated and now expects it to continue until the end of the year. As a result, the company forecasts global container volume growth to range between minus 4% and minus 1%. This revision is more pessimistic compared to the previous outlook of minus 2.5% to plus 0.5%.
Chief Executive Vincent Clerc attributed the company’s ability to mitigate the market challenges to their decisive actions on cost containment and a strong contract portfolio. Despite the difficult market conditions, A.P. Moeller-Maersk remains optimistic.
Updated Full-Year Guidance
A.P. Moeller-Maersk has revised its full-year guidance for 2023 as follows:
- Underlying earnings before interest, taxes, depreciation and amortization: $9.5 billion to $11.0 billion (previously $8 billion to $11 billion)
- Underlying earnings before interest and taxes: $3.5 billion to $5.0 billion (previously $2 billion to $5 billion)
- Free cash flow: $3.0 billion (previously at least $2 billion)