Danish liner giant AP Moller-Maersk saw profits plummet as the bottom dropped out of the container shipping market.
The Copenhagen-based company logged an underlying profit of $2.6bn for the first quarter of 2023, down from $7.5bn in the same period last year.
Chief executive Vincent Clerc blamed lower freight rates and volumes, as container shipping demand softened.
The company cited the normalisation of global demand and supply, characterized by the inventory correction seen in Western economies over the past two quarters.
That had resulted in a 26% drop in revenues to $14.2bn.
“We delivered a solid financial performance in a challenging market with lower demand caused by continued destocking,” Clerc said.
He added the company had needed to “adjust to a radically changed business environment”.
“Visibility remains low for the remainder of the year and moving through this market normalisation, we remain focused on proactively managing costs,” Clerc said.
That was mainly due to a slump in Ocean revenues which dropped by $5.7bn to $9.8bn.
Average loaded freight rates were 37% lower than in the same quarter last year and 26% lower than the fourth quarter of 2022.
Loaded volumes decreased by 9.4% to 2.7m forty-foot equivalent units (feu), down from over 3m in the previous quarter.
Maersk expects volumes to gradually pick up in the second half of the year.
Slide continues
Maersk notched up a record $29.7bn profit in 2022.
However, earnings of the world’s second largest liner operator have steadily declined since peaking in the third quarter.
Ebitda decreased in the first quarter to $4bn (from $9.1bn) and Ebit was down to $2.3bn ($7.3bn)
Going forward, the company is sticking with its downgraded projection for earnings that it issued on 8 February.
Underlying Ebitda in 2023 is projected at between $8-11bn, while underlying Ebit is forecast at between $2-5bn.
The guidance is based on the expectations that inventory corrections of shippers will be complete by the end of the first half of the year, resulting in a more balanced demand environment.
The company expects that GDP growth remains muted, and that the global ocean container market will grow from -2.5% to +0.5%.
Maersk expects its Ocean division to grow in line with the market.
In Logistics & Services, year-on-year revenues in the first quarter increased by 21% to $3.5bn driven by the consolidation of acquisitions.
In Terminals, revenues decreased to $876m from $1.1bn, mainly due to lower volumes and storage income.
