Danish liner giant AP Moller-Maersk celebrated the best financial result in its history with a record $29.7bn profit in 2022.
But the downturn in container shipping markets is already trimming billions from the bottom line as container growth contracts.
The Copenhagen-based company saw more than $1bn shaved from profits towards the end of the year.
Profits for the fourth quarter of 2022 dropped to $5bn, down from $6.1bn in the previous year.
Revenues for the quarter were down by $686m to $17.8bn, mainly due to a decrease in Ocean of $1.3bn. Ebitda decreased by $1.5bn to $6.5bn (from $8bn) and Ebit was down by $1.5bn to $5.1bn
Maersk attributed the result to lower volumes caused by weakening customer demand, easing of congestions and operational bottlenecks.
Freight rates from Asia to Europe and the transpacific were also down from their peak levels reached by mid-2022, while costs rose on its container handling network.
Despite the expected normalisation of the market, 2022 was still an “exceptionally strong year”.
The world’s second largest liner operator saw year revenue increase by 32% to $81.5bn, and Ebit increased 57% to $30.9bn. The result was by solid performance across all business during the market conditions in the first part of the year.
Downgraded projections
Maersk is, however, forecasting a tricky year ahead due to muted economic growth projection, when it expects to grow in line with the market.
The company has downgraded its projection of global ocean container market growth to a range of -2.5% to +0.5%.
It projects underlying Ebitda of between $8-11bn, an underlying Ebit of $2-5bn, and free cash flow (FCF) of at least $2bn.
The forecast is based on expectations that inventory corrections of shippers will be complete by the end of the first half, resulting in a more balanced demand environment.
The financial guidance is not impacted by an impairment and restructuring charge of $450m that the company expects to incur in the first quarter.
Disruptive times
Chief executive Vincent Clerc noted that the challenging market has not impacted Maersk’s transformation into an integrated logistics provide for customers seeking to make supply chains more resilient and sustainable.
“2022 was remarkable in more than one way. While we report the best financial result in the history of the company, we have also taken the partnerships with our customers to a new level by supporting their supply chains end to end during highly disruptive times,” he said.
“As we enter a year with challenging macro-outlook and new types of uncertainties for our customers, we are determined to speed up our business transformation and increase our operational excellence to seize the unique opportunities in front of us.”
Maersk reported Ocean revenues up 33% in 2022, during which it maintained stable level of long-term contracts.
In Logistics & Services, revenue increased by 47%, with an organic contribution of 21%.
In Terminals, Ebit adjusted for the Russia exit reached a record of $1.2bn, supported by solid volumes growth and high congestion-related storage income.
