Integrated logistics solutions provider A.P. Moller-Maersk has reported a 91. 8 per cent decline in net profit for the first quarter ended March 31, 2024 at USD 210 million, largely impacted due to the ongoing situation in the Red Sea/Gulf of Aden which has impacted its ocean business.
The company, which considers January-December as its financial year, had reported a net profit of USD 2,561 million in the corresponding quarter in 2023.
Its total revenues for the January-March quarter decreased by USD 1.9 billion to USD 12.4 billion as against USD 14.2 billion reported in Q1, 2023, stemming from ocean, with an increase in logistics and services and in terminals of USD 33 million and USD 123 million, respectively.
According to Maersk, financial items, net, amounted to an income of USD 151 million as compared to USD 190 million, reported a year-ago, impacted by lower interest income and higher interest expenses, partly offset by the positive foreign exchange rate impact on working capital.
“We had a positive start to the year with a first quarter developing precisely as we expected. Demand is trending towards the higher end of our market growth guidance and conditions in the Red Sea remain entrenched. This not only supported a recovery in the first quarter compared to the previous quarter, but also provide an improved outlook for the coming quarters, as we now expect these conditions to stay with us for most of the year,” Vincent Clerc, CEO, Maersk said.
He further said, “However, we still anticipate high number of new vessels being delivered during this and next year to eventually offset these factors and put the ocean markets under renewed pressure. We therefore relentlessly continue to pursue our cost agenda with the aim of rolling back the disruption linked cost in ocean and restoring margins in logistics and services. This work on cost, helped by our strong value proposition, is crucial in supporting our customers through the ongoing volatility and build a more resilient business.”
On the segment performance, the company stated that the ocean results were impacted by the situation in the Red Sea with increased market rates and costs due to the supply chain disruptions. “Strong volumes, high-capacity utilisation and continued cost discipline ensured improved results compared to the previous quarter,” it said.
The logistics and services business saw significant growth in volumes, while margin was at an unsatisfactory level on the back of too low utilisation in some of the warehouses and short-term challenges implementing new customer contracts in the ground freight business in North America.
As far as the terminals business is concerned, the company started the year with strong results supported by good volumes growth. Strong cost management and high productivity helped improve margins.
As these conditions are expected to continue well into the second half of the year, Maersk has lifted the lower end of its guidance range and now expects underlying EBIT at USD -2.0 to 0.0bn.
“Maersk continued to streamline its portfolio to focus on end-to-end logistics with the spin-off of Svitzer. The demerger was approved by an Extraordinary General Meeting on April 26 and completed on April 30, with Svitzer Group A/S now listed on the Nasdaq Copenhagen,” the company stated.
