Indian Transport & Logistics

Maersk Q4FY2023 loss at $442mn

For the full year 2023, Maersk reported a profit of $3.9bn as against $29.7bn in 2022 - a drop of 87%

Maersk Q4FY2023 loss at $442mn

Photo Credit: Maersk

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Danish carrier Maersk reported a net loss of $442 million for the fourth quarter of 2023 compared to a profit of $4.9 billion in Q42022 due to downward pressure on rates.

Revenue declined 34 percent to $11.7 billion even as volumes improved across the board compared to Q4 2022, says an official release.

Ocean revenue decreased due to a decline in freight revenue of 49 percent ($7.2 billion) with loaded freight rate down by 50 percent ($1,925 vs $3,869 in Q42022), partly offset by 11 percent higher loaded volumes.

For the full year 2023, Maersk reported net profit of $3.9 billion as against $29.7 billion in 2022, down 87 percent and revenue declined 37 percent to $51.1 billion. Ocean freight revenue was down 50 percent at $28.4 billion even as loaded volumes were flat at 11.9 million FFEs and loaded freight rate slipped 50 percent to $2,313/FFE.

"The financial results for Q4 2023 were in line with A.P. Moller-Maersk’s revised outlook, and continued to show the transition of the business from the peak levels of the Covid-19 years to an environment marked by the increasing overcapacity in the shipping segment, which the Red Sea situation in the last weeks of December did not alter. While a rather stable macroeconomic environment ensured a volume increase in most businesses compared to the low previous year, prices in Ocean continued to be under pressure given the new additions combined with subdued idling and ship recycling activities. Faced with this environment and in line with previously announced measures, A.P. Moller - Maersk continued to focus on cash preservation measures and reduced its operating costs position with significant improvements in Ocean, Logistics & Services and more generally in SG&A.

"Given the uncertainties ahead and in line with the implementation of its Integrator strategy, A.P. Moller – Maersk will exercise a prudent capital allocation. As a consequence, the Board of Directors proposes a dividend of DKK 515 per share, equivalent to a payout of approx. $1.2 billion and has decided to demerge and spin off the Svitzer towage activities, which will be subject to approval at an Extraordinary General Meeting in April 2024. As indicated in November 2023, the Board of Directors has decided to immediately suspend the share buy-back programme with a re-initiation to be reviewed once market conditions in Ocean have settled."

Vincent Clerc, CEO, Maersk

Vincent Clerc, CEO, Maersk says: "2023 was a transitional year following the extraordinary market boom caused by the pandemic. We secured solid financial results despite significantly changed circumstances, and we are well positioned to manage the expected headwinds in 2024. By taking early and decisive measures to enforce strict cost management, we adapted to the new reality. We need to see further progress in the logistics business to align with our targets, as we continue to push our transformation forward and enhance our competitiveness. The current market remains one of robust volumes but while the Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually the oversupply in shipping capacity will lead to price pressure and impact our results. The ongoing disruptions and market volatility emphasise the need for supply chain resilience, further confirming that Maersk's path toward integrated logistics is the right choice for our customers to effectively manage these challenges."

2024 outlookConsidering the significant oversupply challenges and high uncertainty about the duration and degree of the Red Sea disruption, Maersk expects an underlying EBITDA of $1-6 billion, an underlying EBIT of $-5-0.0 billion and a free cash flow (FCF) of $-5 billion or higher for the full-year 2024, with front-loading towards the start of the year, the update added.

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