Maersk Q3 Profit Rises Despite Small Increase In Container Throughput
Ocean revenue rose to $15.8 billion in the quarter ended Sept. 30 from $12.1 billion a year earlier, the parent of Copenhagen, Denmark-based liner operator Maersk said in an earnings statement. $2.8 billion in EBIT offset a $27 million loss from shipping disruptions caused by attacks by Yemen’s Houthi rebels in the Red Sea.
The cargo was also diverted to U.S. West Coast ports to avoid a final strike by union port employees, which briefly shut down container handling at East Coast ports in early October.
The attacks prompted shipping lines to reroute ships around the Red Sea route for long voyages around Africa’s Cape of Good Hope. This led to a 14% year-on-year rise in marine fuel consumption and a 6.7% rise in total operating costs, Maersk said. Those costs were carried forward as average freight rates rose 54% and peaked in the early third quarter.
However, the second-largest container shipping company said its loads rose 0.3% from the third quarter of 2023, below its forecast of 4%- 6% year-on-year global growth.
“[Maersk’s] operating fleet grew by 2.3% on average compared to last year, which was not enough to maintain weekly capacity given the need to sail longer distances due to the Red Sea crisis. This prompts Lars Andersen, CEO of consultancy Vespucci Maritime, to post on LinkedIn that this was probably “the main reason for the decline in load market share.”
Maersk said throughput on the East-West route fell by 3.1%, but volumes on cross-traffic services grew by 7.6%.
The operating EBITDA margin for the past 12 months was 6.4%, above the company’s full-year 2024 target of 6%. Maersk raised its expected EBITDA to $9 billion to $11.5 billion to $11 billion and its earnings before interest, taxes, depreciation and amortization to $11 billion, from $3 billion to $5.7 billion to $5.2 billion. Free cash flow increased to $3 billion from $2 billion previously, $1.6 billion.
Quarterly revenues in the Logistics and Services business grew 11% as sales of most products continued to grow. The company opened the Middle East’s largest logistics center in Jeddah, Saudi Arabia, and added a new Boeing 777F aircraft to its fleet. Over the past 12 months, growth was 2%, below the company’s 10% target.
Supply chain cargo volumes increased 21% year-on-year, first-mile cargo volumes increased 9.6%, while air cargo volumes fell 2.4% year-on-year.
The Terminals division achieved record revenues and cargo volumes, with volumes in Los Angeles and Elizabeth, New Jersey, up 20%. EBITDA reached $424 million, the highest level since the first quarter of 2022. The company revised its forecast for return on invested capital across sectors in 2024 from 9% to 13%.
EBITDA margin was 21%, and EBITDA margin was 30%.
