A.P. Moller – Maersk’s (Maersk) financial results for third quarter of 2023 were in line with expectations in a difficult market environment with rates well off their 2022 peak and tested by the increase of capacity in Ocean. Revenue was USD 12.1bn compared to USD 22.8bn in Q3 2022 with an EBIT margin at 4.4% impacted by lower freight rates and lower volumes. Maersk maintains its guidance ranges but now expects to be towards the lower end of the ranges.
Ocean reported a 9% increase in volumes since the previous quarter and a strong cost focus supported an 11% decrease in unit cost at fixed bunker compared to Q3 2022. However, EBIT was negative at USD 27m, down from USD 8.7bn in Q3 2022, driven by significant pressure on rates, in particular on Asia to Europe, North America and Latin America trades.
Revenue in Logistics & Services was USD 3.5bn compared to USD 4.2bn in Q3 2022. The segment was impacted negatively by lower prices, especially in the air and haulage market, while volumes were broadly back in line with last year’s level. Increased cost management helped stabilise margins sequentially.
Terminals reported revenue at USD 1.0bn compared with USD 1.1.bn in Q3 2022 driven by less demand for storage amid eased global congestion and a 4.1% decline in volume. Results were strong as a combination of price adjustments and cost measures. Return on invested capital (ROIC) increased to 10.3%, exceeding the expectation of above 9% towards 2025.
Maersk has imposed rigorous cost containment measures during the year to effectively cushion the impact of the challenging market conditions, including headcount reduction from 110,000 early 2023 to around 103,500 today. Given the worsening price outlook in Ocean, Maersk is intensifying those measures and today introduce plans to further decrease the workforce by 3,500 positions, with up to 2,500 to be carried out in the coming months and the remaining to extend into 2024. This will reduce the global workforce to below 100,000 positions. Accordingly, total expected restructuring charge is now expected at USD 350m, up from USD 150m announced in February.
“Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base,” said CEO Vincent Clerc. “Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling. Given the challenging times ahead, we accelerated several cost and cash containment measures to safeguard our financial performance.
“While continuously streamlining our organisation and operations, we remain dedicated to our strategy of fulfilling our customers’ diversified supply chain needs while pursuing growth opportunities across our Terminals business and Logistic & Services.”