Maersk reported its best quarter in Q1 2022 with a $6.8bn profit despite taking a $718m hit from pulling out of Russia. Operating results hit record levels across Maersk’s Ocean, logistics and services, and terminals segments.
Maersk said its ocean segment’s result was fueled by strong contract rates boosting freight rates; logistics and services was supported by increased volumes and better margins. Terminals’ result was driven by higher volume and storage income in North America. This all added up to a $6.8bn profit in Q1, compared to $2.7bn in the same period in 2021, for the Danish shipping company. First quarter revenues were up 55% on-year to $19.3bn. The lion’s share of a $6.9bn increase in revenue, some $6.1bn, came from the ocean segment of Maersk’s business.
The ocean segment reported a 6.7% decline in loaded volumes, driven by lower backhaul volumes in Europe and North America, said Maersk. Loaded volumes fell across East-West, North-South and intra-regional trades, but were offset by an average 71% increase in freight rates to $4,553 per feu. At the same time costs were higher with an average increase in bunker prices of 54% between Q1 2021 and Q1 2022 brought prices to $611 per tonne.
“Freight and charter rates remained elevated in the container industry, reflecting congestions, although a gradual decline was recorded for spot/short-term contracts during Q1 relative to Q4 2021, in line with the deterioration of supply-demand,” Maersk said in its Market Insights. “The continued congestions and dislocation of supply and demand fundamentals in the logistics industries increases the uncertainty surrounding the rates outlook. On the demand side, a reduced impact from the COVID-19 pandemic should support the Global economy, but the composition of spending is likely to rebalance towards services, and sharply rising prices for some goods may lead consumers to adjust their spending plans.”
Maersk continued its acquisition binge in the quarter, completed its purchase of Pilot Freight Services. Outstanding acquisitions include LF Logistics, expected to close in Q3, Senator International expected in Q2 2022, and a JV with Grindrod Intermodal Group expected to close in Q3 2022.
Maersk decided in the wake of Russia’s invasion of Ukraine to completely withdraw from Russia. Its last cargo operation in a Russian port was completed on May 2. The biggest impact on EBIT was $485m on terminals, followed by $162m on ocean, $53m on logistics and services and $18m on towage & maritime services. Maersk’s withdrawal from Russia includes divestment of shares in Global Ports Investments, the exit of two Russian warehouses, and an end to Svitzer towage services in Sakhalin.
Maersk restated its updated guidance issued on April 26 of a $30bn underlying EBITDA for 2022.