Although Maersk's first-quarter results beat expectations, the shipping giant warned that the global shipping industry may gradually return to normal in the second half of the year.
On April 26, Maersk reported financial results for the first quarter of 2022, with revenue of $19.3 billion, underlying EBITDA of $9.2 billion, and underlying EBIT of $7.9 billion. Maersk said, "The first quarter results exceeded expectations," the quarter's results were driven by the continued abnormal conditions in the ocean shipping market, compared with the first quarter of 2021, the volume fell by 7%, and the freight rate increased by 71%. Maersk said: "The strong performance stemmed from exceptional market conditions within the container shipping market, with volumes down 7% compared to the first quarter of 2021, while freight rates increased by an average of 71%."
Given the strong performance in the first quarter, Maersk expects current market conditions to continue in the second quarter and raises its full-year 2022 outlook. Maersk once again significantly raised its full-year profit forecast as last year. Maersk expects full-year 2022 actual earnings before interest, tax, depreciation and amortization (EBITDA) to be $30 billion (previously expected to be $24 billion), an increase of 25%. Actual EBIT was $24 billion (previously expected to be $19 billion) and free cash flow would exceed $19 billion (previously expected to be around $15 billion).
"The already tight supply chain situation deteriorated further in the first quarter of this year, with the Russian-Ukrainian conflict adding to uncertainty," Maersk Chief Executive Detlef Trefzger said in a statement. "The current market situation is expected to continue in the second quarter. Going down, combined with higher contracted freight rates, we expect full-year 2022 results to be stronger than previously expected."
It should be noted that, unlike last year, the shipping giant also warned that this year's container traffic may actually decline, and the Russian-Ukrainian conflict and high inflation may have adverse effects on the global economy. The current performance forecast is still based on the assumption that the marine business will return to normal in the second half of 2022. Although it continues to be optimistic about the container shipping market this year, Maersk also expressed concern about global container demand based on the decline in freight volume in the first quarter, and lowered its outlook for global container demand growth from 2-4% to -1/+1%.
The shipping industry has made record profits in recent quarters, as surging consumer demand, blockages at major global ports due to the pandemic and the recent closure of airspace following the conflict between Russia and Ukraine have kept prices up.
Clarksons data shows that there are currently 861 container ships on order, with a total capacity of 6.57 million TEU, equivalent to 26.4% of the existing fleet. The data shows that the new ships ordered by the shipping giants in large quantities last year are also about to start delivering. This means that the state of high freight rates in the container shipping market will be difficult to sustain.
