Maersk logistics revenue drops 8.2%

Denmark-based shipping giant Maersk today reported fourth-quarter revenue of $11.7 billion, a 34% year-over-year decline. Its logistics and other services revenue dropped 8.2% YoY to $3.5 billion. [caption id="attachment_57132120" align="alignright" width="414"] (Courtesy/Maersk Air Cargo)[/caption] THE BIG PICTURE : While demand remained stable throughout the year and volumes increased, freight rates remained low , contributing to overall revenue losses, Maersk leaders said in an earnings call today. “As discussed earlier, 2023 was a transitional year for logistics and services business. Operational excellence became a key priority as markets normalized and prices rapidly adjusted back to pre-pandemic levels,” Patrick Jany , chief financial officer at Maersk , said in the earnings call. “We made progress on optimizing our fiscal space and adjusted our footprint to the current market environment,” he said. “We are still facing headwinds from lower prices and subdued activities in our verticals, which are reflected in the fourth quarter financials.” BY THE NUMBERS : Maersk reported a total year revenue in 2023 of $51 billion, a decrease of 37.4% YoY. The company also reported for Q4: Logistics and other services gross profit of $1 billion, a decrease of 71.7% YoY; Logistics and other services EBIT of $60 million, a 57% decrease YoY; and Logistics and other services EBIT margin of 1.7%, down 1.9 points YoY. Maersk additionally reported for its logistics services in Q4: Fulfilled by Maersk: revenue of $1.5 billion, a 7.6% decrease YoY; Managed by Maersk: revenue of $479 million, a 21% decrease YoY; and Transported by Maersk: revenue of $1.6 billion, a 4.1% decrease YoY. “Profitability decreased compared to Q4 2022, as a result of lower rates and partly offset by higher volumes,” the earnings report stated. WHAT THEY’RE SAYING : “The organic revenue suffered from slower-than-expected activity,” Jany said in the earnings call. “You know, particularly retail and lifestyle, as well as automotive and technology. ... The EBIT performance is obviously below our ambitions. And, as previously alluded to, recovery margins will be one of our key focus areas for 2024.” NOTEWORTHY: Maersk announced it would suspend its shares buy-back program due to the ongoing turmoil in the Red Sea . “Given the uncertainties that lie ahead,” the company will “immediately suspend the share buy-back program, with a re-initiation to be reviewed once market conditions in Ocean have settled,” Maersk Chief Executive Vincent Clerc said in the call. The oversupply of shipping vessels and uncertainty about how the Red Sea crisis might affect financials heading into 2024 contributed to the decision, Clerc said. “This move is in line with the steps we have taken in recent years under our strategy to simplify our business and focus on integrated logistics that offers immediate value to shareholders,” Clerc said. Maersk in 2023 landed the No. 25 spot on Air Cargo Next ’s Power 25 list of top airfreight forwarders, its first appearance on the list. FUTURE LOOK : Maersk remains “uncertain” about the situation in the Red Sea and how it may affect business in 2024, whether it’s one quarter or an entire year, Jany said in the earnings call. Due to this, the shipper expects losses in Q1 2024. “Eventually the oversupply in shipping capacity will lead to price pressure and impact our results,” the company said in a Q4 financial press release. MARKET OUTLOOK : Shares of Maersk [OTCMKTS: AMKBY] were down 14.75% from market open to $7.94 at market close. Maersk has a market capitalization of $29.7 billion.

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