A.P. Moller – Maersk, owner of the world’s top shipping line, reported record profit in the second quarter as congestion and bottlenecks continue to drive up freight rates. Second quarter revenue was up 58 percent to $14.2 billion and operating profit (EBIT) increased almost five times to $4.1 billion.
Net profit came in at $3.7 billion in the second quarter, bringing its net profit for the first half of 2021 to $6.5 billion.
Maersk attributed the strong results to the continued ‘exceptional market situation’ in container shipping. “The strong results benefited both from the exceptional circumstances in Ocean, where congestions and bottlenecks continued to drive up rates, and from solid progress in executing on our strategic transformation where we kept a firm focus on our customers need for integrated solutions across their supply chains,” said CEO Søren Skou.
Revenues from its Ocean grew to $11.1 billion in Q2 2021, from $6.6 billion last year, and EBIT increased to $3.6 billion, compared to $500 million in Q2 2020.
Maersk said this growth came from a 15 percent rebound in volumes and an increase in average freight rates of 59 percent as both long-term contract rates increased and short-term contracts continued to be impacted by congestions and bottlenecks.
Logistics & Services delivered 38 percent revenue growth in Q2 to $2.2 billion “with more than half coming from the top Ocean customers”.
Gateway Terminals also had a strong Q2 with volumes rebounding 24 percent and persisting high storage income.
Revenue increased to $969 million from $723 million last year, while EBIT doubled to $302 million leading to an EBIT margin of 31.1 percent.
Confirming earlier guidance, Maersk said earnings in Q3 are expected to exceed the level for Q2. However, trading conditions for the quarters ahead are still subject to “higher-than-normal volatility” due to the “temporary nature of current demand patterns, disruptions in the supply chains and equipment shortages.”
For full year 2021, Maersk expects an underlying EBITDA of $18-$19.5 billion with free cash flow expected to be a “minimum” $11.5 billion, Maersk said. Ocean is still expected to grow in line with global container demand, which is now expected to grow 6 to 8 percent this year, increasing from Maersk’s previous expectation of 5-7 percent, primarily driven by the export volumes out of China to the United States.
For 2021-2022, the expectation for the accumulated CAPEX remains to be around $7 billion. “The outlook for Q3 is strong and we expect that the current momentum in Ocean will continue into Q4, also benefitting our Terminals business.
Logistics & Services will continue its strong growth pattern for the rest of the year. As communicated on 2 August, we have upgraded our guidance for 2021 to an underlying EBITDA of USD 18-19.5bn, an EBIT of 14-15.5bn and a free cash flow expected to be minimum USD 11.5bn,” added Skou.