FX.co ★ A.P. Moller-Maersk Q1 Profit Plunges; Updates FY24 Underlying Earnings View

A.P. Moller - Maersk, a leading Danish container logistics company, has reported a dramatic drop in its net income group share for the first quarter, falling to $177 million from the previous year's $2.28 billion.

The firm's earnings per share also saw a decrease, falling to $11 from $131 in the same period last year. Additionally, the underlying profit for the quarter stood at $210 million, a significant drop from the prior year's $2.56 billion.

Profit before financial items or EBIT slumped to $177 million from the $2.33 billion reported last year. Moreover, profit before depreciation, amortisation, and impairment losses, or EBITDA, fell to $1.59 billion, down from the previous year's $3.97 billion.

The company's revenue for the quarter also reduced to $12.36 billion from $14.21 billion the previous year, with this reduction primarily attributed to weakness in the Ocean segment.

Despite these financial setbacks, A.P. Moller - Maersk's quarterly results showed an increase in volumes, but persistent rate pressures compared to the previous year. Vincent Clerc, CEO of A.P. Moller - Maersk, remarked, "We have had a positive start to the year with a first quarter developing precisely as we expected. Demand is trending towards the higher end of our market growth guidance and conditions in the Red Sea remain entrenched."

Looking forward, A.P. Moller - Maersk has raised the lower end of its financial guidance, forecasting an underlying EBITDA between $4 billion and $6 billion. This is up from a previously anticipated range of $1 billion to $6 billion. The company attributes this adjustment to the strong container market and the ongoing disruption in the Red Sea/Gulf of Aden, which is expected to continue into the second half of the year.

Current expectations for the underlying EBIT range from negative $2 billion to $0, improved from the previous forecast which ranged from negative $5 billion to $0.

The company also announced that due to the ongoing Red Sea crisis, it has plans to extend the current rerouting south of the Cape of Good Hope potentially for the remainder of the year. Despite this, A.P. Moller - Maersk continues to expect overcapacity, which is likely to lead to lower rates during the second half.