Posted on April 30, 2024
By Dominic Chopping
Denmark’s A.P. Moeller-Maersk is scheduled to report results for the first quarter on Thursday. Here is what you need to know.
REVENUE FORECAST: The shipping giant is expected to post first-quarter revenue of $12.45 billion, down 12% from a year earlier, according to a FactSet consensus of 13 analyst estimates.
EARNINGS FORECAST: Earnings before interest, taxes, depreciation and amortization are seen at $1.89 billion from $3.97 billion a year earlier, while the company is seen posting a net profit of $270 million from $2.32 billion, according to a FactSet poll of 8 analysts.
Shares have fallen around 17% in the last 12 months.
WHAT TO WATCH:
–Maersk could see good growth in the number of containers it shipped during the quarter, driven by easier comparables, increased activity and a gradual normalization of inventories at companies, Sydbank analyst Mikkel Emil Jensen said in a note. He expects Maersk to deliver an 8% increase in volumes in the quarter compared to the same period last year.
–The crisis in the Red Sea gave rise to significant freight rate increases toward the end of 2023 before peaking in January. Rates fell back slightly in February and have stabilized in March. The higher freight rates will lift the first-quarter average freight rate compared with the previous three months, but in 1Q last year Maersk was still benefiting from legacy contracts signed at favorable terms, so on that basis Sydbank models a drop in the average year-on-year freight rate. Jensen models an average freight rate of $2,182 for an FFE–a standard 40-foot container–in 1Q, corresponding to a decrease of 24% on year.
–The significantly longer route around Africa to avoid the Red Sea naturally means greater fuel consumption, the analyst said. At the same time, an increased level of activity, continued high inflation and increased network costs will make it difficult to keep costs down, he added.
–Sydbank sees revenue at Maersk’s main ocean unit at $7.6 billion, with Ebitda falling 75% to $800 million, driven mainly by a continued difficult basis for comparison.
–Maersk has guided to full-year underlying Ebitda of between $1 billion and $6 billion, with underlying EBIT between $0 and a $5 billion loss, reflecting uncertainty over the duration of the Red Sea situation. There are many indications that a solution to the Red Sea isn’t just around the corner, while activity is increasing and high freight rates could remain for a while yet, Sydbank said. “We therefore continue to assess that Maersk’s low end of the forecast is conservative.” Sydbank models full-year Ebitda of around $5 billion with an EBIT loss of $500 million and continues to expect a guidance upgrade from Maersk either with the release of 1Q results or later in the year.
