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Maersk warns ‘dark clouds’ are looming despite another record quarter

Maersk reports a surge in its profits but warns of ‘dark clouds on the horizon’ due to high inflation and a looming global recession.

The largest container shipping company in the world, Maersk, reported a significant increase in third-quarter profit and revenue due to higher ocean freight rates and acquisitions but issued a warning that “dark clouds on the horizon” were looming over the sector.

In comparison to the same period last year, the Copenhagen-based company reported a $9.5 billion profit before taxes.

Higher freight rates in the primary Ocean business unit of the company and completed acquisitions in the Logistics business unit were major contributors to the revenue increase of 37% to $22.8 billion.

EBITDA increased by more than 60% over the same period, from $6.9 billion to $10.9 billion, while EBIT increased from $5.85 billion to $9.5 billion.

“Our third quarter result was another record and the 16th consecutive quarter with year-over-year earnings growth,” AP Moller-Maersk CEO Sren Skou said.

However, it is evident that freight rates have peaked and started to normalise during the quarter, due to both lower demand and less supply chain congestion. “Ocean freight rates, which drove the exceptional results we delivered in 2022, were up year on year and compared to the second quarter.”

A significant increase in freight rates on contract and shipment routes from Asia to Europe and North America during the quarter led to an increase in ocean revenue of $18 billion and an increase in EBIT of $8.7 billion, which was partially offset by a decline in volumes and higher costs for bunker, container handling, and network.

Due primarily to higher volumes, prices, and the completion of the Terminal’s share in Global Ports Investments in Russia, revenue increased to $1.1 billion and EBIT increased to $357 million in Terminals.

The company’s CEO, Sren Skou, also provided a gloomy outlook for the future.

“With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon,” Skou said in a statement. “This weighs on consumer purchasing power which in turn impacts global transportation and logistics demand.”

“Supply-side bottlenecks” are still a problem, but there are signs that they are easing as demand slows and COVID-19-related restrictions in China loosen, according to Maersk, which claims that demand for logistics services moderated across global supply chains in the third quarter.

Maersk saw its profits skyrocket as the global economy reopened following pandemic lockdowns and container demand surged. Profits tripled to $24 billion in 2021.

The sector is under pressure, though, from declining demand brought on by higher inflation.

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