Maersk ratchets up profit guidance after freight rates soar

A.P. Moller-Maersk A/S, the world’s largest container line, raised its guidance for profit this year after freight rates soared as lockdowns led to a surge in spending on shipped goods.

The Copenhagen-based company added almost $5 billion to the midpoint of its operating profit forecast, according to a statement late on Monday. Full-year Ebitda will be $18 billion to $19.5 billion, up from a previous forecast of $13 billion to $15 billion. Underlying Ebit will be in a range of $14 billion to $15.5 billion compared with $9 billion to $11 billion seen previously.

Rates have almost jumped 4-fold in a year

“The strong quarterly performance is mainly driven by the continuation of the exceptional market situation with a strong rebound in demand causing bottlenecks in the supply chains and equipment shortage,” Maersk said.

Over the past year, freight rates have repeatedly broken through record highs amid intense demand and limited supply. On the demand side, consumers who were unable to channel savings into restaurant visits and trips abroad instead spent their money on imports. On the supply side, already-tight capacity was hit by bottlenecks that squeezed traffic in key routes.

Maersk shares rose 1.5% after trading started in Copenhagen on Tuesday, bringing its gains this year to more than 30%.

“Freight rates have continued their ascent so a profit upgrade is not a surprise, but the new forecast range is higher than expected,” Mikkel Emil Jensen, an analyst at Sydbank, said in a note.

What Bloomberg Intelligence Says

“Maersk’s improved 2021 earnings forecast is achievable, we believe, against the backdrop of supply-chain constraints, inventory restocking and equipment shortages that have created the most favorable rates in a generation. The midpoint of management’s revised 2021 Ebitda guidance ($18-$19.5 billion) is about 9.2% above consensus. Demand growth (revised up to 6-8%) should continue to find support from trans-Pacific trade into 2022.”

–Lee Klaskow and Adam Roszkowski, transportation analysts

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Maersk, which in May said it will buy back $5 billion in stock, is scheduled to release its full second-quarter report on Aug. 6.

The company provided some unaudited second-quarter figures on Monday:

  • Revenue was $14.2 billion
  • Underlying Ebitda was $5.1 billion
  • Underlying Ebit was $4.1 billion
  • Earnings in the third quarter are expected to “exceed the level for Q2 2021”
  • 2021 global container demand is expected to grow 6-8%, up from 5-7% expected previously, primarily driven by export volumes out of China to the U.S.
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