Maersk's preliminary results for the third quarter exceeded expectations across the board. Revenue for the third quarter increased by more than 30% year-on-year, and EBITDA profit increased by 150%. This year, the EBITDA guidance range increased by 22%, up to 13% higher than analysts' expectations; the global container trade growth guide was also raised this year, which is expected to increase by up to 6%.
The Red Sea crisis, triggered by the geopolitical situation in the Middle East, continues to help Maersk (A.P. Møller-Mærsk A/S). The Danish shipping giant's initial estimated performance for the third quarter surpassed expectations and raised its profit guidance for the whole year for the fourth time in less than six months, reflecting strong market demand and continued disruptions to Red Sea shipping.
On Monday, October 21, local time, Maersk released preliminary results data for the third quarter of 2024, providing performance guidelines for the full year of 2024, and stated that it will release the full mid-term report for the third quarter results on October 31.
1) Main financial data:
Revenue: Third-quarter revenue of $15.8 billion; analysts expect $14.75 billion.
EBITDA: Earnings before underlying interest, tax, depreciation and amortization (EBITDA) for the third quarter was $4.8 billion, and analysts expected $3.63 billion.
EBIT: Underlying profit before tax (EBIT) for the third quarter was $3.3 billion, and analysts expected $2.29 billion.
2) Performance Guidelines:
EBITDA: The underlying EBITDA for 2024 is expected to be 11 billion to 11.5 billion US dollars. The company previously estimated 9 billion US dollars to 11 billion US dollars, and analysts expected 10.14 billion US dollars.
EBIT: The basic EBIT for 2024 is expected to be 5.2 billion to 5.7 billion US dollars, and the company previously estimated 3 billion to 5 billion US dollars.
free cash flow: Free cash flow in 2024 is at least 3 billion US dollars, and the company previously estimated at least 2 billion US dollars.
After the financial data was released, at the end of early trading of US stocks on Monday, Maersk's US stock gains rapidly expanded and reached a new daily high. In just about five minutes, the intraday increase pulled from less than 0.7% to about 7%. Later, the increase narrowed rapidly, rising less than 5% in midday trading.
Annual profit guidance increased by as much as 22%, global container trade guidance increased by up to 6%
Based on the final results estimates for the third quarter of last year announced by Maersk, the company's revenue and profit grew strongly in the third quarter of this year. Preliminary results showed that revenue for the third quarter increased by about 30.6% year on year, EBITDA increased by 152.6% year on year, and EBIT was more than six times that of 0.538 billion US dollars in the same period last year. Revenue was 7.1% higher than analysts' expectations, EBITDA was 32.2% higher than expected, and EBIT was about 44% higher.
In terms of performance guidance, Maersk raised its EBITDA profit guidelines again after May, June, and September of this year. The low end of the estimated annual EBITDA guidance range is 22.2% higher than the previous guidance, and the upper end of the guidance range is 4.5% higher than the previous one. The low end of the new guidance is still about 8.5% higher than analysts' expectations, and the upper end of the guidance range is 13.4% higher than analysts' expectations.
The increase in performance guidelines once again highlights that the conflict in the Red Sea, the world's busiest shipping route, had a bigger impact on the global supply chain than Maersk expected.
Xinhua News Agency reported in September that about 12% of the world's cargo traffic passes through the Eurasian Water Channel, which is composed of the Red Sea and the Suez Canal. For the global energy and materials supply chain, the Red Sea route can be called a “lifeline”. In recent months, due to the continuing tense situation in the Red Sea, many international shipping companies have been forced to abandon Red Sea routes and divert to African routes, with ships circling the Cape of Good Hope at the southwestern tip of the continent.
Less than two weeks ago, on October 9, Maersk announced that it will launch a shared vessel shipping cooperation with German container shipping company Hapag-Lloyd AG in southern Africa using the Cape of Good Hope network starting February 1 next year. Commentary at the time said that this cooperation suggested that the two companies expected that the Red Sea route would not be safe until next year.
When Mars basically released financial data on Monday, it also updated guidelines related to global trade, showing that shipping demand is also stronger than the company's previous expectations. As a container transport giant that controls about one-sixth of the world's container trade, Maersk currently expects global container trade to grow by 6% in 2024, and the company previously expected a 4%-6% increase.
