A.P. Moller-Maersk (Maersk) has achieved a first quarter that met expectations, with profitability recovering well compared to the fourth quarter of 2023.
According to Maersk, the results were driven by terminals’ strong profitability, as well as a mix of increased demand and a prolonged Red Sea crisis.
As these circumstances are projected to persist far into the second half of the year, Maersk has raised the lower end of its forecast range, currently estimating underlying EBIT at $ -2.0 to 0.0 billion.
The Red Sea crisis led to higher market rates and expenses owing to supply chain interruptions, which affected ocean outcomes.
READ: Maersk upgrades India and North Europe service
Strong volumes, good capacity utilisation, and continuous cost control resulted in better earnings over the previous quarter.
Maersk noted that its Logistics & Services had a considerable volume increase, but inadequate margins due to low warehouse utilisation and short-term issues executing new client contracts in North America’s ground freight division.
Additionally, Maersk’s terminals had a robust start to the year, driven by increased volumes. Strong cost control and excellent productivity helped to boost profitability.
READ: Maersk’s WAX ship calls at Sri Lankan terminal
Vincent Clerc, CEO of Maersk, said: “We 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.
“This not only supported a recovery in the first quarter compared to the previous quarter but also provided an improved outlook for the coming quarters, as we now expect these conditions to stay with us for most of the year.
“However, we still anticipate the high number of new vessels being delivered during this and next year to eventually offset these factors and put the ocean markets under renewed pressure. We therefore relentlessly continue to pursue our cost agenda to roll back the disruption-linked cost in Ocean and restore margins in Logistics & Services.
“This work on cost, helped by our strong value proposition, is crucial in supporting our customers through the ongoing volatility and build a more resilient business.”
