Just Now, Maersk Released Its Latest Earnings Report For The Third Quarter! Announced Another 3,500 Layoffs.

Maersk released its financial results, which show that the company's performance in the third quarter of 2023 was in line with expectations. However, the current market environment is becoming increasingly difficult, with freight rates well below the peak reached in 2022 and the increase in shipping capacity continuing to exert pressure. Revenue for the quarter was $12.1 billion, compared to $22.8 billion in the same period last year, with an EBIT margin of 4.4%, impacted by lower freight rates and lower cargo volumes. Maersk maintained its expectations for full-year results but expects them to be near the lower end of the range of previous estimates.

Mr. Vincent Clerc, Chief Executive Officer of A.P. Müller-Maersk, said: "Low demand, freight rates returning to historic levels, and inflationary pressure on costs have become the new normal for our industry. Since the summer, we have seen overcapacity on most of the world's routes, leading to falling freight rates, but no significant increase in ship dismantling or idling. To better meet the challenges ahead, we have accelerated a number of cost and cash control measures to protect our financial performance. Despite the streamlining of the company's personnel and operations, our strategy of developing an integrated shipping and logistics strategy, our commitment to meeting the diversified supply chain needs of our customers, and our pursuit of growth opportunities in our terminal business and logistics and services business have never changed."

Business performance
In Ocean, volumes grew by 9% since the last quarter, and the cost per container at fixed bunker prices fell by 11% compared to the third quarter of 2022 as a result of a focus on cost control. Actual EBIT was negative, with a loss of $27 million compared to $8.7 billion in the same period last year, driven by significant downward pressure on freight rates, particularly on the Asia-Europe, North America, and Latin America routes.

Logistics & Services revenue was $3.5 billion, compared to $4.2 billion in the same period last year. The segment, particularly in air transportation, was negatively impacted by the decline in freight rates, but volumes were largely back to last year's level. Strengthened cost management helped stabilize margins.
Terminals revenue was $1.0 billion, compared to $1.1 billion in the same period last year, as volumes declined by 4.1 percent due to reduced demand for stockpiles as global congestion eased. Performance was stronger given the combination of price adjustments and cost initiatives. Return on invested capital (ROIC) increased to 10.3%, exceeding expectations of over 9% by 2025.

Enhancing competitiveness and resilience through lean operations
Maersk has implemented stringent cost control measures this year to effectively mitigate the impact of the challenging market environment, including a reduction in headcount from 110,000 at the beginning of 2023 to approximately 103,500 today. Given the deteriorating outlook for the maritime market, Maersk will continue with these initiatives and today announced plans to reduce its workforce by a further 3,500, of which 2,500 employees will be affected by the end of the year, with the remainder extending into 2024. The measure will reduce the company's overall headcount to less than 100,000 people. As a result, restructuring costs are now expected to total $350 million, up from the $150 million announced in February.

The cumulative effect of the personnel restructuring, which complements the full year of cost containment, could reduce Maersk's cost of sales and general and administrative expenses (SG&A) by $600 million in 2024. In addition, capital expenditure expectations for 2023 and 2024 have been adjusted downward, while further measures, including the continuation of the share buyback program into 2024, are under review. The company's full-year earnings report for 2023 will be released on February 8, 2024, at which time a preview of the 2024 performance will be provided.

2023 Performance Expectations
Maersk expects global growth in seaborne containerized cargo volumes to be -2% to -0.5%, compared to previous estimates of between -4% and -1. Maersk's marine business will keep pace with the market.

Maersk maintains its full-year 2023 earnings forecast but now expects results to be close to the lower end of its previously announced full-year actual EBITDA of $9.5–11 billion and actual EBIT of $3.5–5 billion. Free cash flow (FCF) expectations of at least $3 billion are unchanged. In 2022-2023, total expenditures are expected to be $8 billion (previously expected to be $9–10 billion). In 2023–2024, capital expenditures are expected to be $8–9 billion (previously expected to be $9–10 billion).

For the announced restructuring costs of US$350 million (previously US$150 million), the majority will be recognized in 2023. Total cost savings compared to 2023 are expected to be approximately $600 million in 2024.