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Maersk posts blockbuster Q2 results — and Q3 looks even better

Full-year guidance now double what it was at the start of the year

Maersk container ships (Photo: Flickr/Kees Torn)

There’s a saying at public companies: “Underpromise and overdeliver.” A.P. Moller-Maersk has apparently taken that credo to heart in 2021.

At the beginning of this year, it introduced initial guidance for 2021 earnings before interest, taxes, depreciation and amortization of $8.5 billion-$10.5 billion.

In April, it raised its EBITDA guidance to $13 billion-$15 billion.

Then on Monday, it hiked it yet again, to $18 billion-$19.5 billion. The midpoint of the new range is double the midpoint of the range at the beginning of this year and 8% above the current consensus estimate of $17.4 billion.

Maersk CEO Soren Skou previously called Q1 2021 his company’s “best quarter ever” — but that record didn’t last long. Maersk reported on Monday that Q2 2021 EBITDA was $5.1 billion on revenues of $14.2 billion. That easily tops Q1 2021 EBITDA of $4 billion.

“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 chain and equipment shortages,” said the company.

Q2 2021 ocean volumes increased 15% year on year, with average freight rates surging 59%. In the first quarter, volumes increased 5.7% year on year and rates rose by 35%.

Maersk revised its outlook for full-year demand growth to 6%-8% from 5%-7% previously, “primarily still driven by the export volumes out of China to the U.S.”

The high-water mark reached in the second quarter is unlikely to stand for long. Maersk said that “earnings in the third quarter are expected to exceed the level for Q2 2021.” It added that the “exceptional market situation” is “expected to continue at least until the end of full-year 2021.”

Guidance still too conservative?

Even after two revisions, is Maersk’s guidance still too conservative? First-half results imply that Maersk expects H2 2021 EBITDA of $8.9 billion-$10.4 billion. The midpoint of that range, $9.65 billion, “in our view looks slightly conservative,” said Fearnleys Securities.

At Clarksons Platou Securities, the outlook for Q3 2021 is so strong that Maersk’s results would have to fall significantly in Q4 2021 for the company to keep within its new guidance range.

Clarksons projects Q3 EBITDA of around $7 billion. If that happens, Maersk would beat its latest guidance if it made more than $3.4 billion in Q4 2021. That would mark more than a 50% slowdown in the fourth quarter versus Clarksons’ third-quarter estimate.

According to Clarksons Platou Securities analyst Frode Mørkedal, “Even if the company says ‘the exceptional market situation [is] still expected to continue at least until the end of full-year 2021,’ the actual guidance implies a marked slowdown during Q4 2021.”

The path to ‘new normal’

The timing of container-rate normalization is proving hard to predict. Earlier estimates called for rates to ease after Chinese New Year in February. Then the market was expected to turn mid-year. Now, expectations are shifting to the end of 2021 or early 2022.

According to Jefferies analyst David Kerstens, “Container freight rates continue to set new record highs every week. Freight rates will likely eventually come down, when container demand normalizes and supply chain bottlenecks and capacity constraints ease. Demand for goods is expected to start leveling off as spending on services recovers, but inventory restocking will likely sustain production and container imports.

“Our estimates assume some normalization in the second half of 2021, followed by a decrease to a level in between this year’s record-high freight rates and previous levels, resulting in a normalization at higher-than-expected earnings levels,” said Kerstens.

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  1. F Mae Morgan

    Just like everything else its blamed on covid when its likely excuse for slow service & excuse to “GOUGE” the customer for poor & slow service knowing people are willing to pay more just to get ANY service. I think they know if they dont worry about speedy delivery it creates a higher demand & therefore higher shipping rates. Why would shippers want to speed up service when theres BIG money to be made?

  2. Dean

    Market situation due to COVID19… Allowing for exceptional gains to a limited few… Whilst others, many of not most, suffer it 🤷‍♂️ yet these companies boast of their “achievements” while exporters importers pay increased rates (assuming they are lucky enough to get empty containers etc)

    1. Sonu Padua

      Agree. This is daylight robbery & at the expense of the end client. Shipping lines have become monopolies, overcharging, introducing additional fees like late B/L fees, etc., putting the entire logistics industry to stress. When is this ever going to end or brought back to pre-covid conditions?

  3. javed iqbal

    Hi,Being an importer I would like to say that in this critical situation causing shortage of containers around the world the trade between continents has become very difficult,containers are not available,rates are at mad level,free days being reduced,and allot of changes has been made by the lines fir the shipper’s and consighnee,But the shipping line did not rought any change or any good or user’s favourable addition,

    For example the lines are taking too much time to solve a BL issue if there is any mistake, they do not take the Urgent actions for the containers awaiting for Delivery orders,

    My 2 containers were abounded on the port,1 was on CNA CHM and other on ONE LINE.
    I lost the both cargos due to very lengthy and lazy service provided by the carriers,I am sure if their team was willing to solve the with fast teamwork they could save my cargos and the empty containers to get out of the port and to make them able to be a part of the empty again to get back into cycle,

    By hard luck the containers are on port from Last many months and the customs now will auction them and it must take few more months to get in.

    It’s a request please make your team assure to solve cases on daily bases and lines should have an authority to ask their team to solve cases regularly by giving them 12 or 24 hours to decide of hand over case to the next level of officers to make sure the flow going on.
    A well wisher.Mr javed iqbal.

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Greg Miller

Greg Miller covers maritime for FreightWaves and American Shipper. After graduating Cornell University, he fled upstate New York's harsh winters for the island of St. Thomas, where he rose to editor-in-chief of the Virgin Islands Business Journal. In the aftermath of Hurricane Marilyn, he moved to New York City, where he served as senior editor of Cruise Industry News. He then spent 15 years at the shipping magazine Fairplay in various senior roles, including managing editor. He currently resides in Manhattan with his wife and two Shih Tzus.