Shares of A.P. Møller - Maersk fell 6.6% after the quarter as investors were disappointed by continued margin pressure in Ocean due to persistent oversupply, lower freight rates, and a cautious full-year EBIT outlook spanning a wide negative-to-positive range.
- Q1 EBITDA stood at $1.8 billion with EBIT of only $340 million, severely impacted by the lowest year-on-year ocean freight rates.
- Ocean segment rates declined 14% YoY, driven by new fleet deliveries outpacing demand and contract re-pricing, despite a 9% volume growth above market.
- Free cash flow was negative $874 million for the quarter, with full-year guidance maintained at a wide underlying EBIT range from -$1.5 billion to +$1 billion and negative $3 billion cash flow or better.
- The Middle East conflict added approximately $0.5 billion a month in extra costs, largely mitigated so far by commercial surcharges and operational adjustments but creating ongoing uncertainty.
- Operational improvements, including a 96% vessel utilization and cost efficiencies from the Gemini network, have partially offset pressures but were insufficient to stabilize margins.
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