Brief analysis of Q1 performance of major shipping companies: plunging operating income and profit

Recently, major global container shipping companies have successively released their financial reports for the first quarter of 2023. Due to the significant drop in market freight rates and weak demand, the performance of shipping companies in the first quarter of this year has been rather dismal, with the revenue and net profit of various shipping companies dropping significantly compared to the same period of last year. Some shipping companies have suffered losses.

The followings are the performance of some major shipping companies and their forecast for the whole year:

Hapag Lloyd

Hapag Lloyd's EBITDA in the first quarter of 2023 was $2.4 billion (2.2 billion euros). Compared with the same period of last year, EBIT fell to $1.9 billion (1.7 billion euros), while group profit was also lower on the year, at $2 billion (1.9 billion euros).

Said Rolf Habben Jansen, chief executive of Hapag Lloyd: "despite the decline in performance, we have made a strong start in this fiscal year. The market environment has been normalized, and demand and freight have fallen accordingly. This will undoubtedly have an impact on our revenue for the whole year, so we will pay close attention to our costs. In addition, we are advancing the further development of our Group's '2030 Strategy', which will focus on quality and sustainability. "

For the whole of 2023, Hapag Lloyd confirmed his forecast released on March 2. EBITDA is expected to be between $4.3 and $6.5 billion (4 to 6 billion euros), and EBIT is expected to be between $2.1 and $4.3 billion (2 to 4 billion euros). However, the ongoing war in Ukraine, other geopolitical uncertainties and persistent inflationary pressures are creating risks that would have a negative impact on forecasts.

Maersk

Vincent Clerc, CEO of Maersk, announced that earnings before interest and tax (EBIT) fell sharply by 68% from $7.3 billion last year to $2.3 billion, and said bluntly that the first quarter of this year was the best quarter of the year.

Maersk's first-quarter revenue fell 26% from $19.3 billion to $14.2 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) declined from $9.1 billion to $4 billion, and earnings before interest and tax (EBIT) fell from $7.3 billion to $2.3 billion. 

Maersk's estimate of the company's full-year performance this year remains unchanged, pointing out that the market in the first quarter is characterized by continued destocking in Europe, especially in North America. Although it is difficult to predict the exact time, it is expected that shipment volume will gradually pick up in the second half of the year. The company's profit before interest and tax in 2023 is between $2 billion and $5 billion, which means it is estimated that there may be no profit at all for the next three quarters, with full-year profits based on the first quarter, but it is also possible to make a total of about $2.7 billion in the later three quarters.

Yangming, Wanhai and Evergreen 

Evergreen said that overall transport demand and market freight rates declined in the first quarter, affecting revenue and profit performance in the first quarter. In addition to paying close attention to the changes in cargo volume in the short-term market, Changrong Shipping will also continue to pay attention to changes in the relevant industrial chain and trade structure caused by geopolitical factors, and deploy capacity in a timely manner to cope with market development.

Looking to the future, Evergreen said that the overall freight rate and export volume have picked up slightly in April, and the future still depends on global political and economic development, destocking, and the impact of changes in supply and demand in various regions. Evergreen still believes that the market recovery is cautiously optimistic.

Looking forward to the second half of the year, according to Alphaliner's forecast for the growth of supply and demand in the shipping market, ship supply will grow by 8.2% this year, and freight demand will grow by 1.4%; in 2024, supply will grow by 8.9%, and demand will grow by 2.2%. Wanhai Lines pointed out that in response to such challenges, ship types and routes have been configured to meet customer needs in order to maintain the company's sound operation. Judging from the financial results, the financial structure remains robust enough to cope with capital expenditure and external environmental challenges in the coming years.

ZIM

On May 22, 2023, global container shipping company ZIM Integrated Shipping Services Ltd.  released its consolidated results for the three months ended March 31, 2023.

Net loss in the first quarter of 2023 was $58 million (compared with net income of $1.711 billion in the first quarter of 2022); adjusted EBITDA in the first quarter of 2023 was $373 million, down 85% from a year earlier; and operating loss of EBIT before interest and tax in the first quarter of 2023 was $14 million, compared with operating profit of $2.243 billion in the first quarter of 2022. Revenue was $1.374 billion in the first quarter of 2023, down 63% on the year.

Mr. Eli Glickman, President and CEO of ZIM, concluded: "despite the macro and industry headwinds, we still expect to be positive for earnings before interest and tax in 2023. We expect that the replenishment of inventory will begin in the second half of 2023 (retailers) to achieve a recovery in demand and thus improve freight rates. Therefore, for 2023, we reiterated the full-year 2023 results guidance that we shared earlier this year with adjusted EBITDA between $1.8 billion and $2.2 billion and adjusted EBIT between $100 million and $500 million.

CMA CGM

Recently, CMA CGM announced its first-quarter results. Revenue during the reporting period was $12.72 billion, down 30.2% from a year earlier. EBITDA was $3.44 billion, down 61.3% year on year; net profit was $2.01 billion, down 72.1% compared with the same period of last year.

The main performance data for the first quarter from CMA CGM
 

Specifically, revenue from CMA CGM shipping business fell 40.3% year-on-year to $3.05 billion, down 64.3% from a year earlier. Revenue from the logistics business was $3.86 billion, up 14.1% on annual basis. ETITDA was $340 million, up 36.9% on the year. In addition, in the first quarter, CMA CGM cargo volume was 5.02 million TEU, down 5.3% from a year earlier. The average freight was $1766 /TEU, down 37% on the year.

The main performance data for the first quarter marine transport business from CMA CGM

Rodolphe saad, chairman and chief executive of CMA CGM, commented: "after a special period of two years, due to slowing global economic growth, inflation and continued destocking in many parts of the world, the shipping industry has entered normalization and our first-quarter results remain solid."