Brief analysis of Q3 performance of major shipping and logistics companies

Recently, major global container shipping companies have successively published their financial reports for the third quarter of 2023 and many expressed their views toward market forecast.

 

Net profit rank of some major container marine companies in Q1-Q3, 2023 (Unit: MLN dollar)
Shipping companies	Q3 2022	Q3 2023	YOY change	Q1-Q3,2022	Q1-Q3,2023	YOY change
Maersk	8,911	554	-93.78%	24,340	4,364	-82.07%
CMA CGM	7,039	388	-94.49%	21,840	3,730	-82.92%
Cosco Shipping Holdings	4,454	756	-83.03%	19,330	3,567	-81.55%
Hapag Lloyd	5,199	293	-94.36%	14,665	3,425	-76.65%
Ocean Network Express	5,521	187	-96.61%	16,127	1,910	-88.16%
Evergreen Shipping	3.184	678	-78.71%	9,728	1,108	-88.61%
HMM	1,561	72	-95.37%	6,480	533	-91.78%
Yangming Marine	1,542	89	-94.23%	5,140	196	-96.19%
Wanhai	692	79	-88.58%	2,881	-60	-102.08%

 

Evergreen

Evergreen announced its third-quarter results. Thanks to the contribution of long-term contract protection, interest income, and foreign exchange earnings, the net profit after tax in the third quarter was 21.908 billion New Taiwan dollars, an increase of 330% from the previous quarter, but a year-on-year decrease of 78.24%. Due to the increase in overall cargo capacity, Evergreen's consolidated revenue in the third quarter was NT$72.812 billion, an increase of 8.05% quarter-on-quarter, a decrease of 57.28% year-on-year, and a gross profit margin of 17.04%, 3.43% lower than that of Yangming and Wanhai in the second quarter. Evergreen's consolidated revenue in the first three quarters was NT$207 billion, with a net profit after tax of NT$32 billion and a gross profit margin of 19.81%.

 

Wanhai

Wanhai turned into a profit in the third quarter, but still lost about $60 million in the first three quarters. Mainly benefited from the recovery of the niche market, volume growth and interest income, contributed to profits, so that Wanhai out of the previous three consecutive quarters of loss haze. Wanhai said that the volume of goods increased slightly in October compared with the previous month. 

 

The fourth quarter is the peak season of the Asian near-western line, but due to the influence of geopolitics, high inflation and high oil prices, the economic outlook is still full of challenges. It will continue to look at the benefits of individual routes and streamline costs to maintain operational efficiency. According to the Alphaliner supply and demand growth forecast, container ship supply will grow by 8.4% this year, which is greater than the 1.4% growth in freight demand. Next year, supply will grow by 9.1%, still outpacing demand growth by 2.2%.

 

Yangming Marine

Yangming Marine announced revenue of NT$35.901 billion in the third quarter and a net profit of NT$2.806 billion after tax. Revenue in the third quarter was the same as that in the previous two quarters, but freight rates fell compared with the same period of last year, resulting in a decrease in revenue compared with the same period of last year. 

 

Yangming said that November followed by the fourth quarter to the first quarter of next year is the traditional off-season in the European and American markets, and the trend of container volume and price remains to be seen. The imbalance between supply and demand growth for two consecutive years will bring operational challenges to the container shipping industry. Furthermore, persistent high global inflation, international geopolitical tensions, and the European Commission's policy adjustments to the Shipping Joint Venture Collective exemption Regulation (CBER) all affect the overall development of the shipping market. Yangming Marine will actively pay attention to the changes in regional markets and flexibly adjust its operating strategy, route layout and fleet configuration in line with international competition laws and regulations, so as to maintain the company's operating performance and international competitiveness.

 

Maersk 

On November 3, Maersk released its third-quarter results, which showed that, affected by falling freight rates and falling cargo volumes, Maersk's basic quarterly revenue was $12.1 billion, compared with market expectations of $12.66 billion, compared with $22.8 billion in the same period of last year, with a profit margin of 4.4% before interest and tax.

 

"The current market environment is becoming increasingly difficult, with freight rates well below the peak reached in 2022, with continued pressure due to increasing seaborne capacity. While it will maintain expectations for full-year results, it is expected to be close to the lower end of the previous forecast range." Maersk said.
 

In terms of logistics and services, Maersk had revenue of $3.5 billion in the third quarter, compared with $4.2 billion in the same period of last year. Maersk said the air transport sector of the business segment was negatively affected by falling freight rates, but cargo volume basically returned to last year's levels.
 

In the terminal business, Maersk had revenue of $1 billion in the third quarter, compared with $1.1 billion in the same period of last year, mainly due to reduced global congestion, falling stacking demand and a 4.1% decline in cargo volume.

 

ONE 

ONE has announced its results for the second quarter of fiscal year 2023 (July 1, 2023 to September 30, 2023).

 

Net profit of ONE in the second quarter of 2023 fiscal year fell by 96.6% compared with the same period of last year. In the second quarter of fiscal year 2023, that is, in the third quarter of the calendar year, ONE realized operating income of US$3.549 billion, down 62.1% year on year and 5.7% on the quarter. Profit before interest and tax (EBIT) was US$58 million, down 99.0% on annual basis and 85.0% over last quarter. Profit before interest, tax, depreciation and amortisation (EBITDA) reached US$496 million, down 91.5% from the same period of last year and 35.6% on the quarter; net profit was US$187 million, down 96.6% on annual basis and 63.5% over last quarter.

 

2023 fiscal year Q2 performance of ONE
MLN dollar	Q22023FY	Q12023FY	Q22022FY	Q12022FY	YOY change	MOM change
Operating income	3549	3765	9367	9019	-62.10%	-5.70%
EBITDA	496	770	5843	5859	-91.50%	-35.60%
EBIT	58	386	5528	5561	-99%	-85%
Net profit	187	513	5521	5499	-96.60%	-63.50%

 

Fiscal year 2023 performance outlook: ONE said that due to the increase in the number of new ships, the balance between supply and demand has softened and short-term freight rates cannot maintain an upward trend. ONE expects full-year revenue in fiscal 2023 to fall by about 51% to $14.47 billion, EBIT down by about 98% to $252 million and net profit down by 94% to about $851 million. In fact, ONE expects an operating loss over the next two quarters, with a projected EBIT of -$191 million over the next six months.

 

HMM

HMM, South Korea's largest container shipping company, said its third-quarter profit fell sharply due to falling freight volumes and low freight rates. HMM has been profitable for 14 consecutive quarters since it turned profitable as a result of the epidemic, and its debt ratio fell to 20% at the end of September from 26% at the end of 2022. In addition, HMM said the market "shows no encouraging signs that consumer appetite is recovering" and will step up efforts to improve profitability by rationalizing routes and opening up new areas of business, as well as a series of cost-cutting measures.

 

Hapag Lloyd

 

In the first nine months of 2023, Hapag Lloyd's revenue was $15.312 billion, down 46.2% from a year earlier; earnings before interest, tax, depreciation and amortisation (EBITDA) was $4.519 billion, down 72.9% year on year; earnings before interest and tax (EBIT) was $2.989 billion, down 80.3% on annual basis, according to financial data. The average per-box freight was $1604/TEU, and Hapag Lloyd shipped 8.916 million TEU of goods in the first nine months.

 

Look at the third quarter alone, Hapag Lloyd's revenue was $4.465 billion, down 54.8% from a year earlier; profit before interest, tax, depreciation and amortisation (EBITDA) was $744 million, down 87% year on year; profit before interest and tax (EBIT) was $288 million, down 94.5% on the year; the average per-box freight was $1312/TEU, and Hapag Lloyd shipped 3.11 million TEU of goods in the first nine months.

 

 

Key figures (USD)*	Q3 2023	Q3 2022	9M 2023	9M 2022	9M2023 versus 9M 2022
Transport volume (TTEU)	3110	2975	8916	8987	-70
Freight rate (USD/TEU)	1312	3106	1604	2938	-1334
Revenues (USD million)	4465	9878	15312	28439	-13128
EBITDA (USD million)	744	5708	4519	16649	-12131
EBIT (USD million)	288	5225	2989	15143	-12154
EBITDA margin	17%	58%	30%	59%	-29 Ppt
EBIT margin	5%	53%	20%	53%	-34 Ppt
Group profit (USD million)	293	5199	3425	14665	-11239

 

Prospect
-Profit normalization as expected--prospects for fiscal year 2023 narrows.

-Reflects solid performance and an increasingly challenging market environment in the first three quarters of fiscal year 2023.

-Given many geopolitical conflicts, persistent inflationary pressures and high customer inventory levels, the outlook is uncertain.
-Although freight rates may stabilize above cost levels in the medium term, increased overcapacity may have a significant negative impact on industry profitability in 2024.

 

Kuehne+Nagel

Kuehne+Nagel released the first three quarters of good results, but the market environment is still full of challenges. The special economic situation associated with the epidemic in 2021 and 2022 continued to distort year-on-year comparisons of all key figures. The profit before interest and tax of 1.581 billion Swiss francs in the first three quarters of 2023 almost doubled from the pre-epidemic level of 794 million Swiss francs in the first three quarters of 2019, but decreased by 49% compared with 3.119 billion Swiss francs in the first three quarters of 2022.

 

 

DHL

DHL freight forwarder Q3 revenue fell 44% year-on-year to $4.731 billion.

 

On November 8, 2023, freight forwarder giant DHL released the third quarter of this year's results, and said that it expects the freight market downturn will continue into next year.
 

It was understood that the logistics industry continued to be dragged down by the general economic downturn, for large logistics enterprises DHL, this difficulty will continue until the end of 2023.

 

In the third quarter of this year, DHL Group's revenue was 19.398 billion euros ($20.775 billion), down 19.3% from a year earlier, while profit before interest and tax (EBIT) was 1.372 billion euros ($1.469 billion), down 32.4% on annual basis.

 

 

Cosco Shipping Holdings

 

On October 30, 2023, Cosco Shipping Holdings released the third quarter report of 2023.
 

In the first three quarters of 2023, Cosco Shipping Holdings realized operating income of 134.556 billion yuan, profit before interest and tax (EBIT) of 33.23 billion yuan, and net profit of 25.999 billion yuan, of which the net profit belonging to shareholders of listed companies was 22.071 billion yuan.

 

The revenue of the supply chain except shipping was 21.842 billion yuan, accounting for 16.9% of the revenue of container shipping business, an increase of 8.69% over the same period of last year.

 

Looking to the future, Cosco Shipping Holdings said that it will speed up the integration and reengineering of business chain, mathematical intelligence chain and green chain around the positioning of "global digital supply chain operation and investment platform with container shipping as the core". Better able to domestic and international double cycle.

 

DSV

DSV achieved solid results in the first three quarters of 2023. Gross profit fell 15.1% and profit before interest and tax declined 30.6%, which was to be expected given challenging market conditions and record profits last year.

 

In the first three quarters of 2023, profits before interest and tax in the aviation and maritime sectors decreased by 35.7%, profits before interest, tax, depreciation and amortisation in the solutions sector decreased by 16.9%, and the performance of the highway sector was the same as last year.

A real recovery in global freight volumes does not appear to have happened in 2023, but based on its performance so far, DSV has raised the floor of the 2023 EBIT guidance, which is now expected to be between DKK 17.5-18.5 billion (previously DKK 17-18.5 billion).

 

Matson

Matson's consolidated revenue in the third quarter of 2023 was $827.5 million, down 25.8% from a year earlier. Third-quarter profit was $119.9 million, down 54.9% from a year earlier.

 

 

"Looking ahead, it is expected that Matson's consolidated operating revenue in the fourth quarter of 2023 to be higher than that in the first quarter of 2023." It expects domestic routes and logistics have returned to a normal seasonal trend and its freight demand for services in China will continue to be stable, and there will be some seasonality in the post-holiday period. CLX and CLX+ freight rates in the fourth quarter of 2023 are expected to be much higher than before the epidemic.

 

CMA CGM

 

CMA CGM Group released its latest financial statements on November 10. According to the data, CMA CGM Group achieved operating income of $11.43 billion in the third quarter, down 42.6% from a year earlier; profit before interest, tax, depreciation and amortisation (EBITDA) reached $2 billion, down 78.2% year-on-year; EBITDA profit margin fell 28.5 percentage points to 17.5%; and group net profit fell to $390 million from $7.04 billion in the same period of last year, down 94.5% from a year earlier.

 

2023 Q3 performance of CMA CGM
	Q32023	Q32022	YOY change %	Q1-Q3, 2023	Q1-Q3, 2022	YOY change %
Operating income (MLN dollar)	11431	19906	-42.60%	36442	57607	-36.70%
EBITDA (MLN dollar)	1997	9148	-78.2	8025	24430	-67.20%
EBITDA profit margin	17.50%	46%		22%	42.40%
Net profit (MLN dollar)	388	7039	-94.50%	3730	17681	-78.90%

 

In the first three quarters, CMA CGM Group achieved a total operating income of US$36.44 billion, down 36.7% from a year earlier, with EBITDA at US$8.02 billion, down by 67.24 year on year; its profit margin fell by 20.4 percentage points to 22.0% from a year earlier. Net profit decreased to US $3.73 billion from US$17.6 billion in the same period last year, down 78.9% from the same period of last year.
 

In the logistics sector, operating revenue in the third quarter of this year was $3.672 billion, down 15.4% from a year earlier; the EBITDA was at $348 million, a year-on-year reduction of 3%; the profit margins increased by 1.2 percentage points on the year to 9.5%.

 

It will continue to invest in operating assets to support energy transformation. At the end of August 2023, CMA CGM completed its $2.8 billion acquisition of GCT Bayonne and New York Container Terminals, renamed Liberty Bayonne Port and Liberty New York Port. CMA CGM is actively investing to diversify the energy structure of its ships, with the goal of achieving net zero carbon by 2050. So far, CMA CGM has invested more than 17 billion US dollars to set up a container fleet of nearly 120 LNG power and methanol power.
 

Macroeconomic forecasts show that global economic activity in 2023 is relatively resilient and, although lower than the historical average, is not expected to recover in 2024. However, this prospect is expected to contrast sharply with the expected rebound in world trade in 2024. The increase in market capacity in 2024 is likely to continue to drag on freight rates. In this context, CMA CGM Group will continue to focus on cost control, promote decarbonization strategy, and continue to integrate strategic investments in the past two years, while CMA CGM Group will continue to focus on geopolitical implications.