Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• A P Moller Maersk AS (AMKAF) reported a record full-year EBITDA of $12.1 billion and EBIT of $6.5 billion for 2024, marking the best financial year outside the pandemic boom.
• The logistics and services segment saw a significant improvement in margins, increasing from 2.5% in the first half to 4.6% in the second half of 2024.
• The company's new ocean network, Gemini, is expected to enhance operational efficiency and reduce costs by approximately $500 million annually.
• The terminals segment achieved a return on invested capital of 13.5%, surpassing midterm targets and reflecting strong performance.
• A P Moller Maersk AS (AMKAF) reinstated its share buyback program, planning to return approximately $4.4 billion to shareholders, indicating strong cash flow and financial health.

Negative Points

• The company faces ongoing uncertainty regarding the potential reopening of the Red Sea, which could impact supply chain dynamics.
• Despite improvements, the logistics and services segment still falls short of its 10% organic revenue growth and 6% margin targets.
• The company anticipates a challenging supply-demand imbalance in 2025, with potential capacity increases and market disruptions.
• A P Moller Maersk AS (AMKAF) expects a wide range of underlying EBIT for 2025, between breakeven and $3 billion, indicating potential volatility.
• The company acknowledges that the progress in its integrated strategy has been slower than expected, with foundational capabilities still being developed.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with BSBR.

Q: With your largest competitor pulling ahead in terms of size, how should we think about your use of cash? Could you consider M&A in logistics and services, or doubling down on container shipping? A: (CEO) We are focused on maintaining our current position in ocean shipping as we don't see a correlation between size and increased margin. Our Gemini network is competitive and cost-effective. Regarding capital allocation, we are pleased with our decisions on dividends and share buybacks, and we plan to continue executing our strategy without major acquisitions in shipping.

Q: With a utilization of 95%, what are the levers to improve unit costs further? A: (CEO) Higher utilization is maxed out, but operational efficiency through the Gemini network will create more density and better asset turns, achieving $500 million in savings. Additionally, as the situation normalizes, we expect cost reductions in areas like charter rates and procurement.

Q: Can you provide some color on the integrated strategy's progress and future investment needs? A: (CEO) The foundational capabilities are in place, and we are now focused on execution. The strategy remains relevant, especially with the increasing importance of logistics. We aim to achieve a 6% EBIT margin in logistics and services, and more details will be shared at our Capital Markets Day.

Q: How did the Asia-Europe contracting season go, and what are the expectations for the transpacific season? A: (CEO) Contracting has progressed well, with volumes and rate levels in line with expectations. We anticipate strong market growth in the transpacific, supported by positive customer sentiment and expected economic conditions.

Q: What needs to happen for you to start reshaping your network and returning to the Red Sea and Suez transits? A: (CEO) Safety is the primary concern. We need assurance that the region is stable and safe for our operations. Additionally, we must ensure that any changes are sustainable to avoid costly disruptions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.