Red Sea crisis continues "assistance", A.P. Møller - Mærsk raises profit guidance four times in half a year, stock price jumps 7% intraday | Financial Report News

The Red Sea crisis sparked by the geopolitical situation in the Middle East continues to boost A.P. Møller - Mærsk A/S, the Danish shipping giant. The preliminary estimate of the third quarter performance of this company far exceeded expectations, with profits showing strong growth. This marks the fourth time in less than six months that the company has raised its full-year profit guidance, reflecting strong market demand and the ongoing disruption in Red Sea shipping.

On Monday, October 21st, local time, A.P. Møller - Mærsk A/S announced its preliminary performance data for the third quarter of 2024, provided guidance for the full year of 2024, and stated that the interim report for the third quarter will be released on October 31st.

1) Key Financial Data:

Revenue: Operating revenue in the third quarter was $15.8 billion, exceeding analysts' expectations of $14.75 billion.

EBITDA: Earnings before interest, taxes, depreciation, and amortization (EBITDA) in the third quarter was $4.8 billion, surpassing analysts' expectations of $3.63 billion.

EBIT: Earnings before interest and taxes (EBIT) in the third quarter was $3.3 billion, higher than analysts' expectations of $2.29 billion.

2) Performance Guidance:

EBITDA: The estimated basic EBITDA for 2024 is expected to be between $11 billion and $11.5 billion, compared to the company's previous estimate of $9 billion to $11 billion, and analysts' expectations of $10.14 billion.

EBIT: The estimated basic EBIT for 2024 is expected to be between $5.2 billion and $5.7 billion, compared to the company's previous estimate of $3 billion to $5 billion.

Free Cash Flow: The free cash flow for 2024 is expected to be at least $3 billion, compared to the company's previous estimate of at least $2 billion.

After the financial data was released, during the final moments of Monday's pre-market trading session, A.P. Møller - Mærsk A/S's stock price surged rapidly, hitting a new daily high. In just about five minutes, the intraday gain increased from less than 0.7% to around 7%, before quickly narrowing to less than 5% by midday.

Full-Year Profit Guidance Raised by Up to 22%, Global Container Trade Guidance Up by 6%

Based on A.P. Møller - Mærsk A/S's final estimate of last year's third-quarter performance, the company's revenue and profits have shown strong growth in the third quarter of this year. The preliminary performance indicates a year-on-year revenue growth of approximately 30.6%, EBITDA growth of 152.6%, and EBIT growth of more than six times that of the same period last year. Revenue exceeded analysts' expectations by 7.1%, EBITDA by 32.2%, and EBIT by about 44%.

In terms of performance guidance, A.P. Møller - Mærsk A/S has once again raised its EBITDA profit guidance following the adjustments made in May, June, and September this year. The lower end of the annual EBITDA guidance range for this time has been raised by 22.2% compared to the previous guidance, while the upper end has been raised by 4.5%. The lower end of the new guidance is approximately 8.5% higher than analysts' expectations, and the upper end is 13.4% higher than analysts' expectations The upward revision of performance guidance highlights the greater impact of the conflict in the Red Sea, the busiest maritime route in the world, on the global supply chain than expected by A.P. Møller - Mærsk A/S.

According to a report by Xinhua News Agency in September, approximately 12% of global goods transportation passes through the Eurasian waterway formed by the Red Sea and the Suez Canal. For the global energy and material supply chain, the Red Sea route is considered a "lifeline." In recent months, due to the ongoing tension in the Red Sea, many international shipping companies have been forced to abandon the Red Sea route and divert to the African route, with ships circumnavigating the southwestern tip of the African continent, Cape of Good Hope.

Less than two weeks ago, on October 9th, A.P. Møller - Mærsk A/S announced that starting from February 1st next year, it will launch a joint container shipping cooperation with the German container shipping company Hapag-Lloyd AG in southern Africa using the Cape of Good Hope network. At that time, analysts commented that this cooperation implied that both companies expected the Red Sea route to remain unsafe until next year.

When A.P. Møller - Mærsk A/S announced its financial data on Monday, it also updated its guidance related to global trade, reflecting stronger-than-expected shipping demand. As a container shipping giant controlling about one-sixth of the global container trade share, Maersk currently expects global container trade to grow by 6% in 2024, compared to the previous forecast of 4%-6%