AP Moller-Maersk said it expected global supply chain woes to ease in the second half of this year as the Danish container shipping group proposed a seven-fold increase in its dividend and unveiled a $1.7bn logistics acquisition.
The world’s second-largest container shipping line by capacity said revenues had risen 55 per cent to $62bn last year, with earnings before interest, tax, depreciation and amortisation tripling to a record $24bn.
“It’s record-breaking in every dimension,” chief executive Soren Skou told the Financial Times.
Maersk said it expected supply chain problems to persist into the second quarter but that “a normalisation [should] occur early in the second half of the year”, and added that it was targeting ebitda of $24bn again in 2022. Analysts expect $28bn on average in 2022.
But Skou said he expected a “normalisation of the situation” and a fall in freight rates as Covid restrictions are lifted and infection rates fall, leading to a likely easing of congestion in ports such as Los Angeles and Long Beach on the US west coast.
“It’s fair to say that we don’t have much experience of coming out of a pandemic. Exactly how it will play out is hard to say,” Skou said. “We see the first quarter in line with 2021 and the second quarter is very strong.”
“We continue to have the combination of very high demand and less supply,” he added, pointing to waits of three to four weeks to enter the west coast ports. Fully 70 per cent of its shipping business this year was expected to be from long-term contracts, reducing volatility, Skou said.
Maersk is proposing a dividend of DKr2,500 per share, up from DKr330 a year earlier. It added that this represented a dividend yield of 10.7 per cent, an amount Skou called “truly exceptional”. Maersk has already said it will buy back $2.5bn of shares a year for the next four years.
The Danish group is also continuing its push into land-based logistics to boost its end-to-end offering to customers by buying Pilot Freight Services in the US for $1.7bn.
Skou said retailers needed “an omnichannel supply chain” where they were able to move goods from distribution centres to their stores as well as from fulfilment centres directly to customers. “We want to be able to offer both [and] sell products to move goods from the factory in China to the consumer in the US,” he added.
Maersk has been bulking up its non-shipping logistics business, but there is scepticism from some shareholders over whether it might be overpaying. Skou noted that Maersk’s logistics business had organic revenue growth of 30 per cent in 2021.
Shares in Maersk initially fell more than 5 per cent but soon recovered to be flat on the day in Wednesday morning trading. They are up by almost three-quarters in the past year.