Maersk Buys Trucking Firm, Warns Ocean Freight Boom Is Waning
Maersk Agrees to Buy Pilot Freight Services for $1.68 Billion
(Bloomberg) -- A.P. Moller-Maersk A/S agreed to buy Pilot Freight Services LLC for $1.68 billion, shoring up its road-transport business while signaling an unprecedented boom in container shipping may be starting to fade.
The deal announced Wednesday coincides with a 2022 profit forecast that falls well below analysts’ estimates. Maersk said it expected a strong first half before a “normalization in ocean” early in the second half.
Container firms have enjoyed massive profits over the past two years, as port backups and consumers buying goods from home drove up prices during the Covid-19 pandemic. Maersk and its peers have been using the money to diversify, strengthening in areas such as air freight and logistics.
“We are guiding in an environment where we are coming out of a pandemic and we don’t have much experience with that to be honest,” Chief Executive Officer Soren Skoso said in an interview with Bloomberg TV. The result will be “very similar to the one we had last year, which was record breaking in every dimension.”
Maersk shares slid as much as 5.6% and were down 2% at 9:17 a.m. in Copenhagen.
The company said it expects to report a 2022 profit of about $24 billion, measured as underlying earnings before interest, tax, depreciation and amortization. The guidance compares with an average estimate of $28 billion in a survey by Bloomberg.
U.S.-based Pilot Freight deal adds “big and bulky first, middle and last mile logistics” to its landside transportation offerings, Copenhagen-based Maersk said in an emailed statement. The transaction price is equivalent to an enterprise value of $1.8 billion post IFRS-16 lease liabilities, Maersk said.
The global container market will expand by 2% to 4% this year, “subject to high uncertainties related to the current congestion, network disruptions and demand patterns,” Maersk said. Last month, the company was surpassed by Mediterranean Shipping Co. as the world’s largest shipping line in terms of capacity, but remains the biggest owner of container ships.
Maersk has ample of cash for acquisitions. The company, which transports about a fifth of the world’s containers at sea, has set its sights on land-based logistics where there’s more potential for growth and profit margins are higher.
In December, Maersk agreed on a $3.6 billion deal to acquire Asian warehouse specialist LF Logistics in the second-biggest takeover in its history.
The shipping industry as a whole came out of 2021 with record profits as global supply-chain problems enabled shipowners to charge higher freight rates for their services.
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